Minority Partner Rights in Omani Companies: How to Protect Yourself

Partners with small stakes often find themselves shut out: not invited to meetings, never shown the accounts, shares changing hands around them without their knowledge. Yet the Commercial Companies Law issued by Royal Decree 18/2019 gives every partner in a limited liability company a set of mandatory rights the majority cannot take away. Said Ibrahim Ambusaidi Advocates (SIA), a law firm in Muscat, sets out the most important of them and how to use them.

What is your right to inspect company documents?

A partner may inspect the partners register under Article 247 of the Commercial Companies Law, and the Law guarantees every non-manager partner the right to request information about the company’s business and to examine its books, records and accounts personally or through an expert. Article 268 requires the financial documents to be deposited at the company’s head office at least fourteen days before the partners assembly for every partner to review, entitles each partner to inspect the statements of the previous ten years, and voids any contrary provision in the constitutive documents or any later agreement.

How do you force management to convene the partners assembly?

The partners assembly must meet at least once a year within one hundred and eighty days of the financial year end under Article 281. Article 282 allows one or more partners holding at least one fifth of the capital to require the assembly to be convened at any time. The notice must reach every partner at least fifteen days before the meeting and state the agenda, time and place under Article 284, and the assembly may not consider matters outside the agenda save exceptionally under Article 285. Every partner may attend and has one vote per share under Article 286.

How does pre-emption protect you when shares are sold?

A partner wishing to transfer shares to a non-partner must notify the company’s manager in writing, stating the shares, the proposed transferee and the terms, under Article 249, and the manager must immediately inform every partner so they can exercise their priority right to buy on the same terms under Article 250. No stranger enters the company before the shares are first offered to you. Pre-emption does not apply to shares passing by inheritance or will, under Article 253. In all cases a transfer is only effective against the company and third parties from the date of its registration, under Article 248.

What is your last resort when the dispute hardens?

If the company reaches deadlock, Article 40 of the Law allows interested parties to apply for dissolution by court judgment, and lists grounds on which the company dissolves by operation of law, including ceasing activity for more than two years and losing its capital. Before that, partners have lighter tools: removing the manager by resolution of the partners assembly or through the court, and liability claims against managers for mismanagement.

Key facts

• Every partner may inspect the partners register and the company’s books and accounts, and no agreement can remove that right.
• Financial documents must be available at the head office at least fourteen days before the assembly, with a ten-year look-back right, under Article 268.
• Holders of one fifth of the capital can require the partners assembly to be convened at any time, under Article 282.
• Assembly notice must go out at least fifteen days ahead with a defined agenda, under Article 284.
• Transfers of shares to non-partners must pass through the partners’ pre-emption mechanism under Articles 249 and following.
• Judicial dissolution of the company is available where its grounds exist, under Article 40.

When to involve a lawyer

Involve a lawyer if you are denied access to the company’s accounts, if an assembly was held without notice to you or outside its agenda, if shares were sold without being offered to you, if the manager or majority partner is diverting company funds or blocking dividends, or if you want an orderly exit from a deadlocked company.

At Said Ibrahim Ambusaidi Advocates we represent partners in corporate disputes, from inspection claims and challenges to assembly resolutions to manager liability actions and dissolution, before the courts across Oman. The first consultation is free by phone or WhatsApp on +968 9706 3030. We are based in Al Khoudh, Seeb, Muscat, and work Sunday to Thursday, 9:00 to 13:00 and 14:00 to 17:00, in Arabic and English.

This article is general legal information, not legal advice.