Changes to Omani insurance companies law.
Summary: The recent amendments to Omani Insurance Company Law require all insurance companies in Oman to be incorporated or registered as public joint stock companies with a minimum paid-up share capital of RO10mn
The insurance sector in Oman is regulated by the Capital Market Authority and the law applicable tothe insurance sector is primarily set out in the Insurance Companies Law and its Executive Regulations.
Prior to RD 39/2014 which came into effect on August 2014 which amends the Insurance Companies Law , companies wishing to carry out insurance business in Oman were, among other things, required to be joint stock companies (either closed or a public joint stock company) with a paid up share capital of RO5mn.
The recent amendments require all insurance companies in Oman to be now incorporated or registered as public joint stock companies with a minimum paid-up share capital of RO10mn. Consequently, 16 of the 22 insurance companies currently operating in Oman will be required to raise their issued share capital to meet the new minimum capital requirements. The remaining six insurance companies have paid-up share capital in excess of RO10mn. All insurance and reinsurance companies not incorporated and/or registeredas public joint stock companies are required to convert to public joint stock companies within a period of three years commencing from the date of amendment of the Insurance Companies Law.
Presently, out of the 22 insurance companies licensed to operate in Oman, only four companies are listed on the Muscat Securities Market out of which two are Islamic insurance firms and the other two companies conduct general and/or life insurance business.
Industry sources have indicated that eight locally incorporated companies, including a reinsurance company, will be offering shares to public within three yearsto comply with the amendments. The insurance companies will need to comply with all listing requirements and the promoters of such companies must divest 40 per cent of the insurance company's shares to investors in accordance with the Commercial Companies Law of Oman and the Capital Market Authority Law of Oman. The Omani insurance sector which has witnessed an average annual growth of 14 per cent in the last seven years has reacted positively to the recent amendments.
The amendments will also impact non- admitted companies wishing to conduct insurance business in Oman. Any new entrant in the insurance sector will now be required to establish a public joint stock company with a minimum share capital of RO10mn and its shares would need to be listed on the Muscat Securities Market at the time of its incorporation.
Industry sources are viewing the increase in minimum share capital of insurance companies from RO5mnto RO10mn as the Government of Oman's desire for Omani insurance companies to underwrite larger risks and to retain premium within Oman. These amendments further signal the Government of Oman's commitment to enable increased public participation in the private sector as part of its strategy to enlarge and/or diversify the equity base of insurance companies which will enable insurance companies to reduce the cost of funding their operations.
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|Publication:||Oman Economic Review (OER)|
|Date:||Nov 25, 2014|
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