Enhancing UBO transparency in Oman: A regulatory approach to ensuring compliance and accountability

The identification of ultimate beneficial owners (“UBOs”) has become a key priority for governments and institutions worldwide. It is well established that organized crime often conceals itself through intricate ownership structures, obscuring the identities of UBOs, who may be criminals or sanctioned individuals. Allowing UBOs to remain anonymous facilitates illegal activities such as tax evasion, corruption and money laundering, often placing these activities beyond the reach of law enforcement agencies.

In line with international efforts, the Sultanate of Oman has introduced significant regulatory measures to address this issue. Ministerial Decision No. 424/2023 on Issuing the Regulations for Organizing the Procedures for Identifying the Ultimate Beneficial Owner (the “Regulations”) came into effect on 7 August 2023. These Regulations aim to enhance transparency and accountability within commercial companies by mandating the identification and documentation of UBOs.

A UBO is defined as an individual who exercises ultimate effective control over a business, whether directly or indirectly, including those on whose behalf transactions are conducted. This also extends to individuals who exercise ownership or control through a series of intermediary companies.

Key obligations for Omani companies under the Regulations:

1. UBO Register: All companies incorporated in Oman, except public joint-stock companies, are required to maintain a UBO register. This register should contain personal details such as the name, date of birth, nationality, place of residence and address of UBOs including shareholders owning twenty-five percent (25%) or more of the company's shares. If a legal entity holds 25% or more of the shares, both the details of that legal entity and the UBOs of that entity (if any) must be set out in the register. The Capital Market Authority has provided guidance on identifying UBOs in different scenarios and calculating ownership percentage in complex structures.
   
   The UBO register must be preserved for at least ten years from the date of registration, or from the date of dissolution or liquidation of the company, depending on the circumstances. If no UBO exists, the company’s highest administrative officer will be deemed the UBO for regulatory purposes.
    
2. Data Maintenance and Updates: Companies are required to update the UBO register within five working days of any changes to ensure the information remains accurate.
    
3. Shareholders Register: The Regulations also mandate each company to maintain a separate shareholders register that includes detailed information about each shareholder and their holdings including their name, nationality, place of residence, address, age, and the number of shares they own. Any changes in the information recorded in the shareholders register must be recorded within five working days.
    
4. Coordination with Authorities: Companies must designate a natural person residing in the Sultanate of Oman to liaise with the Ministry of Commerce, Industry and Investment Promotion (the “Ministry”) and relevant authorities and to provide UBO data upon request within three working days. In all cases, companies shall provide the Department of Supervision of Commercial Establishments in the Ministry with the name, place of residence and address of the person who shall coordinate with the Ministry.
    
5. Penalties: Strict penalties, ranging from warnings and fines (up to Omani Rials 1,000) to the suspension or deletion of business activities, may be imposed for non-compliance with these Regulations.