New Corporate Governance Requirements for Closed Joint Stock Companies in Oman

3 min 21 sec

Oman has raised the bar of corporate governance for closed joint stock companies (“SAOCs”) with Ministerial Decision no. 5 of 2025, issued by the Ministry of Commerce, Industry and Investment Promotion (“MOCIIP”) and effective on 14 January 2025 (“Decision”). The decision rolls out a set of corporate governance principles designed to align the management standards of closed joint stock companies with global best practice.

The Decision prioritises robust leadership, clear accountability, and enhanced transparency as core values which underpin the SAOC principles.  SAOCs are required to amend their articles of association and optimize internal practices to comply with the Decision by 14 January 2026.

Key areas of importance for those who own or manage SAOCs are as follows:

The Board of Directors

Qualifications

The Decision set clear criteria which directors of the board must meet in terms of competence, experience, skills and qualifications. In particular, directors must have qualifications which are aligned with the nature of the entity’s commercial activity, be proactive in contributing to management, strategic vision and conflict resolution, and have an understanding of management trends and crisis management protocols.

Emphasis is placed on the requirement of directors to remain neutral and free of conflicts of interest. Specifically, directors are required to act with honesty, fairness and independence, recognise that their duties are owed to the company and its shareholders and not solely to the company or body nominating them.

Responsibilities

Directors are also now subject to a more thorough and rigorous mandate of responsibility which includes developing actionable performance indicators, developing and continuously formulating strategy, overseeing the policy for disclosing data and corporate governance-related issues, and thoroughly overseeing the work and performance of the executive management.

Composition

At least one third of the board must be composed of non-executive members, with the chairman being distinct from the chief executive officer and with independent members required for boards exceeding 7 members, companies with assets valued over OMR 5 million or companies with cover 50 shareholders. Such members are subject to specific criteria before qualifying as independent to safeguard objectivity and integrity of the board.

Meetings

The Decision acknowledges the shift towards technology in conducting business and allows directors to conduct business through virtual means whilst highlighting the requirements of clear communication, participation and recordkeeping.

Key performance indicators

The Decision highlights the oversight function of the board which is required to implement mechanisms to monitor the performance of board members, its committees, the executive management and overall company operations. The board and executive management will be monitored in their adherence to professional conduct standards and the level of involvement they demonstrate at meetings of the board or management.

Executive Management

The executive management, which had previously been operating on an ad-hoc basis, now have a clear mandate and responsibilities under the Decision. These responsibilities include the development of strategic plans for the company, advising the board on policy and company affairs and all matters within the remit of day-to-day management.

Transparency and reporting

As a step up in reporting discipline, companies must prepare and submit semi-annual unaudited financial statements and annual audited statements promptly after board approval.

Related party transactions

The audit and risk management committee has been tasked with closely monitoring related party transactions and the disclosure rules for related party transactions have been strengthened to be in line with the IFRS and IAS.

Corporate social responsibility

The Decision has established CSR responsibilities as part of law, whereby each company must develop an annual CSR plan in line with global best practices and government policies. Companies must also monitor competitors and other companies within the same industry to diversify CSR initiatives and refrain from duplication of CSR efforts.

The Decision marks a structural shift in Oman’s corporate landscape. For SAOCs, which were traditionally less regulated than their publicly listed counterparts, governance is no longer optional. Companies must now implement formal mechanisms for oversight, risk management, equality, financial transparency and board accountability. These changes aim to create higher trust in SAOCs and send a clear message that proper governance is no longer a guideline, it is law.