Al Busaidy Mansoor Jamal & Co.

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Capital Markets

IFN Islamic Finance Forum returns to Muscat

Filed under AMJ News, Capital Markets, Central Bank of Oman, Islamic Banking and Finance

AMJ is partnering with the IFN for this major event in the Islamic finance sector calendar in Muscat on March 7, 2017.

With keynote addresses by H.E Abdullah Al-Salmi, Executive President of the Capital Market Authority and H.E Hamood bin Sangour Al Zadjali, Executive President of the Central Bank of Oman, the Forum will provide an opportunity for industry players to gain insight into Oman’s Shariah-compliant capital raising and investment space as well as to network with other executives and leaders from government, industry and institutions.

This 2017 Forum builds on the success of the inaugural seminar last year which brought together more than 120 senior industry players from across the GCC with 26 domestic and international speakers. It will include an audience with the regulators and expert panel discussions on legislative and regulatory developments in the Islamic finance space as well as the outlook and prospects for Oman’s fast fund management industry, more sukuk issuances and cross border deals

For more information, contact Bernadette Bhacker-Millard

No extension of listing deadline for Oman’s insurers

Filed under Capital Markets, Insurance

Oman CMA

Oman’s capital market and insurance regulator, the Capital Market Authority (CMA), has ruled out any extension to the three-year window given for Omani insurers to comply with regulations issued in August 2014. Royal Decree 39/2014 introduces an amendment to Oman’s Insurance Law which requires Omani insurers to double their capital to OMR10 million and list on the Muscat Securities Market by the end of July 2017.

Executive President of the CMA, H.E Abdullah al Salmi, speaking on the sidelines of the 11th Muscat Securities Market Forum in October, put an end to speculation that he might consider extending the mandatory listing deadline due to the dampening effect adverse market conditions have had on IPO plans in 2016. H.E al Salmi reiterated that the three-year grace period given for insurers to comply with the new rules was adequate and that it will always be difficult to predict the right time to go public as market conditions evolve continuously.

The new rules are expected to boost the insurance sector’s access to capital as well as to increase transparency via the financial reporting rules in place for publicly-listed companies. They are also aligned with the regulator’s aim to increase investment opportunities for individuals and small retail investors.

Oman’s New Code of Corporate Governance takes effect

Filed under Capital Markets

Oman corporate governance code

On July 21, 2016, Oman’s Code of Corporate Governance for Publicly Listed Companies came into force in Oman. The New Code (issued by CMA Circular E/4/2015) replaced the previous code issued in 2002 and is legally binding on companies with shares listed for public trading on the Muscat Securities Market in accordance with Article 50(8) of the Capital Market Law (Royal Decree 80/98).

The New Code is presented in a novel format of 14 high-level principles of good corporate governance each underpinned by detailed terms for attainment. While primary responsibility for ensuring compliance with the New Code rests with the boards of directors of public companies, executive management and external auditors should note that they also have significant compliance-related obligations under the New Code.

Other key changes include:

• restricting board membership to non-executive members
• stringent qualifications for an individual’s nomination as an independent director
• revised rules concerning related party transactions and avoiding conflicts of interest (including restricting board members from voting on resolutions where he/ she may be an interested party and prohibiting the CEO of a public company from serving as CEO of its subsidiary)
• requiring boards to establish a nomination and remuneration committee in addition to the pre-existing requirement for establishing an audit committee
• requiring board members to undergo periodic training on corporate governance and sustainability and for their performance as directors to be assessed and reported upon by an external agency.

Boards are required to report on compliance with the New Code in their listed company’s annual report for the previous financial year. Accordingly, they will need to ensure that the companies they lead are fully compliant with the New Code no later than December 31, 2016 so that they can certify compliance in the next annual report.

The regulator, the Capital Market Authority (CMA), has been steadfast to date in declining waiver applications for derogation from the New Code which indicates that it fully expects public companies to meet the end of year deadline for compliance. Given the CMA’s track record of rigorously monitoring the compliance of public companies with the previous code through onsite inspections and compliance audits, we anticipate that it will monitor compliance with the New Code equally robustly.

Directors of public companies and auditors interested in advice on developing a road-map for compliance with the New Code, are invited to contact partners Mansoor Malik or Ardeshir Patel.

AMJ advises on Oman’s international sukuk issuance

Filed under AMJ Deals, Capital Markets, Sukuk

Oman Islamic finance - sukuk regulation

AMJ acted as sole Omani Counsel to all the parties on the Oman government’s recent US$500mn sukuk issuance. The sovereign sukuk issuance, Oman’s first US dollar-denominated sukuk issuance, was privately placed by Oman Sovereign Sukuk S.A.O.C, a special purpose vehicle incorporated in Oman and wholly owned by the Government of Oman.

The certificates were priced with a profit rate of 3.5% per annum, payable semi-annually. As in the case of Oman’s debut sovereign sukuk, the certificates are based on an al-Ijarah structure. The tenor is 6 years with maturity date of July 14, 2022.

Standard Chartered Bank acted as lead manager and placement agent for the issuance and Deutsche Bank as the certificate-holders’ agent and principal paying agent.

The purpose of this sophomore issuance is to finance ongoing development projects as well as to raise Oman’s profile in international debt markets. The issuance met with strong demand from investors despite a Baa1 rating by Moody’s compared to its A1 rating for the previous sovereign issuance.

Commenting on the deal, AMJ managing partner, Mansoor Malik, said, “It is a testament to investor confidence in Oman’s stable outlook and the government’s risk profile that, despite the rating downgrade, this international issuance achieved the same pricing as the previous sovereign issuance. We are pleased to have played our part in another landmark transaction in Oman’s Islamic finance space and to assist efforts to maintain forward momentum in the economy during challenging times.”

Mansoor Malik led AMJ’s team which included corporate and capital markets partner, Ardeshir Patel, and senior Islamic Finance associate Asad Qayyum. The same team acted as Oman Counsel to the issue manager and joint lead managers on Oman’s debut sovereign transaction in 2015.

Allen and Overy acted as International Counsel for Standard Chartered Bank and Clifford Chance as International Counsel for Oman Sovereign Sukuk S.A.O.C and the Government.

Oman restructures capital markets

Filed under Capital Markets

muscat securities market

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.