Oman’s Financial Services Authority outlines its Capital Market Incentives Programme

Oman’s capital market regulator, the Financial Services Authority (FSA), has outlined reforms and incentives through its Capital Market Incentives Programme (CMIP) to support economic development and drive investment into the Sultanate.

The five-year CMIP comprises three paths to facilitate the establishment of new public joint-stock companies through new and existing family businesses, the creation of a “Promising Companies Market” on the Muscat Stock Exchange (MSX), and encouraging the transformation of Limited Liability Companies (LLCs) into closed joint stock companies.

The reforms and incentives announced by the FSA are significant. They will enhance the MSX’s profile and its ability to attract companies to list and raise capital.

Impact on the MSX

Under the reforms, some significant drivers will impact listed companies and companies seeking to list, including:
• The Ministry of Finance has proposed income tax incentives, and the Tax Authority introduced payment of income tax in instalments for a period not exceeding six months from the due tax date.
• Tendering authorities will award preference to listed companies, which will be relevant to companies regularly involved in government procurement.
• Listed companies will utilise the financial incentives to seek out investment regionally and internationally. International investors and rating agencies will look favourably at the reforms.

The Promising Companies Market

• The Promising Companies Market will provide opportunities to companies that have outgrown their LLC status and to family-owned entities whereby the families seek further investment or a complete exit. SMEs now have a foundation for access to investment and funding they may not have previously possessed.
• In time, this market could also act as a springboard to the primary market, provided enough companies are available to be listed on the Promising Companies Market, and market liquidity is maintained at a reasonable level.

The reforms and incentives are a welcome addition to Oman’s capital markets. They will benefit most sectors, particularly those not subject to supervision by an industry regulator, such as family-owned businesses in mining, construction, technology, and real estate.

We expect a measured response by the market to the introduction of specific regulations and there will need to be regular interaction between the relevant bodies and the market to encourage the utilisation of the incentives.