THECOMMERCIAL COMPANIES

LAW

6 th EditionApril 2007

PART ONE

COMMERCIAL COMPANIES IN GENERAL

CHAPTER ONE

GENERAL PROVISIONS

A commercial company is a contract by which two or morepersons undertake to participate in an enterprise for profit, eachcontributing a share of the capital in the form of tangible orintangible property or services, with a view to sharing any profitor loss resulting from the enterprise.

This law shall govern the following types of companies:

(a) General Partnerships.

(b) Limited Partnerships.

(c) Joint Ventures.

(d) Joint Stock Companies.

(e) Limited Liabilities Companies.

(f) Holding Companies.

Subject to the transitional and final provisions provided in PClrtnine o~ this law, any company which does not adopt one of thetypes listed above shall be null and void, and the persons whohave -acted in such company's name shall be jointly andseverally liable for the obligations resulting from such acts.

All commercial companies, except joint ventures, shall beconsidered juristic persons.

All contracts, receipts, notices and other documents issued bycommercial companies shall indicate the company's name, itsform, its principal place of business and the number and placeof its registration in the Commercial Register. The provisions ofthis article shall not apply to the joint ventures.

No commercial company other than the joint stock companymay have as its object the conduct of insurance business,solicitation of savings or capital from the public. investment offunds of the account of third parties, conduct of bankingbusiness or the provision of commercial air transport services.

The memorandum and articles of association of commercialcompanies other than those related to joint ventures shall bepublic documents which shall be registered and publishedpursuant to the provisions of this law and the CommercialRegister Law. Any person who becomes a partner of acommercial company shall be subject to the provisions of thememorandum of association and articles of association thereof.The existence of a commercial company shall not be assertedby third parties in good faith until such time as registration andpublication procedures are complete according to the provisionsof the Commercial Register Law. Nevertheless, third parties ingood faith may assert the existence of the company in claimsplaced against partners thereof even though such registrationand publication procedures are not complete.

Commercfal companies with non-Omani partners, whether suchpartners are natural or juristic persons, shall comply with theforeign capital investment law.

Partners of a commercial company shall not, without the priorconsent of all partners. conduct any business similar to thebusiness of the company for their own account or for theaccount of third parties. provided. however, that this restrictionshall not apply to partners of joint ventures or shareholders ofjoint stock companies.

Partners. managers and directors of a commercial companyshall not, without .the prior consent of all the partners or withoutthe consent of the general meeting, in the case of joint stockcompanies, use the company's assets or properties for theirbenefit or for the benefit of third parties, or enter. directly orindirectly, into any agreement with the company for theiraccount, except for the ordinary contracts of the type which thecompany concludes with its customers within the ordinarycourse of its business.

Partners, managers and directors of a commercial companywho violate the provisions of this article shall be liable to thecompany for the profits they have gained from such violationand for the damages arising thereof. A remedial action may befiled by any interested party, and all transactions to which thecompany is a party and which infringe the provisions of thepreceding paragraph shall be voidable.

Personal creditors of a partner of a commercial company shallnot claim the payment of their debt out of such partner's sharein the capital of the company. However, they may claim on thedissolution of the company, the payment of their debt out of thepartner's share in the remaining assets of the company after theselliement of the company's liabilities.

Personal creditors of a partner of a commerCial company otherthan the Joint stock company may claim the payment of theirdebt out of such partner's share in the company's profits asdetermined In the company's profit and loss statement. As forthe Joint stock company, payment may be claimed only out ofthe partner's share in the declared dividends

Personal creditors of a shareholder in a joint stock company may,besides the rights provided in the two preceding paragraphs,claim the public sale of the indebted shareholder's shares torecover their debt out of the proceeds, subject to the provIsions ofthe applicable laws and the company's articles of assoclatiun.

Article (10) : No case shall be filed for claims arising under the provisions ofthis law against or among partners of commercial companiesregarding the company's memorandum or - -articles ofassociation or the company's acts, or against the company'smanagers, directors, auditors or liquidators, or against the heirsor successors of any of them for the acts they performed duringthe exercise of their functions, unless such case IS filed within aperiod of five years from the most recent of the following dates:

A - The date of the act or omission forming the basis of case.

S - The date of the General Meeting at which the Board ofDirectors gave an account of the company's operations forthe period that includes the act or the omiSSion forming thebasis of the case filed against the directors of a Jomt stockcompany.

C· The date of the partner's meeting at which the managersgave an account of the company's operations for the periodwhich includes the ad or omission forming the basis of the

\case filed against the managers of a limited liabilitycompany

D· The date on which the general partners of a limitedpartnership gave the limited partners an account of thecompany's operations for the period which includes the actor omission forming the basis of the case filed against thegeneral partners of a limited partnership

The case lodged by the capital market authority will beexempted from the period mentioned in the above paragraph.

CHAPTER TWOCONTRIBUTION TO CAPITAL ANDDIVISION OF PROFITS & LOSSES

The contribution of partners to the capital of a commercialcompany may consist of money or may be a contribution in kindconsisting of real or personal property, or intangible propertyrigtlts or the services of one or more partners subject to thespecial provisions governing each form of company.

The value of all contributions to the capital of the company shallbe stated in the memorandum and articles of association of thecommercial company in terms of money

If the Authority for the Settlement of Commercial Disputes. upona complaint by a par:tner or a creditor of the company finds thata partner's contribution-,';; kind has been overvalued, the partnershall then pay to the company, in cash, the differences betweenthe estimated value of the property contributed by such partnerand ItS true value as al the time of contribution. All partners ofthe company shall be Jointly and severally liable to creditors ofthe company for the payment of such diHerence to thecompany. with resourse against the partner whose contributionhas been overvalued. Liability under this paragraph shall bebarred. however if the value of the contribution in kind to thecapital has been appraised prior to the company's registration

in the Commercial Register by an expert appointed by theAuthority for the Settlement of Commercial Disputes at anamount not less than eighty per cent of the value stated in thecompany's memorandum and articles of association.

Article (12) : In the absence of an agreement to the contrary, the partners'contributions to the capital of a commercial company shall bedeemed of equal value.

If a partner defaults in making his contribution to the capital ofthe company, the remaining partners may either expel him fromthe company or insist on the performance of his obligation tothe company, without prejudice in either case to their or thecompany's right to claim damages from the defaulting partner.

If a partner's contribution consists of a debt owed by anotherperson, such partner shall be considered as having made hiscontribution only when and to the extent the company receivespayment of thE:debt from the dp.b~oror from such partner andthe contribution shall be equal to the debt received by thecompany. If such debt is represented by negotiable instrumentshaving a determinable va'·ue in the financial markets, then suchdebt may be contributed as. property in kind at its value in thefinancial markets and the contributor of the debt so contributedshall not be held responsible for the payment of such debt bythe debtor.

If a partner's contribution consists of property rights or property.such partner shall be deemed to have given the company hisguaranty against hidden defects and defects in title.

Article (12) bit: The Ministry shall have the right to instruGt--eompanies toprovide an audited annual balance sheet according to the rulesand on the dates declared by the Minister of Commerce andIndustry.

Article (13) : All pa~ners shall share the company's profits and losses. If thecompany's memorandum and articles of association do notspecify the partner's shares in the company's profits and losses.then each partner's share therein shall be in proportion to hisshare in the capital of the company.

If the company's memorandum and articles of associationspecify only the devision of profits, such specification shall thenapply to losses and vice versa.

Any provision in the company's memorandum or articles ofassociation or any other agreement purporting to deprive apartner from participating in the profits or to exempt a partnerfrom participating in the losses of the company shall be null andvoid, and in such case the provisions of the precedingparagraph shall apply.

CHAPTER TWO (1)TRANSFORMATION OF COMPANIES

Article (13) (1): Without prejudice to the provisions regulating Gulf Investments andthe provisions of this law relating to all types of companies, a companymay be transformed from one form into another by a resolutionto be passed pursuant to the conditions set out for amendingthe existing company's Memorandum or Articles of Associationand by observing th procedures and conditions of incorporationof the new company. The Minister of Commerce and Industryshall issue a decision stipulating the conditions for transforminginto a publicly held joint-stock company.

The transformation of the company shall be indicated in thecommercial registration and the transformation shall be validonly after releasing the jointly-liable partners from the previousliabilities of the company towards its crpditors, as contained inthe .following Arti.cle.

- ~------Article (13) (2): The transformation of the company shall not result in the creation

of a new juristic person. The company, after transformation, shallmaintain its rights and liabilities that preceded such transformationwhich shall not release the jointly liable members from the liabilitiesof the company preceding the transformation unless the creditorsagree. However, such agreement shall be assumed valid Ifnone of the creditors objects in writing within two months fromthe date of being officially notified of the transformation resolutionpurusant to the procedures decided by the Minister of Commerceand Industry.

If any of the creditors objects to the Ministry of Commerce andIndustry against such transformation, the procedures thereofshall not be completed until after the payment of the debt orafter the company has issued out a decision of the Authority forthe Settlement of Commercial Disputes rejecting such obJection.

Article (13)(3) : In the event of transformation, each partner shall have a numberof shares or proportions In the new company equivalent to thevalue of shares or proportions he had prior te>.transformation.

If the transformation IS to a limited liability company. and thevalue of a pertner's share is less than the minimum nominalva'!ue of a share In the company, then such member shall haveto pay the balance of such value in cash within one month of thedate of hiS notification of the same: otherwise. he will be deemedwithdrawn from the company and the value of hiS share shall bp.paid according to its market value on the di'lte of trdnsformatlon

CHAPTER TWO (2)MERGER OF COMPANIES

Article (13)(4) : A company may. although under liquidation, merge with anothercompany of the same or different legal form. Merger shall takeplace In accordance with either of the two following ways:

1 - Incorporation Dissolution of one or more companies andthe transfer of its or their liabilities to an existing company.

2, Consideration Dissolution of tW()'.or-more companies andthe establishment of a new company to which the liabilitiesof the amalgamated companies shall be transferred.

A merger resolutton shall be made by agreement of thecompanies wishing to merge pursuant to the manners specifiedfor the amendment of the company's memorandum of associationor articles of association without following liquidation proceedings.The merger resolution shall not take effect without the consent ofthe competent authority specified by this law according to legalform to which the company has been transformed.

