The Role Of Managers Of Limited Liability Companies Under Oman's New Commercial Companies Law

The limited liability company (the LLC) is the most commonly incorporated form of company in Oman by both foreign investors and Omanis alike.

LLCs are typically preferred by investors to other types of Omani companies as they are subject to lower capitalisation requirements, a simpler regulatory regime and are, by comparison to other types of Omani companies, more straightforward to establish.

Key changes for managers of LLCs

The new Commercial Companies Law (promulgated by Sultani Decree No. 18/2019) became effective on 17 April 2019 (the New CCL) and repealed the old Commercial Companies Law (Law no. 4/74).

Managers under the New CCL retain largely the same roles and responsibilities. Pursuant to Article 264 of the New CCL and subject to the restrictions in the New CCL, managers may carry out all acts necessary for pursuing the LLC's objectives, unless their authority is limited by the LLC's constitutive documents.

However, the New CCL does introduce a number of provisions that extend or alter the responsibilities of managers. A summary of the key provisions introducing these changes is set out below:

Register of partners - Article 247: There is a new requirement for LLCs to maintain a register of partners. Ownership of membership interests in an LLC will not be effective unless details of the partners and their interests are listed in the register. Managers are jointly liable for maintaining the register and for the validity of its data. Liability of managers - Article 265: With respect to liability, managers of LLCs are now subject to the same provisions governing the members of the board of directors of joint stock companies. From our analysis of the law, the key provisions relating to directors of joint stock companies that managers are now subject to are: Article 202: Managers shall not exploit their positions for personal or third-party gain. Managers who breach this provision will be liable to the company, its partners and third parties for any losses suffered and will be required to reimburse the company for any gains, even if no loss is suffered by the company. Article 203: Managers shall not take part in the management of another company that is conducting similar business, shall not carry out any business similar to that of the company for their own personal gain or that of third parties, and shall not use the company's assets for their personal interest or the interest of third parties without the prior approval of the...

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