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A recent decision (KH/5/2016, May 25, 2016) of Oman’s Capital Market Authority (CMA) amending the executive regulations of the Capital Market Law (Royal Decree 80/1998) introduced key changes restructuring the markets and significantly increasing capital thresholds for listing on the Regular markets. Following the decision, only companies with paid-up capital of OMR 5 million (increased from OMR 2 million) will be listed on the Muscat Securities Market’s (MSM) Regular market.

Other changes raise the minimum shareholder/unitholder equity threshold from 100% of the paid-up capital to 120%. Several new requirements are that the traded value should be no less than 10% of the paid capital throughout the year, and that the company has issued financial statements for two successive years.

The structural changes introduced to the MSM by the market regulator, limit listing on the Third Market to closed joint stock companies and private investment funds the units of which are offered via private placement. Joint stock companies and investment funds whose shareholders’ equity is no less than 50% of paid–up capital are excluded from listing on the Parallel and Third Markets. In addition, two new specialised markets have been created within the MSM; i) the Continuity Market, reserved for public joint stock companies and investment funds which have suffered a significant (being 25%) capital erosion or which have resolved to be dissolved, liquidated or have their legal form converted; and (ii) the Pre-emptive Rights Market.

These changes, along with a new monthly capital sufficiency reporting requirement for all listed companies (previously quarterly), are indicative of the CMA’s determination to maintain and monitor the financial health of the markets at a time of tightening liquidity and negative market conditions. The restructuring of the markets and introduction of two new markets brings a new level of sophistication to the MSM and aims to stimulate trading by catering to the needs of a broader more diverse base of investors.

The decision takes into account the enactment of the new Sukuk regulation by incorporating a specific provision allowing sukuk to be traded on the MSM’s Bonds Market, which has been renamed the Bonds and Sukuk Market.

For more information on Oman’s capital markets, contact Mansoor Malik or Ardeshir Patel.