In the case of banks and investment companies. the approval ofthe Central Bank of Oman on the merger resolution is a mustprior to the implementation of such merger.

A decision shall be made by the Minister of Commerce andIndustry regarding the way of evaluating the assets of thecompanies wishing to merge, and the procedures andconditions of merger subject to the provisions provided in thefollowing articles.

Article (13)(5): Merger through incorporation shall take place as follows:

,. A resolution shall be made by the incorporated company asto its dissolution and incorporation into the incorporatingcompany.

2· The net assets of the incorporated company shall beevaluated in accordance with the last audited balancesheet; otherwise, the procedure regarding the evaluation ofthe shares in kind provided In this law shall apply.

3· The incorporating company shall issue a resolutionincreasing Its capital pursuant to the result of the assets ofthe incorporated company.

4·· The increase of the capital of the Incorporated companyshall be divided among the partners of the incorporatedcompany in proportion to their shares therein

5· If the shares are in the form of stocks and two years haveexpired since the establishment of the incorporatingcompar:l')l, then such stocks may be negotiable as soon as- .~- --they are issued.

Article (13)(6) : Merger through consolidation shall take place by virtue of adeCISion to be sued out by each of the incorporated companiesfrom the competent authority provided in the memorandum andartICles of association regarding its dissolution. Then the newcompany shall be established according to the terms andconditions provided In this law. However, if the new company IS

a JOintstock company, then the latest audited balance sheet orthe expert's report related to the evaluation of the shares In kindshall be taken Into consideratIOn needless to refer the matter 10the constitutive meeting

Article (13)(7) : Each incorporated company shall be assigned a number ofshares or stocks equivalent to its share in the capital of the newcompany and such shares or stocks shall be divided among thepartners of each incorporated company in proportion to theirshares therein.

Article (13) (8): The merger shall be announced in two daily newspapers fortwo consecutive issues and shall be registered in theCommercial Register. The merger resolution shall not takeeffect until after expiration of three months from the date ofthe registration of the merger in the Commercial Register.The Minister of Commerce and Industry may, by a decisionpublished in two daily newspapers for two consscutive days,reduce this period if the public interest so necessitated.

The creditors of the incorporated company shall have theright, during such peoriod, to object to the merger by aregistered letter to the company, and in this case the mergerremains suspended until the creditor withdraws his objection,or the competent court finally overrules such objection, or thecompany pays the debt if it is mature or gives satisfactorysecurity to settle such debt it it is a defferred debt. If noobjection is received during the aforesaid period, the mergershall be deemed valid.

Article (13)(9) : The authority In charge of management of the companiesdeciding to merge shall remain until the merger comes Intoeffect.

Article (13)(10): All rights and liabilities of the Tne-o-rporated company shall betransferred to the Incorporating or the new company after themerger resolution becomes effective and the new company ISregistered In the Commercia: Register pursuant to the termsagreed In the merger contract without prejudice to creditorsrights

CHAPTER THREEDISSOLUTION AND LIQUIDATION OF COMMERCIAL

COMPANIES

Article (14) : Subject to the special provisions related to the dissolution ofeach form of the commercial companies, a commercia:company shall be dissolved for any of the following reasons:

A - Expiration of the term fixed of the company or theoccurrence of any event obligating the dissolution providedit is laid down in the memorandum of association or articlesof association of the company.

B - Accomplishment of the purpose for which the company wasestablished or impossibility of accomplishing such purpose.

C· Transfer of all shares or all stocks in the capital of thecompany to one partner.

D - Bankruptcy of the company or loss of all or most of itscapital if such loss renders the effective use of theremaining capital impossible.

E - Agreement of the partners to dissolve the company.

F - If at the request of any interested party, and for ~,ny of theforegoing reasons or for any other reason seriouslyimpairing the company's ability to accomplish its object, theAuthority for the Settlement of Commercial Disputesdetermines the dissolution of the company.

Article (15) : Upon its dissolution the company shall enter the phase ofliquidatfoo and shall retain its juristic person to the extentrequired for and until the end of its liquidation.

Article (16) : The powers of the manager or of the Board of Directors of thecompany shall cease upon the dissolution of the company.However, the managers or the Board of Directors shall continuethe.ir work and consequently shall be liable as trustees of thecompany's assets until a liquidator is appointed and assumeshis funclions.

Article (17) : Liquidation shall be effected by all the partners of the companyor by one liquidator or more who shall be appointed byagreement of all the partners or by virtue of a special provision inthe company's memorandum or articles of association. In the

absence of such an agreement on the appointment of liquidators,or if there is a legitimate reason that prevents entrusting theliquidation to the ,)ersons appointed pursuant to the aforesaidagreement in the company's memorandum or articles ofassociation, then the Authority for the Settlement of CommercialDisputes shall, upon application by any interested party, appointone or more liquidators for the company,

If two or more liquidators are appointed, t~ey shall ad Jointlyunless they are expressly authorized by the party appointingthem to act individually.

Article (18) : Liquidators shall be liable to the company, its partners and thirdparties for damages caused by their acts in violation of law orbeyond the scope of their authority or by any fraud ornegligence in the performance of their duties or by their failureto act as prudent men under certain circumstances.

If more than one liquidator are liable under the precedingparagraph, the Authority for the Settlement of CommercialDisputes may hold each such liquidator liable for all or part ofthe damages as the Court deems appropriate In view of thecircumstances of the case.

Article (19) : The liquidators shall register in the Commercial Register theinstrument of their ppointment and which' defines theirauthorities, and shall publish such instrument In the mannerprovided for the publication of amendments to the company'smemorandum or articles of association.

Article (20) : All contracts, receipts, notices and any other documents Issuedby the company aft..e~:-il$_dissolution shall Indicate that thecompany is "under liquidation".

Article (21) : Upon assuming their function, the liquidators shall inconjunction with the company's auditors or its manager, If any,prepare an inventory of the company's assets and liabilities.The liquidators shall take possession of the company's books,records, documents and assets and shall record all liquidationwork in a daily book kept according to accounting rules adoptedin commerce and shall keep all books, papers and recordspertaining to the liquidation.

The liquidators shall, upon request, grant any partner of thecompany access to the books, papers and records pertaining to

liquidation.

Article (21) : Upon assuming their function, the liquidators shall inconjunction with the company's auditors or its manager, if any,prepare an inventory of the company's assets and liabilities.The liquidators sh;;11take possession of the company's books,records, documents and assets and shall record all liquidationwork in a daily book kept according to accounting rules adoptedIn commerce and shall keep all books, papers and recordspertaining to the liquidation.

The liquidators shall, upon request. grant any partner of thecompany access to the books, papers and records pertaining toliquidation.

Article (22) : Subject to any limitation imposed by law or contained in theinstrument appointing them, the liquidators shall have fullauthority to represent the company, manage its business andtake all necessary actions to liquidate its assets and pay itsdebts. The liquidators' authority shall include, in particular, thewinding up of the company's pending business, representingthe company as claimant or defendant. taking any measuresthat preserve the company's interests, and subject to thelimitations set forth in this Article. the sale of the company'sassets in the course of liquidation.

Article (23) : The liquidators shall not conclude any settlement with thecompany's creditors or accept arbitration on the company'sbehalf or waive any insurance or any other kind of security forless than its full value. The liquidators also shall not sell all thecornp..alJ-Y'sassets and projects or transfer them except afterobtaining the unanimous approval of all the partners or theapproval of the. Authority for the Settlement of CommercialDisputes. unless the instrument appointing the liquidatorsprovides otherwise.

The liquidators shall not commence new operations unlesssuch operations are necessary for the liquidation of thecompany's existing business.

Article (24) : Liquidators fees shall be paid from the company's funds, and ifsuch fees are not specified in the instrument appointing them,the Authority for the Settlement of Commercial Disputes shall fixthem.

The liquidators shall, by notice published in the Official Gazetteand by other appropriate means, invite the company's creditorsto submit their claims against the compay so as to be recorded.The period d'Jring which such claims may be submitted. andwhich shall be limited to six months from the date of the firstpublication of the notice, shall be specified in the invitationnotice. unless the Authority for the Settlement of CommercialDisputes approves a shorter period after the expiry of thespecified period. Claims may be submitted to the Authority forthe Settlement of Commercial Disputes which may. if itconsiders that circumstances justify the delay. allow therecording of such claims any time prior to the distribution of thecompany's net assets to the partners.

The liquidators shall. after the settlement of the valid claimsraised against the company and which are presented pursuantto the provisions of the preceding paragraph. return to eachpartner the value of his share or stocks in the capital of thecompany as stated in the company's memorandum or articlesof association. and distribute any remaining assets among thepartners in accordance with the provisions of the company'smemorandum or articles of association. In the absence of aspecific provision relating to such distribution. the remainingassets shall be distributed among the partners In proportion totheir respective shares or stocks in the capital of the company Ifthe net assets are Insufficient to cover the full value of thepartner's shares or stocks in the capital of the company asstated in the company's memorandum or articles of association,the deficit shall _be divided among the partners in the ratioprovided for the dIVision of losses.

Article (26) : At the end of every financial year during the liquidation period.the liquidators shall prepare a balance sheet. a profit and lossaccount and a report on their work during the last financial year.Such documents shall be presented to the partners of thecompany in a general meeting for approval pursuant to theprovisions of the company's memorandum or articles ofassociation.

Article (27) : Upon completion of liquidation, the liquidators and auditors, ifany, shall submit a final report and a statement of account oftheir work to the partners of the company for approval. If thepartners do not unanimously approve the final report and thestatement of account, the liquidators may apply to the Authorityfor the Settlement of Commercial Disputes for their approval.

Upon approval of the final report and the statement of accounts,the liquidators shall declare the completion of liquidation andshall register such declaration in the Commercial Register - Thedeclaration of the completion of liquidation shall be pUblished inthe manner provided for the publication of amendments to thecompany's memorandum or articles of association, and uponsuch publication the liquidation shall end and the company'sexistence shall cease.

Article (27)(2): The liquidator shall deposit the liquidation balance, which was notreceived by the beneficiaries, at the Capital Market Authority aftersix months from the date of the completion of liquidation as per theprocedures that will be issued by a resolution of the board ofauthority. The liquidators should advertise the same twice in thedaily news papers within a maximum period of 14 days from thedate of deposit.The authority shall advertise the dues deposited with it as per themode and time specified by its board.

