OMAN Law and Practice Contributed by: Ahmed Said Al Jahwari, Idil I. Kaner and Al Muhalab Al Issai, Dr. Ahmed Said Al Jahwari & Partner Law Firm
3.5 Debt Buyback Debt buybacks are generally permitted under Omani law in private credit transactions and others as a mat -
tion Protection and Monopoly Prevention Center is not currently focused on private credit.
ter of contract and commercial practice. 3.6 Recent Legal and Commercial Developments
3. Structuring and Documentation 3.1 Common Structures Private credit transactions in Oman are typically struc - tured as bilateral secured loans. Common structures include term loans, asset or equipment finance, and receivables-backed facilities. Revolving facilities are rare in the private credit market, although banks occa - sionally offer them. More complex structures, includ - ing delayed draw facilities, unitranche, mezzanine, or covenant-lite loans, see minimal adoption in the private credit market. 3.2 Key Documentation Key documents in private credit transactions typically include standard loan agreements, security docu - ments, and guarantees. Agreements among lenders are often negotiated on a per-transaction basis. First out-last out transactions are not common; however, contractual provisions can be included to facilitate such arrangements according to lenders’ instructions. Beyond the documents required for security registra - tion, there is no market standard for private credit documentation. 3.3 Restrictions on Foreign Direct Lenders Foreign lenders are not restricted from providing pri - vate credit or taking security as long as they com - ply with the registration and licensing (if applicable) requirements outlined in 2.1 Licensing and Regula- tory Approval . 3.4 Use of Proceeds and Acquisition Financings The proceeds from private credit transactions are typically used for working capital or the purchase of assets and equipment. Acquisition financing through private credit is limited, as most mergers and acquisi - tions are funded by banks or equity. Private credit is therefore not a primary tool for take privates and other acquisition financings.
There have been no significant legal or commercial developments that would have required changes to the legal documentation. 3.7 Junior and Hybrid Capital Junior/hybrid capital in Oman is limited and primar - ily used in larger or sponsor-backed deals. Common structures include subordinated loans, mezzanine- style debt, and, in regulated capital markets, per - petual subordinated bonds. Terms in junior/hybrid deals differ from senior secured loans by including subordination provisions (such as payment stand - still), intercreditor arrangements, and, in some cases, looser financial covenants. HoldCo deals are typically secured through pledges over HoldCo shares. 3.8 Payment in Kind/Amortisation Payment in kind features are not common in Oman’s private credit market, as providers generally prefer cash payments, although they may occasionally be included depending on the borrower-lender arrange - ment. While banks typically require amortisation, pri - vate credit providers do not usually impose it. 3.9 Call Protection Depending on the circumstances of the private credit transaction, providers in Oman may include call pro - tection in their agreements. Prepayment penalties and make-whole clauses are uncommon, with lenders generally preferring soft call options that allow early repayment under certain conditions. Terms are typi - cally negotiated on a case-by-case basis and depend on the lender-borrower relationship.
4. Tax Considerations 4.1 Withholding Tax
Principal repayments are generally not taxable under the Omani Income Tax Law. A 10% withholding tax (WHT) applies to specified Omani-sourced payments
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