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
Registration costs vary by asset type. By way of indi - cation, commercial mortgage registration fees have been cited at approximately OMR130 (renewable), while legal mortgage registration fees may be calcu - lated at around 0.5% of the secured amount. Addi - tional costs commonly include legal fees, translation, notarisation, and administrative charges. 5.2 Floating Charges and/or Similar Security Interests Omani law permits the creation of a floating charge or similar security over a company’s present and future assets; however, such security is not commonly used in practice. Instead, security in private credit trans - actions is typically fixed and asset-specific, as these provide greater certainty of control and enforceability compared to floating charges. 5.3 Downstream, Upstream and Cross- Stream Guarantees Omani entities may grant downstream, upstream, and cross-stream guarantees, subject to proper corporate capacity and approvals under the Commercial Com - panies Law. A key limitation is the requirement that a guarantee must confer a demonstrable corporate benefit on the guarantor; otherwise, it may be chal - lenged as a misuse of company assets, particularly in an insolvency scenario. Upstream and cross-stream guarantees granted by limited liability companies (LLCs) or sole proprietor - ship companies typically require partner resolutions unless they fall within the ordinary course of busi - ness. Guarantees granted by SAOCs or SAOGs for third-party obligations, especially where the obligation is not the company’s own, generally require general assembly approval and may trigger related-party gov - ernance and disclosure requirements where parent or sister companies benefit. Guarantee limitations are relevant both at the time the guarantee is granted and at the point of enforcement or insolvency. Adequacy of credit support is typically addressed through clear shareholder/board approvals and documented corporate benefit analyses. Trans - actions may also be structured to mitigate guarantee limitations through direct lending to the benefiting entity, on-lending arrangements, payment of guar -
antee fees, or by ring-fencing guarantees to specific obligations. Where different tranches of debt benefit from different levels of guarantees, the allocation of proceeds and recoveries is governed by contractual intercreditor arrangements. Waterfall and sharing mechanics are used, rather than statutory collateral allocation rules. However, priority of claims is addressed in 7.2 Water- fall of Payments . 5.4 Restrictions on the Target Under Omani law, a target company is generally not prohibited from granting guarantees, security, or financial assistance in connection with the acquisi - tion of its own shares. Such arrangements are typi - cally structured carefully to comply with the target’s corporate governance requirements. 5.5 Other Restrictions A company’s ability to grant security or guarantees may be limited by its corporate governance frame - work. Depending on the company’s constitutional documents, board or shareholder approval may be required prior to granting such security or guarantees. Registration and perfection of security interests may involve government fees and associated costs (see 5.1 Assets and Forms of Security ). Oman recognises retention of title and anti-assignment provisions, and properly perfected securities are generally enforce - able, making it difficult to override these rights. There are currently no specific statutory “hardening” periods in Oman. 5.6 Release of Typical Forms of Security Security is typically released by reversing the perfec - tion steps taken when the security was granted, in accordance with the terms of the contractual agree - ment. Deregistration procedures are asset-specific and may involve multiple Omani authorities, depend - ing on the type of security. 5.7 Rules Governing the Priority of Competing Security Interests and/or Claims Oman recognises multiple liens, with the priority of competing security interests generally determined on a first-to-register basis. Contractual subordina - tion between lenders is permitted, allowing parties to
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