PART TWOGENERAL PARTNERSHIPS

CHAPTER ONEESTABLISHMENT OF THE GENERAL PARTNERSHIP

Article (28) : The general partnership is a commercial company formed bytwo or more natural or juristic persons and which aims atpracticing business under a certain trade name. The partners ofa general partnership shall be Jointly and severally liable for thegeneral partnership's debts to the full extent of their property.

The general partnership is subject to all provisions of part oneof this law which are inconsistent with the provisions of this part

The partners shall register the general partnership in theCommercial Register pursuant to the provisions of the law.

The title of the general partnership may consist of words. It mayalso include the name of one or more partners provided that thetitle of the company shall not be misleading as to its objectives,identity, or its partners identities. Wherever it appears, the title ofthe company shall be followed by the term "General Partnership"

Any person who is a non-partner in the company but agreesthat his name be included in the title of the company, shall beresponsible for the company's debts as a general partner to anythird party who, in good faith, relies on such title.

Article (30) : Each partner in a general partnership shall be deemed to bepracticing commercial business under the partnership's nameand shall have the status of merchant; however he shall not berequired to register as such if he has acquired this designationsolely by reason of being a partner. The bankruptcy of a generalpartnership shall result in the bankruptcy of each of its partners.

Article (31) : The partners' share in the partnership shall not be represented bynegotiable certificates. A partner shall not transfer the ownershipof his share in the partnership to a third party except with theconsent of all partners or in compliance 'Nith any conditionsstipulated in the partnership's memorandum of association.

A partner may, however, transfer to a third party the returns andprofits attributable to his share in the partnership; however, theagreement regarding such transfer shall have no effect exceptbetween the parties thereto.

Article (32) : A partner who has withdrawn from the partnership shall not beheld liable for the debts incurred by the partnership subsequentto the date of the registration of the partner's withdrawal, in theCommercial Register but he shall remain liable for thepartnership's debts incurred on the date of such registration.Any agreement to ihe contrary between the partners shall notaffect the rights of the partnership's auditors.

Article (33) : A partner shall not be required to pay any of the partnership'sdebts out of his own property unless the creditor has proventhat despite all reasonable efforts he has made to collect hisdebt from the partnership, the latter has failed to pay the debt.

CHAP'TER TWOMANAGEMENT OF THE GENERAL PARTNERSHIP

Article (34) : All partners of a general partnership shall be de·amed managersof the partnership, nevertheless, the partnership'smemorandum of association or a subsequent agreementconcluded between all the partners, and registered in theCommercial Registe( m~y provide that management shall be- _::- -- .

entrusted to one or more managers who shall be naturalpersons and who may be partners or non-partners.

Article (35) : The managers of the partnership may perform all acts inrealization of the partnership's objectives unless their authorityis, limited by the company's memorandum of associatiOl'l or by asubsequent agreement concluded between all partners andregistered in the Commercial Register.

The managers shall not, however, perform the following actsunless they are expressly authorized to do so by thepartnership's memorandum of association or by a unanimousdecision taken by all partners:

PART ONE

COMMERCIAL COMPANIES IN GENERAL

CHAPTER ONE

GENERAL PROVISIONS

A commercial company is a contract by which two or morepersons undertake to participate in an enterprise for profit, eachcontributing a share of the capital in the form of tangible orintangible property or services, with a view to sharing any profitor loss resulting from the enterprise.

This law shall govern the following types of companies:

(a) General Partnerships.

(b) limited Partnerships.

(c) Joint Ventures.

(d) Joint Stock Companies.

(e) Limited Liabilities Companies.

(f) Holding Companies.

Subject to the transitional and final provisions provided in Pelrtnine of this law, any company which does not adopt one of thetypes listed above shall be null and vQi~.•.._.g[ldthe persons whohave acted in such company's name shall be jointly andseverally liable for the obligations resulting from such acts.

All commercial companies. except joint ventures, shall ~considered juristic persons.

All contracts, receipts, notices and other documents issued bycommercial companies shall indicate the company's name, itsform, its principal place of business and the number and placeof its registration in the Commercial Register. The provisions ofthis article shall not apply to the joint ventures.

No commercial company other than the joint stock companymay have as its object the conduct of insurance business.solicitation of savings or capital from the public. investment offunds of the account of third parties. conduct of ba~kingbusiness or the provision of commercial air transport services.

The memorandum and articles of association of commercialcompanies other than those related to joint ventures shall bepublic documents which shall be registered and publishedpursuant to the provisions of this law and the CommercialRegister Law. Any person who becomes a partner of acommercial company shall be subject to the provisions of thememorandum of association and articles of associati(l~ thereof.The existence of a commercial company shall not be assertedby third parties in good faith until such time as registration andpublication procedures are complete according to the provisionsof the Commercial Register Law. Nevertheless. third parties ingood faith may assert the existence of the company in claimsplaced against partners thereof even though such registrationand publication procedures are not complete.

Commercral companies with non-Omani partners. whether suchpartners are natural or juristic persons. shall comply with theforeign capital investment law.

Partners of a commercial company shall not. without the priorconsent of all partners. conduct any business similar to thebusiness of the company for their own account or for theaccount of third parties, provided, however, that this restrictionshall not apply to partners of joint ventures or shareholders ofjoint stock-comp-anies.

Partners. managers and directors of a commercial companyshall not, without .the prior consent of all the partners or withoutthe consent of the general meeting. in the case of joint stockcompanies. use the company's assets or properties for theirbenefit or for the benefit of third parties. or enter, directly orindirectly, into any agreement with the company for theiraccount. except for the ordinary contracts of the type which thecompany concludes with its customers within the ordinarycourse of its business.

Partners, managers and directors of a commercial companywho violate the provisions of this article shall be liable to thecompany for the profits they have gained from such violationand for the damages arising thereof. A remedial action may befiled by any interested party, and all transactions to which thecompany is a party and which infringe the provisions of thepreceding paragraph shall be voidable.

Personal creditors of a partner of a commercial company shallnot claim the payment of their debt out of such partner's sharein the capital of the company. However, they may claim on thedissolution of the company, the payment of their debt out of thepartner's share in the remaining assets of the company after thesettlement of the company's liabilities.

Personal creditors of a partner of a commerCial company otherthan the joint stock company may claim the payment of theirdebt out of such partner's share in the company's profits asdetermined In the company's profit and loss statement. As torthe joint stock company, payment may be claimed only out ofthe partner's share in the declared dividends.

Personal creditors of a shareholder in a joint stock company may,besides the rights provided in the two preceding paragraphs,claim the public sale of the indebted shareholder's shares torecover their debt out of the proceeds, subject to the provisions otthe applicable laws and the company's articles ot assoclativn

Article (10) : No case shall be filed tor claims arising under the provisions ofthis law against or among partners of commercial companiesregarding the company's m.ef!lOf.andum or articles ofassociation or the company's acts, or against the company'smanagers, directors, auditors or liquidators, or against the heirsor successors of any of them for the acts they performed duringthe exercise ot their tunctions, unless such case IS filed within aperiod of five years from the most recent of the following dates:

A - The date of the act or omission forming the basis ot case.

S - The dale of the General Meeting at which the Soard ofDirectors gave an account of the company's operations forthe period that includes the act or the omission forming thebasis of the case filed against the directors of a joint s~ockcompany.

C - The date of the partner's meeting at which the managers"

gave an account of the company's operations for the periodwhich includes the ad or omission forming the basis of the

"

case filed against the managers of a limited liabilitycompany

D· The date on which the general partners of a limitedpartnership gave the limited partners an account of thecompany's operations for the period which includes the actor omission forming the basis of the case filed against thegeneral partners of a limited partnership

The case lodged by the capital market authority will beexempted from the period mentioned in the above paragraph.

CHAPTER TWOCONTRIBUTION TO CAPITAL ANDDIVISION OF PROFITS & LOSSES

The contribution of partners to the capital of a commerCialcompany may consist of money or may be a contribution in kindconsisting of real or personal property, or intangible propertyrigtlts or the services of one or more partners subject to thespecial provisions governing each form of company.

The value of all contributions to the capital of the company shallbe stated in the memorandum and articles of association of thecommercial company in terms of money

If the Authority for the Settlement of Commercial Disputes, upona complaint by a partner or a creditor of the company finds thata partni{r-'s contribution in kind has been overvalued. the partnershall then pay to the company, in cash, the differences betweenthe estimated value of the property contributed by such partnerdnd ItS true value as al the time of contribution. All partners ofthe company shall be Jointly and severally liable to creditors of:he company for the payment of such diHerence to thecompany, with resourse against the partner whose contributionhas been overvalued. Liability under this paragraph shall bebarred, however if the value of the contribution in kind to thecapital has been appraised prior to the company's registration

in the Commercial Register by an expert appointed by theAuthority for the Settlement of Commercial Disputes at anamount not less than eighty per cent of the value stated in thecompany's memorandum and articles of association.

Article (12) : In the absence of an agreement to the contrary, the partners'contributions to the capital of a commercial company shall bedeemed of equal value.

If a partner defaults in making his contribution to the capital ofthe company, the remaining partners may either expel him fromthe company or insist on the performance of his obligation tothe company, without prejudice in either case to their or thecompany's right to claim damages from the defaulting partner.

If a partner's contribution consists of a debt owed by anotherperson, such partner shall be considered as having made hiscontribution only when and to the extent the company receivespayment of the debt from the deb~or or from such partner andthe contribution shall be equal to the debt received by thecompany. If such debt is represented by negotiable instrumentshaving a determinable value in the financial markets, then suchdebt may be contributed as. property in kind at its value in thefinancial markets and the contributor of the debt so contributedshall not be held responsible for the payment of such debt bythe debtor.

If a partner's contribution consists of property rights or property,such partner shall be deemed to have given the company hisguaranty against hidden defects and defects in title.

Article (12) bit: The Ministry shall have:"""fi'leright to instruct companies toprovide an audited annual balance sheet according to the rulesand on the dates declared by the Minister of Commerce andIndustry.

Article (13) : All pa~ners shall share the company's profits and losses. If thecompany's memorandum and articles of association do notspecify the partner's shares In the company's profits and losses,then each partner's share therein shall be in proportion to hisshare in the capital of the company.

