FSA details incentives and rules for capital market pathways

BUSINESS REPORTER

MUSCAT, AUGUST 11

The Financial Services Authority unveiled on Sunday the incentives and rules for the capital market pathways. These pathways collectively aim to foster a robust and dynamic economic environment by providing tailored incentives and support mechanisms for different categories of companies. By focusing on specific needs and challenges, the Financial Services Authority (FSA) is paving the way for a more diversified and sustainable capital market in the Sultanate of Oman.

First path incentives and rules

The first pathway offers a comprehensive package of incentives to encourage the establishment of new public joint stock companies and the conversion of private and family companies with a market value exceeding RO 10 million. The Ministry of Finance will refund two-thirds of the income tax paid by these companies for five years after listing on the Muscat Stock Exchange (MSX). The Tax Authority will allow income tax payments in installments and provide exemptions from additional tax for up to six months.

Companies listed on the MSX will receive a 10% price preference in procurement contracts and tenders issued by the General Secretariat of the Tender Board for five years. Additionally, listing fees, public offering prospectus fees, and other prospectus fees charged by the FSA will be waived for three years from the start of the incentive program. Companies will also receive guidance on legal and regulatory requirements with a direct communication line to qualified employees for one year.

The FSA will approve prospectuses within three working days of receiving completed documents, and the Muscat Clearing and Depository Company will exempt transfer agent fees for three years. The Development Bank will fast-track financing applications for companies benefiting from the program. These companies will also have preferential access to incentives such as land usufruct and opportunities in concession areas, coordinated with relevant authorities.

To qualify for these incentives, companies must list or establish within the five-year program duration and have a capital or market value of at least RO 10 million. The offering size must be at least 25% of the company’s capital, and the company cannot convert to another legal form for five years after the incentive period ends, except with FSA approval.

Second path incentives and rules

For closed joint stock companies aiming to list on the Promising Companies Market, the Ministry of Finance will refund two-thirds of the income tax paid after listing. The Tax Authority will also allow installment payments for income tax and exempt additional tax for up to six months. These companies will receive a 10% price preference in procurement and tender contracts.

The FSA will waive listing fees and prospectus fees for three years and will provide guidance and advice for companies wishing to list. A training program will be offered to entrepreneurs and company owners, along with simplified prospectus forms and mitigated financial disclosures using a tailored form of international accounting standards. The Muscat Clearing and Depository Company will exempt transfer agent fees for three years, and the Development Bank will fast-track financing applications. The MSX will cover the issue manager costs for the first five companies listed on the Promising Companies Market and will provide marketing support through media coverage. Detailed listing requirements will be announced upon completion of legal procedures.

Third path incentives and rules

Companies transitioning from limited liability to closed joint stock companies in preparation for listing in the Promising Companies Market will benefit from a gradually implemented incentive package. One-third of the income tax paid will be refunded for two years from the date of conversion, and a 10% price preference will be granted in procurement contracts and tenders for two years.

These companies will also receive fast-track financing application processing from the Development Bank. To qualify, companies must have a market value of at least RO 500,000, verified by an FSA-approved valuation firm, employ at least 20 Omani citizens, be tax-compliant, and meet local added value standards.

By implementing these pathways, the FSA aims to stimulate economic growth, enhance the capital market, and support the sustainability and expansion of various companies in the Sultanate of Oman.