If the company's memorandum and articles of associationspecify only the devision of profits, such specification shall thenapply to losses and vice versa.

Any provision in the company's memorandum or articles ofassociation or any other agreement purporting to deprive apartner from participating in the profits or to exempt a partnerfrom participating in the losses of the company shall be null andvoid, and in such case the provisions of the precedingparagraph shall apply.

CHAPTER TWO (1)TRANSFORMATION OF COMPANIES

Article (13) (1): Without prejudice to the provisions regulating Gulf Investments andthe provisionsof this law relating to all types of companies, a companymay be transformed from one form into another by a resolutionto be passed pursuant to the conditions set out for amendingthe existing company's Memorandum or Articles of Associationand by observing th procedures and conditions of incorporationof the new company. The Minister of Commerce and Industryshall issue a decision stipulating the conditions for transforminginto a publicly held joint-stock company.

The transformation of the company shall be indicated in thecommercial registration and the transformation shall be validonly after releasing the jointly-liable partners from the previousliabilities of the company towards its crpditors, as contained in

_ ~t;Le-JollowingArticle.

Article (13) (2): The transformation of the company shall not result in the creationof a new juristic person. The company, after transformation, shallmaintain its rights and liabilities that preceded such transformationwhich shall not release the jointly liable members from the liabilitiesof the company preceding the transformation unless the creditorsagree. However, such agreement shall be assumed valid Ifnone of the creditors objects in writing within two months fromthe date of being otiicially notified of the transformation resolutionpurusant to the procedures decided by the Minister of Commerceand Industry.

If any of the creditors objects to the Ministry ot Commerce andIndustry against such transformation. the procedures thereofshall not be completed until after the payment of the debt orafter the company has issued out a decision of the Authority forthe Settlement of Commercial Disputes rejecting such obJection.

Article (13)(3) : In the event of transformation, each partner shall have a numberof shares or proportions In the new company eqUivalent to thevalue of shares or proportions he had prior tq transformation.

If the transformation IS to a limited liability company. and thevalue of a pertner's share is less than the minimum nominalva'lue of a share In the company, then such member shall haveto pay the balance of such value in cash within one month 01 thedate of his notification of the same: otherwise. he will be deemedwithdrawn from the company and the value of his share shall bepaid according to ItSmarket v;:llue on the di'lte of trdnsformallon

CHAPTER TWO (2)MERGER OF COMPANIES

Article (13)(4) : A company may, although under liquldalion, merge with anothercompany ot the same or different legal form. Merger shall takeplace in accordance with either of the two following ways:

1 - Incorporation DiSSolution of one or more companies andthe transfer of its or their liabilities to an eXisting company.

2 - ConSideration: E)ls-solutlon of two or more companies andthe establishment of a new company to which the liabilitiesof the amalgamated companies shall be transferred.

A merger resolution shall be made by agreement of thecompanies wishing to merge pursuant to the manners specifiedfor the amendment of the company's memorandum of associationor articles of association without following liquidation proceedings.The merger resolution shall not take effect without the consent ofthe competent authority specified by this law according to legalform to which the company has been transformed

In the case of banks and investment companies, the approval ofthe Central Bank of Oman on the merger resolution is a mustprior to the implementation of such merger.

A decision shall be made by the Minister of Commerce andIndustry regarding the way of evaluating the assets of thecompanies wishing to merge, and the procedures andconditions of merger subject to the provisions provided in thefollowing articles.

Article (13)(5): Merger through incorporation shall take place as follows:

1· A resolution shall be made by the incorporated company asto its dissolution and incorporation into the Incorporatingcompany.

2· The net assets of the incorporated company shall beevaluated in accordance with the last audited balancesheet; otherwise, the procedure regarding the evaluation ofthe shares in kind provided In this law shall apply.

3 - The incorporating company shall Issue a resolutionincreaSing ItS capital pursuant to the result of the assets ofthe incorporated company.

4- The Increase of the capital of the Incorporated companyshall be divided among the partners of the Incorporatedcompany in proportion to their shares therein.

5 - If the shares are in the form of stocks and two years haveexpired since the establishment of the incorporatingcompany, then such stocks may be negotiable as soon asthey are issued.

Article (13)(6) : Merger through consolidation shall take place by virtue of adeCISion to be sued out by each of the incorporated companiesfrom the competent authority provided In the memorandum andartICles of association regarding its dissolution. Then the newcompany shall be established according to the terms andconditions provided In this law. However, If the new company isa JOintstock company, then the latest audited balance sheet orthe expert's report related to the evaluation of the shares In kindshall be taken into consideration needless to refer the matter tothe constitutive meeting.

Article (13)(7) : Each incorporated company shall be assigned a number ofshares or stocks equivalent to its share in the capital of the newcompany and such shares or stocks shall be divided among thepartners of each incorporated company in proportion to theirshares therein.

Article (13) (8): The merger shall be announced in two daily newspapers fortwo consecutive issues and shall be registered in theCommercial Register. The merger resolution shall not takeeffect until after expiration of three months from the date ofthe registration of the merger in the Commercial Register.The Minister of Commerce and Industry may, by a decisionpublished in two daily newspapers for two consscutive days,reduce this period if the public interest so necessitated.

The creditors of the incorporated company sha!1 have theright, during such peoriod, to object to the merger by aregistered letter to the company, and in this case the mergerremains suspended until the creditor withdraws his objection,or the competent court finally overrules such objection, or thecompany pays the debt if it is mature or gives satisfactory

•. security to settle such debt if it is a defferred debt. If noobjection is received during the aforesaid period, the mergershall be deemed valid.

Article (13)(9) : The authonty In charge of management of the companiesdeciding to merge shall remain until the merger comes Intoeffect.

- ~.----Article (13)(10): All rights and ·liabilities of the Incorporated company shall be

transferred to the Incorporating or the new company alter themerger resolution becomes effective and the new company IS

registered In the Commercial Register pursuant to the termsagreed in the merger contract Without prejudice to creditorsrights

CHAPTER THREEDISSOLUTION AND LIQUIDATION OF COMMERCIAL

COMPANIES

Article (14) : Subject to the special provisions related to the dissolution ofeach form of the commercial companies, a commercia:company shall be dissolved for any of the following reasons:

A· Expiration of the term fixed of the company or theoccurrence of any event obligating the dissolution providedit is laid down in the memorandum of association or articles8f association of the company.

B - Accomplishment of the purpose for which the company wasestablished or impossibility of accomplishing such purpose.

C - Transfer of all shares or all stocks in the capital of thecompany to one partner.

D - Bankruptcy of the company or loss of all or most of itscapital if such loss renders the eHective use of theremaining capital impossible.

E - Agreement of the partners to dissolve the company.

F - If at the request of any interested party, and for Cl.nyof theforegoing reasons or for any other rea:;on seriouslyimpairing the company's ability to accomplish its object, theAuthority for the Settlement of Commercial Disputesdetermines the dissolution of the company.

Article (15) : Upon its dissolution the company shall enter the phase of- ..:---.-. liquidatIOn and shall retain its juristic person to the extent

required for and until the end of its liquidation.

Article (16): The powers of the manager or of the Board of Directors of thecompany shall cease upon the dissolution of the company.However, the managers or the Board of Directors shall continuethe.ir work and consequently shall be liable as trustees of thecompany's assets until a liquidator is appointed and assumeshis functIOns.

Article (17) : Liquidation shall be effected by all the partners of the companyor by one liquidator or more who shall be appointed byagreement of all the partners or by virtue of a special provision inthe company's memorandum or articles of association. In the

absence of such an agreement on the appointment of liquidators,or if there is a legitimate reason that prevents entrusting theliquidation to the ,)ersons appointed pursuant to the aforesaidagreement in the company's memorandum or articles ofassociation, then the Authority for the Settlement of CommercialDisputes shall, upon application by any interested party, appointone or more liquidators for the company,

If two or more liquidators are appointed, trey shall ad Jointlyunless they are expressly authorized by the party appointingthem to act individually.

Article (18) : liquidators shall be liable to the company, its partners and thirdparties for damages caused by their acts in violation of law orbeyond the scope of their authority or by any fraud ornegligence in the periormance of their duties or by their failureto act as prudent men under certain circumstances.

If more than one liquidator are liable under the precedingparagraph, the Authonty for the Settlement of CommercialDisputes may hold each such liquidator liable for all or part ofthe damages as the Court deems appropriate In view of thecircumstances of the case.

Article (19) : The liquidators shall register in the Commercial Register theinstrument of their ppointment and which' defines theirauthorities, and shall publish such instrument In the mannerprovided for the publication of amendments to the company'smemorandum or articles of association.

Article (20) : All contracts, receipts, notices and any other documents Issuedby- i-tre---company after its dissolution shall indicate that thecompany is "under liquidation".

Article (21) : Upon assuming their function, the liquidators shall Inconjunction with the company's auditors or its manager, If any,prepare an inventory of the company's assets and liabilitiesThe liqUidators shall take possession of the company's books,records, documents and assets and shall record all liquidationwork in a daily book kept according to accounting rules adoptedin commerce and shall keep all books, papers and recordspertaining to the liquidation.

The liquidators shall, upon request, grant any partner of thecompany access to the books, papers and records pertaining to

liquidation.

Article (21) : Upon assuming their function, the liquidators shall inconjunction with the company's auditors or its manager, if any,prepare an inventory of the company's assets and liabilities.The liquidators sh;:;l1take possession of the company's books,records. documents and assets and shall record all liquidationwork in a daily book kept according to Ciccounting rules adoptedIn commerce and shall keep all books, papers and recordspertaining to the liquidation.

The liquidators shall, upon request, grant any partner of thecompany access to the books, papers and records pertaining toliquidation.

SUbject to any limitation imposed by law or contained in theinstrument appointing them, the liquidators shall have fullauthority to represent the company, manage its business andtake all necessary actions to liquidate its assets and pay itsdebts. The liquidators' authority shall include, in particular, thewinding up of the company's pending business, representingthe company as claimant or defendant, taking any measuresthat preserve the company's interests. and subject to thelimitations set forth in this Article, the sale of the company'sassets in the course of liquidation.

The liquidators shall not conclude any settlement with thecompany's creditors or accept arbitration on the company'sbehalf or waive any insurance or any other kind of security forless than its full value. The liquidators also shall not sell all thecompany's assets and projects or transfer them except afterobtaining the unanimous approval of all the partners or theapproval of the Authority for the Settlement of CommercialDisputes, unless the instrument appointing the liquidatorsprovides otherwise.

The liquidators shall not commence new operations unlesssuch operations are necessary for the liquidation of thecompany's existing business.

Article (24) : Liquidators fees shall be paid from the company's funds. and ifsuch fees are not specified in the instrument appointing them.the Authority for the Settlement of Commercial Disputes shall fixthem.

The liquidators shall, by notice pUblished in the Official Gazetteand by other appropriate means, invite the company's creditorsto submit their claims against the compay so as to be recorded.The period d'Jring which such claims may be submitted, andwhich shall be limited to six months from the date of the firstpublication of the notice, shall be specified in the inv'ltationnotice, unless the Authority for the Settlement of CommercialDisputes approves a shorter period after the expiry of thespecified period. Claims may be submitted to the Authority forthe Settlement of Commercial Disputes which may. if itconsiders that circumstances justify the delay. allow therecording of such claims any time prior to the distribution of thecompany's net assets to the partners.

The liquidators shall, after the settlement of the valid claimsraised against the company and which are presented pursuantto the provisions of the preceding paragraph, return to eachpartner the value of his share or stocks in the capital of thecompany as stated in the company's memorandum or articlesof association, and distribute any remaining assets among thepartners in accordance with the provisions of the company'smemorandum or articles of association. In the absence of aspecific provision relating to such distribution, the remainingassets shall be distributed among the partners in proportion totheir respective shares or stocks in the capital of the company ifthe net assets are Insufficient to cover the full value of thepartner's shares or stocks in the capital of the company asstated in the company's memorandum or articles of association,

_ _-'he deficit shall be divided among the partners in the ratio- _-:----provided for the division of losses.

Article (26) : At the end of every financial year during the liquidation period.the liquidators shall prepare a balance sheet. a profit and lossaccount and a report on their work during the last financial year.Such documents shall be presented to the partners of thecompany in a general meeting for approval pursuant to theprovisions of the company's memorandum or articles ofassociation.

Article (27) : Upon completion of liquidation, the liquidators and auditors, ifany. shall submit a final report and a statement of account oftheir work to the partners of the company for approval. If thepartners do not unanimously approve the final report and thestatement of account, the liquidators may apply to the Authorityfor the Settlement of Commercial Disputes for their approval.

Upon approval of the final report and the statement of accounts,the liquidators shall declare the completion of liquidation andshall register such declaration in the Commercial Register - Thedeclaration of the completion of liquidation shall be published inthe manner provided for the publication of amendments to thecompany's memorandum or articles of association, and uponsuch publication the liquidation shall end and the company'sexistence shall cease.

Article (27)(2): The liquidator shall deposit the liquidation balance, which was notreceived by the beneficiaries, at the Capital Market Authority aftersix months from the date of the completion of liquidation as per theprocedures that will be issued by a resolution of the board ofauthority. The liquidators should advertise the same twice in thedaily news papers within a maximum period of 14 days from thedate of deposit.The authority shall advertise the dues deposited with it as per themode and time specified by its board.

PART TWOGENERAL PARTNERSHIPS

CHAPTER ONEESTABLISHMENT OF THE GENERAL PARTNERSHIP

Article (28) : The general partnership is a commercial company formed bytwo or more natural or juristic persons and which aims atpracticing bUSiness under a certain trade name. The partners ofa general partnership shall be jointly and severally liable for thegeneral partnership's debts to the full extent of their property.

The general partnership is subject to all provisions of part oneof this law which are inconsistent with the provisions of this part.

The partners shall register the general partnership In theCommercial Register pursuant to the provisions of the law.

The title of the general partnership may consist of words. It mayalso include the name of one or more partners provided that thetitle of the company shall not be misleading as to its objectives,identity, or its partners identities. Wherever it appears, the title ofthe company shall be followed by the term "General Partnership"

Any person who is a non-partner in the company but agreesthat his name be included in the title of the company, shall beresponsible for the company's debts as a general partner to anythird party who, in good faith, relies on such title.

Artl~~(3_0) : Each partner in a general partnership shall be deemed to bepracticing commercial business under the partnership's nameand shall have the status of merchant; however he shall not berequired to register as such if he has acquired this designationsolely by reason of being a partner. The bankruptcy of a generalpartnership shall result in the bankruptcy of each of its partners.

Article (31) : The partners' share in the partnership shall not be represented bynegotiable certificates. A partner shall not transfer the ownershipof his share in the partnership to a third party except with theconsent of all partners or in compliance with any conditionsstipulated in the partnership's memorandum of association.

A partner may, however, transfer to a third party the returns andprofits attributable to his share in the partnership; however, theagreement regarding such transfer shall have no effect exceptbetween the parties thereto.

Article (32) : A partner who has withdrawn from the partnership shall not beheld liable for the debts incurred by the partnership subsequentto the date of the registration of the partner's withdrawal, in theCommercial Register but he shall remain liable for thepartnership's debts incurred on the date of such registration_Any agreement to the contrary between the partners shall notaffect the rights of the partnership's auditors.

Article (33) : A partner shall not be required to pay any of the partnership'sdebts out of his own property unless the creditor has proventhat despite all reasonable efforts he has made to collect hisdebt from the partnership, the latter has failed to pay the debt.

CHAPTER TWOMANAGEMENT OF THE GENERAL PARTNERSHIP

Article (34) : All partners of a gel-Ieral partnership shall be de-amed managersof the partnership, nevertheless, the partnership'smemorandum of association or a subsequent agreementconcluded between all the partners, and registered in theCommercial Register may provide that management shall beentrusted to one or more managers who shall be naturalpersons and who may be partners or non-partners.

Ar'Ucle (35) : The managers of the partnership may perform all acts inrealization of the partnership's objectives unless their authorityis.limited by the company's memorandum of associatiOl'l or by asubsequent agreement concluded between all partners andregistered in the Commercial Register.

The managers shall not, however, perform the following actsunless they are expressly authorized to do so by thepartnership's memorandum of association or by a unanimousdecision taken by all partners:

A - Make donations except small and ordinary donationsrequired by business.

B - Sell all or a substantial part of the partnerships assets.

C - Mortgage or pledge the partnership's assets except tosecure the partnership's debts incurred in the ordinarycourse of the partnership's business.

D -Guarantee third parties' debts except the guarantees madein the ordinary course of business in order to fulfil thepartnership's aims.

Article (36) : If there are several managers, and in the absence of a contraryprovision in the partnership's memorandum of association, thepartnership's decisions shall be reached by the absolutemajority of the votes of all its managers, unless the decision isopposed by a manager or a partner on the ground that theproposed action is contradictory to the partnership'smemorandum of :1ssociation, in which event the matter may bereferred to the Authority for the Settlement of CommerCialDisputes to decide the objection.

DeciSions which may require amendment of the partnership'smemorandum of association shall be reached only by theunanimous vote of the partners.

The general partnership shall be bound by all acts perlormed byIts managers acting in its name and within the scope of theirauthOrity. A third party, in good faith, shall be entitled to assumethat any act done by a manager of the partnership in the causeof Its business IS Within the scope of such manager's authOrity,and IS consequently binding on the partnership unless thelimitation of the manager's authority is registered In theCommerCial Register.

Partners of a general partnership who are not managers shallbe precluded from management and they shall not act In thename of the partnership. However, such partners shal! beentitled to Inspect the partnership's books and records and theymay apply to the Authority for the Settlement of CommerCialDisputes for annulment of any decision taken by the partnershipcontrary to the law or the partnership's memorandum ofaSSOCiation Any agreement depriving any partner of the saidrights shall be null and VOid.

Article (39) : A manager of the partnership shall not be removed from officeexcept by a unani,mous decision taken by all the partners or, ifpartnership's memorandum of association so provides, by adecision of a majority exceeding half of all the partn~rs. If themanager is, at the same time, a partner, he shall not take partin voting on the decision which shall be made by all the partnersunanimously or by majority as the case may be. A member mayalso be removed from office by a decision passed by theAuthority for the Settlement of Commercial Dispute uponrequest of one of the partners if the said Authority finds alegitimate cause that justifies such removal.

CHAPTER THREEDISSOLUTION AND LIQUIDATION OF THE GENERAL

PARTNERSHIP

Article (40) : In addition to the provisions provided in chapter three of partone of this law, the following provisions shall apply to thedissolution and liquidation of the general partnership.

Article (41) : Unless the partnership's memorandum of association providesotherwise, the partnership shall be deemed dissolved upon thedeath, declaration of ineligibility or bankruptcy or withdrawal ofone of its partners. The remaining partners, however, maydecide unanimously to continue the partnership amongthemselves, provided such decision should be registered in theCommercial Register.

Article (42) : A partner whose withdrawal from the partnership causes thelalter's dissolution shall be liable to the other partners for thedamages caused by his withdrawal if it constitutes a breach ofthe partnership's memorandum of association. Withdrawal froma partnership established for an indefinite period shall not beconsidered a breach of the partnerShip's memorandum ofassociation.

Article (43) : Notwithstanding any agreement or provision in the partnership'smemorandum of association to the contrary, the Authority forthe Settlement of Commercial Disputes may, upon the request

of one of the partners, decide the dissolution of the partnershipbecause of the failure of one or more partners to fulfil theirobligations or for any other reason which the Authority deemsserious to such an extent that obligates the dissolution. Thepartners may also petition for the removal of a partner from thepartnership by the Authority for the Settlement of CommercialDispute's if such partner's acts may be considered sufficientreason for the dissolution of the partnership.

Article (44) : In the event the partnership is continued follOWing the death,declaralion of Ineligibility, bankruptcy or dismissal of a partner.such partner. or his heirs or his legal representatives. as thecase may be, shall be entitled to the value of such partner'sshare in the partnership assessed on the basis of a specialinventory list established as of the day of the event whichresulted In such partner's separation from the partnership Incase of dispuk on the value of such share, the assessment ofthe share shall be made, at the request of any Interested party.by the Authority for the Settlement of CommerCial Disputes onthe ground of a report by one or more experts to be appointed bythe Authority unless the parties agree on another way ofassessment The value of the share shall be paid to thebenefiCiarieS In cash or In kind. either In full or In Installments asmay be agreed, otherwise as may be decided by the Authority forthe Settlement of CommerCial Disputes. The beneficiaries shallhave no share In the subsequent revenues of the partnerShip

Article (45): After ItS dlssolulion the partnership shall be liqUidated pursuantto the law and the provISions of ItS memorandum of associationprOVided such provISions do not violate any legal provIsions ofmandatory nature.

All partners, including those who are not entitled to manage thepartnership, shall have the right 10 participate practically in thedecisions thaI affect the liquidation of the partnership

of one of the partners, decide the dissolution of the partnershipbecause of the failure of one or more partners to fulfil theirobligations or for any other reason which the Authority deemsserious to such an extent that obligates the dissolution. Thepartners may also petition for the removal of a partner from thepartnership by the Authority for the Settlement of CommercialDispute's if such partner's acts may be considered sufficientreason for the dissolution of the partnership.

Article (44) : In the event the partnership is continued following the death,declaration of Ineligibility, bankruptcy or dismissal of a partner,such partner, or his heirs or his legal representatives, as thecase may be, shall be entitled to the value of such partner'sshare In the partnership assessed on the basis of a specialinventory list established as of the day of the event whichresulted In such partner's separalion from the partnership Incase of dispuf.:' on the value of such share, the assessment ofthe share shall be made, at the request of any Interested party.by the AuthOrity for the Settlement of Commercial Disputes onthe ground of a report by one or more experts to be appointed bythe AuthOrity unless the parties agree on another way ofassessment The value of the share shall be paid to thebenefiCiaries In cash or In kind, either In full or In Installments asmay be agreed, otherwise as may be decided by the AuthOrity forthe Settlement of CommerCial Disputes The beneficiaries shallhave no share In the subsequent revenues of the partnerShip

Article (45) : After ItS diSSolution the partnership shall be liquidated pursuantto the law and the provisions of Its memorandum of aSSOCiationprOVided such provISions do not VJ~lalRany legal provISions ofmandatory nature.

All partners, including those who are not entitled to manage thepartnership, shall have the right to participate practically in thedecisions that affect the liquidation of the partnership

PART THREELIMITED PARTNERSHIPS

Article (46): The limited partnership is a commercial company whichcompnses two categories of partners :-

A - One or more general partners who shall be jointly andseverally liable for the limited partnership's debts to the fullextent of their property.

B -One or more limited partners whose liability for thepartnership's debts shall be limited to the amount of theircontribution to the partnership's capital provided suchamount has been stated in the limited partnership'smemorandum of association.

The limited partnership is subject to all provisions of part one ofthe law which are not inconsistent with the provisions ot this part.

The general partners shall register the limited partnership ·IntheCommercial Register pursuant to law

Article (47) : The limited partnership is also subject to all provisionsapplicable to general partnerships concerning its establishment,management dissolution and liquidation which are notinconsistent with the following provisions

Article (48) The name of the limited partnership company shall becomposed of any word and may Include the name of one ormore general partners provided that such name is notmisleading as to the aims of the company or the identity of itsmembers. The name of the company wherever it may appearshall be followed by the expression "Limited Partnership".

Article (49): A limited partner's liability shall be limited as long as he doesnot partcipate in the management of the partnerShip or act inthe name of the partnership, whether as ·an agent or otherwise.The limited partner who participate in the management of thepartnership or who acts in the name of the partnership shall beliable as a general partner for the obligations arising from hisacts and may be held responsible as a general partner for all orany of the partnership's other debts according to the importanceand frequency of his acts and according to the reliance of thirdparties In good faith on him on account of such acts.

A limited partner shall not be deemed to be participating in themanagement of the partnership for mere participation in theinternal management in the course of exercising the rightsprovided by law or the partnership's memorandum ofassociation, or for mere supervision he may exerCise over theacts of the managers of the partnership, or because he has giventhem advice or an opinion or matters relating to the partnership.

Limited partners shall not be deemed to carrying on commercialbusiness under the name of the partnership and shall not havethe status of merchants by reason of being limited partners. Thebankruptcy of a limited partnership shall result in the bankruptcyof its general partners only.

Article (50) : The death, declaration of ineligibility, bankruptcy, withdrawal ordismissal of a limited partner shall not result in the dissolution ofthe partnership unless the partnership's memorandum ofassociation so provides.

PART FOURJOINT VENTURES

The joint venture is a commercial company formed by two ormore juristic or natural persons and establishing legalrelationships between its members without affecting thirdparties. The joint venture shall not have a name of its own andits existence shall not be raised as a de1ence against claimsmade by third parties.

The joint vanture is not subject to registration or publication in theCommercial Register.

The contract establishing the joint venture shall define theventure's objects, the rights and obligations of partners andshall govern the distribution of profits and losses among themsubject to the provisions of part one of this law and any legalprovisions of obligatory nature.

The joint venture shall have no juristic personality and thirdparties shall have no legal connections except with the partneror partners of the venture with whom they have entered into acontractual relationship.

However, if the partners disclose the existence of the jOintventure to a third party who is thereby induced to enter into acontract with the joint venture or one or more of its partners,then the provisions governing the liability of general partnershipsand their general partner shall apply in respect to such contract.

The joint venture shall not issue negotiable or transferableshares, nor may it issue bonds.

PART FIVEJOINT STOCK COMPANIES

CHAPTER ONEESTABLISHMENT OF THE JOINT STOCK COMPANY

The jOint stock company is a commerCial company whosecapital is divided into equal negotiable shares pursuant to thelaw.

The liability of the shareholder shall be confined to the paymentof the value of the shares he subscribes and he shall not beresponsible for the debts of the company except within thelimits of the nominal value of the share he subscribes.

The company shall have an issued capital and the company'sarticles of association may, however, specify an authorizedcapital exceeding the Issued capital

The Joint stock company shall consist of, at least, three naturalor JuristiC persons Companies established by the governmentsolely or JOintlywith others, shall be exempt from this provIsion.

The name of the Joint stock company may conSist of any wordbut shall not bear the name of a natural person unless thepurpose of the company is to take advantage of a patentregistered under the name of such person provided the name ofcompany shall not be misleading as to its objects, Identity or theidentity of its partners. The name of tQe~Qr:npany shall, whereverIt appears, be followed by the words limited Omani JOint StockCompany ($.A.O.C) or General Omani Joint Stock Company(SAO.G).

If a violation of the provisions of the preceding paragraphmduces a third party in good faith into error as to the extent ofthe partners' liability, the persons responsible lor such violationshall be personally liable towards such third party for thedamages caused thereby.

The capital of the joint stock company that does not offer

their shares for public subscription, shall not be less than

500,000 (Five hundred Thousand) Omani Rials, and the capital

of the joint stock company that offers its shares for public

subscription shall not be less than two million Omani Rials.

The company's articles of associat(on specify the nominal value ofeach share shall not be exceeded RO 1/- Half of the nominalvalue of the issued shares, at least, must be paid upon subscrip-tion, provided that the full value of the shores is paid in full within amaximum period of three years from the dc.te of the foundation ofthe company

Contributions to the capital of the Joint stock company shall bein cash or In kind and shall not consist of services or labour ofany person.

The joint stock company shall not b~ established withoutauthorization from the Director General of Commerce togetherwith his approval of the memorandum and articles of associationof the company. Mixed companies shall be subject to theconditions provided iil Hle Foreign Business and Investment Law.

The Director General of Commerce shall decide theauthorization application within thirty days from tr.e date of thesubmission of the application together with the requireddocuments to the Ministry. If the application is rejected, or ifsuch penod lapses without a decision has been made. thenconcerned parties may appeal to the Minister of Commerce andIndustry whose decision in this respect shall be final.

lh.~~pplication for authorization to the Ministry of Commerceand Industry shall be signed by, at least, three promoters andshall be accompanied by a number of copies, to be specified bythe Ministry, of the company's articles of association andmemorandum of association signed by all promoters, and abank certificate asserting the payment of the part due of thevalue of the shares subscribed by the promoters. The Ministryshall have the right to amend the company's memorandum andarticles of association to agree with the provisions of this law.

Promoters of companies which offer their shares for publicsubscription shall subscribe neither less than 30% nor morethan 60% of the company's shares and offer the remainingshares for public subscription. No single promoter shall covermore than 20% of the capital neither in his name nor in thename of his under age children who are less than 18 years ofage, except when a company fully owned by Omanis IStransformed into a joint stock company provided it has alreadyissued three annual audited balance sheets. The promoters, Inthis case may maintain their shares therein even If such sharesexceed the percentage determined for each promoter. Shallalso be exempted from the percentage determined for eachpromoter. the companies fully owned by the government andholding companies.

In all cases. the share of the promoters shall not exceed 60~/o ofthe company's capital.

The founders shall invite the public to subscr'lbe for the sharesthey have not subscribed for within thirty days from the date ofthe company's establishment authorization.

The Capital Market Authority, when necessary. may approvethe extension of such period for a further period of thirty daysprovided that the subscription that takes place pursuant to suchinvitation shall be effected in accordance with the provisions ofArticles 64 and 65 of this law.

Invitation to the pl,lblic to subscribe for the shafes of a r:ompanyshall be announced in two daily newspapers, for at least twoconsecutive days and at least on_e'Y_eekprior to the commencementof subscription. The invitation- fo~';~bscription shall be governedby a prospectus to beprepared by virtue of the legal requirementsof the Capital Market Authority. and Pusuant to the Standardform prepared by the Authority .

. Subscription shall be effected through. at least. three nationalbanks licensed to operate in the Sultanate. The founders shallprovide such banks with sufficient copies of the prospectus andthe company's articles of association. During the subscriptionperiod. any person shall have the right to obtain a copy of each.

Subscription announcement shall be published in the newspa-pers af1er the prospectus has been authenticated by the CapitalMarket Authority. The announcement. af1er it has been signedby the founders. shall be submitted to the Capital Market Au-thority to attest it prior to its publication. The company shall.then . deposit a copy of the announcement together with copiesof the newspapers in which such announcement is publishedwith Commercial Registry and the Capital Market Authority.

The announcement shall. in any case. include the following in-formation:-

A -The name of the company. its principal place 0 business. itsobjectives and its duration

B - The date of the decision authorizing the establishment of thecompany

C - The Capital of the company, number of shares and theirnormlnal value.

D - Promoter's names. address and nationality of each of them. thenumber of share he has subscribed for, the norminavalueof such shares and the amounts he has paid.

E - A description of all contributions in kind. if any and thenames of those who made such contributions, theirvalue and the bases of their evaluation.

G - The number of shares offered, their norminal value, themethod of payment and issue expense. if any.

I - Any other information deemed necessary by the Capital Mar-ket Authority.

Subscription shall remain open for thirty days. renewable for anotherperiod not exceeding thirty days with the approval of the CapitalMarket Authority.

SUbSCription shall be made by virtue of document signed by thesubscriber indicating the number of shares subscribed for. theamount paid of the shares' value. the subscriber's approval of

the company's articles of association, the address he prefers toreceive notifications at, his nationality and domicile as well asany other information he may be required to give.

The amounts specified in the subscription document shall bedeposited in a special account to be opened in the name of thecompany followed by the expression "Under Incorporation" if")one of the desigr'lated banks. The amounts deposited shall notbe used before the constitutive meeting has approvedincorporation expenses.

The bank shall keep the funds received from subscribers andshall, if all subscriptions have been accepted, release suchfunds to the Board of Directors or its representative after theincorporation of the company. It the constitutive meeting rejectssome of the subscriptions on the ground that they are contraryto subscription requirements, the funds paid for suchsubscriptions shall be refunded immediately to the subscriberswhose subscriptions are rejected. In case the incorporation 01

the company is abandoned or postponed without a legitimatereason, the bank shall refund the funds paid by subscribers tothem. In case a dispute arises on the incorporation 01 thecompany, the bank shall then release the funds paid to theperson as may be appointed by the Authority for the Settlementof Commercial Disputes to keep such funds till the dispute issettled.

In the event of the reduction of subscription pursuant of Article 65of this law, the excess funds paid by subscribers shall berefunded to them and the reduced amounts shall be paid to theBoard of Directors ol'lhe person they may appoint. II the issueis oversubscribed and shares have been allocated among thesubscribers in accordance with Article 65, the excess amountsshall be refunded to the subscribers.

Article (65) : If the shares oHered for public subscription were not fullysubscribed within the specified subscription period, thepromoters shall either abandon the incorporation of thecompany or reduce the its capital. However, as an exceptionto Article 61 herein, the promotors may, upon the approval ofthe Director General of Commerce, cover the un-subscribedshares, prior to the holding of the constituent assembly. Thepromoters may also allow banks and securities brokeragecompanies to cover these shares. They shall re-offer the shares

for public subscription piJrsuant to the terms and conditions tobe issued by a decision of the Minister of Commerce andIndustry. If the shares were oversubscribed, the shares shall beallocated among the subscribers in proporation to the sharessubscribed by each of them, by rounding off to the shares to thenearest round figure.

The Director General of Commerce may decide to distribute aminimum number of shares equally to all subscribers taking IntoconSideration small subscribers, and then the remaining sharesshall be distributed In the manner prOVided In the prevIousparagraph

The Director Ger,eral of Commerce may, at hiS own discretion,approve an increase In the capital of the company to the limitreached by subscriptions or any part thereof If the promoters sorequested In the event of a reduction of the capital of thecompany, an announcement related to such reduction shall beplaced in two daily newspapers and the announcement shall benotified to each subscriber immediately at nlS address el\her byregistered mail or by hand delivery against signature to Informhim that he may withdraw his subscription Within fifteen daysfrom the date of the publication of the announcement of thecapital reductton, otherwise hiS SubSCrIption shall be deemedfinal.

Promoters who contribute in kind shall describe the contributedproperty in the subscription document when an Invitation ISaddressed to the public to subsCribe for the shares of acompany.

The evaluation of the contribution in kind shall be subject to theassessmeni of one or more experts appointed by the Ministry ofCommerce and Industry upon promoter's request and pursuantto the regulations and arrangements to be issued by a decisionof the Minister of Commerce and Indu$try.

The expert shall submit his report within thirty days from thedate on which he's assigned to the task. However, the DirectorGeneral of Commerce may, by a justified request of the expert,grant him a further period of time.

A copy of the report shall be sent to subscnbers and thepromoters shall deposit enough copies of such report at thecompany's head office. The report shall also be published Intwo local daily Arabic newspapers prior to the constitutivemeeting by, at least, twenty days. Every concerned party mayperuse the report

If the assessment of the expert is less than that of the promoter,then the person who has contnbu:ed the share in kind shall berequired either to pay the difference in cash or provide anadditional share in kind for the value of the balance, subject tothe consent of the remaining promoters and the verification ofthe accuracy of its evaluation shall be carried out according tothe preceding way. Nevertheless, the person who hascontributed the share in kind may withdraw it altogether and paythe assessed value of such share in cash subject to theapproval of the other promoters.

If the constitutive meeting has decided to reject the share inkind or if such share has been withdrawn by its owner, it maybe subscribed for in cash pursuant to the terms and conditionsof cash subscription, or the capital may be reduced by theamount equivalent to the reduction, provided that the capitalshall not be less than the limit provided in this law and subjectto the approval of the Director Gen€·ral of Commerce of thereduction.

Decisions related to the valuation of the share in kind shall bemade by majority votes of the subscribers of cash sharesprovided that such majority owns, at least, two-third of tne saidshares, The-k-ind shareholders shall hav·~ no right to vote evenif they hold cash shares,

Contributors of shares in kind shall be bound to transfer thetitles of the evaluated shares in kind to the name of thecampany immediately after the constitutive meeting's approvalof the experts' report, and the auditors of the company shallmake sure of such transfer.

Artl,cle (67) : The promoters shall, within thirty days after the expiry date ofsubscription, summon the subscribers to the ConstitutiveGeneral Meeting.

The Constitutive General Meeting shall convene pursuant to the

provisions of this law and the provIsIons of the company'sarticles of associations which govern the extraordinary generalmeetings.

The promoters shall present to the Constitutive GeneralMeeting a report, toghter with supporting documents, includingsufficient information pn all the actions taken, the expensespaid for the incorporation of the company an all commitmentscontracted by the promoters on behalf of the company underincorporation. The Constitutive General Meeting may ratify all orpart of such cor.tracted actions or commitments.

The promoters shall be jointly and severally responsible for theexpenses paid and commitments contracted on behalf of thecompany under incorporation and which have not been ratifiedby the constitutive mee~ing.

Tine constitutive meeting shall elect the members of the firstBoard of Directors and appoint the first auditiors in accordancewith the provisions of the law and the company's articles ofassociation. The constitutive meeting shall also make sure anddeclare whether the conditions required for the incorporation ofthe company have been complied with.

The Constitutive General Meeting shall have the right to amendthe company's Articles of Association. However, suchamendments shall be effective only after the Director General ofCommerce approves that.

Article (68) : The Board of Directors shall adopt the internal regulations thatgovern the company's governance, its business and its personnelaffairs, within one year from the date of registering the companyat the Commercial Registry or from the date of enforcing this

law, in respect of the companiesexisting at the time of its enforcement,

pursuant to the controls issued by the Capital Market Authority.

- ~:-Aiticle (69) The company's first Board of Directors shall register thecompany with the Commercial Register within one month fromthe date of the Constitutive General Meeting. The companyshall finally be constituted on completion of its registration in theCommercial Register and the members of the Board ofDirectors shall be jointly and severally responsible for thedamages arising from non-registration of the company.

Article (70) : The company shall make its articles of association available tothe public at its principal place of business for inspection, andany person shall be entitled to obtain a duplicate thereof againstreasonable fee.

Article (71) : If any fault has occurred in the procedures of establishing a Jointstock company, any interested party may, within five years fromthe company's establishment, warn the company of thenecessity of amending such fault. Should the company fail,within one month from the warning to take the necessaryactions to make the required amendment, such interested partymay claim the dissolution of the company by the Authority forthe Settlement of Commercial Disputes. The promoters orfounders, the members of the first Board of Directors and thefIrst auditors shall be Jointly and severally responsible for thedamages arising from the dissolution of the company and whichare attributable to their illegal acts or their negligence or theiromission In establishing the company.

CHAPTER TWOSHARES OF STOCK AND BONDS

Article (72) : The joint stock company shall not issue "Promoters' Shares","bonds de jouissance" or any other securities that grant thepromoters or any other person a right to a share in thecompany's earnings or profits without having made anappropriate advance contribution to the capital.

Article (73) Shares of a joint stock company shall be represented bynegotiable certificates They shall be nominal shares and eachone shall bear a special number.

Article (74) The Shares of the Joint Stock Company shall have the samenominal value, and a share shall neither be divided nor shall itbe owned by more than one person except when suchownership is by inheritance provided that the heirs arerepresented by the 'person whose name comes first in theregister and the owners of the share shall be responsibleseverally and jointly for the liabilities arising from suchownersh~ However, the transfer of the share requiresendorsement by all joint owners.

All shares of a joint stock company shall enjoy equal andinherent rights in the ownership thereof, namely, the right toreceive dividends declared by the general meeting, thepreferential right of subscribing for new shares, the right toshare in the distribution of the company's assets on liquidation,the right to transfer shares in pursuance of the law, the right toview the company's balance sheet, the profit and loss accountand the shareholder registers, the right to be notified of themeetings of the general meeting and to participate and vote insuch meetings personally or by proxy, the right to apply forannulment of any decision made by the general meeting or theBoard of Directors if such decision is contrary to the law, or thecompany's articles of association or the company's internalregulations, and the right to sue directors and the auditors ofthe company on behalf of the share hoiders or on behalf of thecompany pursuant to Article 110.

Article (75)(1) : The articles of association of a company may provide someprivileges for certain types of shares in voting or profits or theproceeds of liquidation, provided that shares of the same typesshall be equal in rights. privileges or restrictions Rights.privileges and restrictions related to a type of shares shall notbe amended except by a decision made by an ExtraordinaryGeneral Meeting and the approval of two-third of the holders ofthe relevant type of shares.

Companies whose articles of association provides theamortization of their shares prior to the expiry of the company'sterm because of the connection of the company's activity to acommitment to utilize a natural resource or a public utility whichis granted to the company for a limited period of time, or to anysort of utilization that may be exhausted by use or cease toexist after a certain period of time, may issue "actions dejouissance ((1))" concessionary shares.

However. the company's articles of association shall, onestablishment, include the rules and conditions of thepreferential and concessionary shares. The capital shall not beincreased by preterential shares unless the articles ofassociation originally permits so and after the approval of anExtraordinary General Meeting.

The executive regulations shall state the controls, conditionsand circumstances related to the issue of the preferential andconcessionary shares.

Article (76) : Notwithstanding the provisions of the preceding Article, the_E!9IDPany'sarticles of association may provide the division of

the capital of the company into shares of different categories inorder to give the shareholders of each category the right toelect, by majority of thtm- votes, a certain member of proportionof the members of the Board of Directors.

If the company has different categories of shares, then everyincrease in the capital shall lead to a proportionate increase inthe number of the shares of each category unless a specialmeeting of each category and an Extraordinary GeneralMeeting of all the shareholders approve an unequal issue or thecreation of a new category of shares. No decision made by the

general meeting shall affect the rights of any category unlesssuch deciSion is approved by such class in a special meetingThe special meetings of each class shall be held by themembers of the concerned class in accordance with the rulesthat govern Extraordinary General Meetings. Shareholders of acertain category shall have the preferential right of subscribingonly for the new shares of the same category.

Transfer of negotiable shares that are sold or bought on the Securities

Market, in accordance with the provisions of the Capital Market

Law. Approval of the board of directors of the relevant joint-stock

company shall not be a condition for that.

The promoters shall not withdraw from the company or dispose

off their shares before the company has published two balance

sheets for two consecutive financial years, starting the date of

the actual production or the carrying the activity as the case

may be. Exempted from this shall be the cases of relinquishment

of the shares owned by the Government or assignment of the

shares among theshareholders themselves and cases of inheritance.

The period during which the promoters are not allowed to withdraw

or dispose off their shares, can be extended for one more year

by a decision of the Minister of Commerce and Industry, upon

the request of the Capital Market Authority. However, this shall

not prejudice the right of the promoters to make second grade

pledge on those shares.

Shares shall not be issued at a price less than their nominalvalue. An addititional amount within 2% of the nominal value ofshare may be collected for each share as issue fees. If theshares are issued at a value higher than the nominal value. theexcess amount, after backing issue expenses, shall be addedeither to the legal reserve or th a special reserve to beestablished as provied under Article (106) of the law.

Article (79) : The shares whose value is not fully paid shall be representedby a nominal provisional certificate which bears an expressionindicating that the holder of such certificate shall pay theamount unpaid of its value when it becomes due and payable.Upon the payment of the share value in full, the holder of suchshare shall be entitled to a final certificate for the said share assoon as he returns the provisional certificate to the company.

Article (80) Amounts unpaid of shares value fall due and payable asspecified in the subscription contract; and if a shareholder failsto pay installment in time, the company shall have the right tootter his shares in the Securities Market after sen~ing a noticeto such shareholder at his domicile registered in theshareholders' register, allowing him at least fourteen days fromthe date the notice is sent to him to make the payment. Thecompany shall have priority over all creditors to recover fromthe proceeds of sale, all amounts unpaid of the shares value inaddition to Interest and expenses and the balance shall be paidto the shareholder. Should the sale proceeds be insufficient tocover the shareholder's arrears, the company shall then claimthe payment of the balance from the shareholder's property.

Article (81) Transfer of shares shall come into effect by confirming it in theregister of the Securities Market. The transfer of ownership shallalso be entered in the shareholders' register in the company andwhich shall include the shareholder's register in the companyand which shall include the shareholder's name his nationality,domicile and the number of shares he holds and their numbers.The company shall not consider any person as owner of itsshares unless his ownership is registered in the shareholder'sregister. The company shalr~;gister transfer of ownership freeof charge and within three days from its receipt of the requireddocuments and it shall be impermissible for the company toreceive any charges against the issue of ownership certificates.

Article (82) The authorized capital may be increased by a resolutionadopted by an Extraordinary General Meeting of the companyand, the issued capital of the company may be increased, by aresolution passed by the Board of Directors. to within the limitsof the authorized capital. provided that the issued capital shall

actually be increased within the five-year period that follows theissue of the resolution authorizing the increase otherwise suchincrease shall be null and void. This period shall be calculated,with regard to every increase decided or approved prior to thedate of the application of the provisions of the law, as of this date.By a resolution passed by the extra-ordinary general meeting,some of the company's capital increase shares may be allocatedto its own employees, within a maximum limit of 5% of the issuedcapital. The decision shall specify the terms and conditions oftrading and relinquishing of such shares and the rights of theemployees, during the period of their service and at the time oftheir termination.By a resolution adopted by the extra-ordinary general meeting,capital increase shares may be allocated to one or more specificpersons, pursuant to the controls issued by the Capital MarketAuthority.

In the event of the capital increase shares being oHered for publicsubscription, each shareholder shall have the preferntial right tosubscribe a number of the new shares in proportion to the numberof shares he/she owns

A written notice shall be sent to each shareholder at his/herdomicile registered in the shareholders' register informing him!her of such preferential right, enclosing a copy of the prospectusapproved by the Capital Market Authority. This notification shallbe published at least in two daily newspapers for two consecutivedays after it has been approved by the concerned entity. Thenotification shall also specify the period during which this rightcan be excercised, provided that such period shall not be lessthan 15 days from the date of the publication. The shareholder,pursuant to the procedures and provisions issued by the Ministerof CQA!JrtE1rCeand Industry, may relinquish the above referredright.

Shares not subscribed for by the present shareholders withinthe specified period shall be re-offered for public subscription asper the rules prescribed for subscribing. for the capital of joint-srock company under formation. These procedures shall be takenby the board of directors of the company. Alternatively, theboard shall have the right to reduce the capital increase equivalent.to the value of the unsubscribed shares.

The Extraordinary General Meeting may resolve the reduction ofthe company's capital if such capital exceeds the need of thecompany of if the company has sustained losses. Neverthelessthe capital shall not be reduced to below the minimum specifiedin Article (58) of the law.

The resolution to reduce the capital of the company must bepublished in, at least two daily newspapers and for twoconsecutive issues, and all the debtos of the company must benotified in writing to submit their objections.

Such capital reduction shall not be valid except alter the lapseof the sixty . day period specified above and after. all theobjecting debtors have been satisfied either by paying theirdebts or by giving them appropriate guarantees.

Article (85) : The joint stock company shall not acquire its own shares exceptpursuant to a resolution reducing its capital or . if such sharesare part other assets of a project which is acquired by thecompany with all its assets and liabilities.

As an exception to the foregoing. it shall be allowed. by aresoloution of the extra-ordinary general meeting. to decide onthe company purchasing some of its own shares not exceeding10% of its issueo capital, pursuant to the controls prescribed by itand after the approval of the Capital Market Authority.

Without prejudice to the provisions of the Capital Market Law,the joint-stockcompanycan, by a resolutionadoptedby the ex1ra-ordinarygeneral meeting, issue through public subscription tu one ormore specific persons, negotiable bonds against the amounts itborrows. as per the cc')trols issued by a decision from the Ministerof Commerce and Indus1fy-r"

All bonds of the same issues shall have the same nominal valueand shall have the same entitlement. The bond shall not be divisibleand the value of the bonds shall be fully paid at the time of subscription.The ownership of the bond shall not be transferred to more thanone person except in the case of inheritance, ""hereby the heirsshall be represented by one person chosen from among themand his or her name shall be recorded in the register preparedfrom that and in this case the bond shall not be transferred withoutthe approval of ail the owners.

The bonds shall be nominal and shall give their holder the rightto claim an interest 01 specified rate payable at certain terms.and the right to refund the nominal value 01 his bonds from thecompany's property.

The compal'1y shall not advance or postpone the maturity dateof the bonds it has issued or change the conditions of suchbonds without the approval 01 a general meeting of thebondholders.

The company shall not issue lottery bonds or bonds whosematurity date is subject to luture events or reward bonds.

The conditions 01 issue may include the convertibility of bondsissued into shares after the lapse of two years, at least, fromthe date of their issue. The bondholder shall have the option toconvert his bonds into shares or receive the nominal valuethereto.

Article (88) : A joint stock company shall not issue bonds unless ttlefollowing conditions are fulfilled:

A - The subscribed share capital of the company has been lullypaid

B - The aggregate principal amount of all outstanding bonds ofthe company plus the aggregate principal amount of thebonds proposed to be issued does not exceed the amount01 the company's capital; however, this condition shall notapply to loans obtained by banks through issue 01 bonds.

The company's articles of association shall not prOhibit theissue of bonds and an ordinary general meeting shall dulyauthorize a specific issue

Subscription lor bonds shall be effected through, at least, threenational ba0ks licensed to operate in Oman Invitation lorsubscription shall take place in the same manner adopted forinvitation lor subscription for shares. The prospectus shall besigned by all members 01 the Board 01 Directors who shall beheld responsible lor the validity thereol, and it shall include:

A - The resolution of the general meeting authorizing the bondissue and the date thereof.

B - The sUbscription opening and closing dates as well as theplace and conditions of subscription.

C - The number of bonds offered and their nominal value.interest rate and the maturity date thereof.

D - Terms and conditions of the bonds and any security orguarantee of payment

E - The total nominal value of all bonds previously issued bythe company. the guarantee or security furnished thereforand the total nominal value of the bonds. if any. remainingoutstanding at the time of the issue of the new bonds.

F - The amount of the company's capital and the value of anycontributions in kind made within the last five years.

G - Reasonably adequate information about the pastoperations of the company and its financial positionsincluding the latest approved balance sheet and loss andprofit account.

H - The method of using the issue proceeds

The foregoing information shall be included in alladvertisements and publications pertaining to the loan.and the information provided in A. B. C & 0 above shall beindicated in the bonds themselves. with reference to thenumber and date of the OHicial Gazette in which theprospectus is published.

If the foregoing provisions have not been complied with. or if theissue has been abandoned, or if the issue has been delayedwithout a legitim~le~i'eason the subscribers for the bonds maycancel their subscnptions and refund the amount they have paid.

The rules provided with regard to subscription for shares andtheir issue shall apply to subscription for bonds and their issueby joint stock companies.

Article (90) : The Board of Directors shall resort to the registration of theissue in the Commercial Register after the sale of bonds hasbeen completed.

The provisions of Article (77) of the law shall apply to theregistration. negotiability and transfer bonds ownership.