Which SOEs will follow corporate governance principles approved by CMA?

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هذه الصفحة متوفرة بهذه اللغة: العربية

24 October 2020

MUSCAT (WAF): The recently-approved corporate governance principles exempts three categories of State-Owned Entities (SOEs). With over 250 companies, the government of Oman owns 50% or more of their shares, WAF News brings you an answer to the question “Which SOEs will follow the new governance guidelines?”

On 19 October, the Oman Capital Market Authority (CMA) issued the principles of government-corporate governance, which oblige companies that are influenced by or controlled by the government to periodically disclose the financial statements and the purpose of each of these companies, whether commercial or strategic. However, the principles excluded Oman Investment Authority (OIA) companies, public joint-stock companies, and private purpose companies (SPVs). 

At “WAF”, we searched for the number of SOEs that are not owned by OIA, and do not fall under the classification of a public joint-stock company as a legal form, in light of the absence of a particular category of special purpose companies among government companies, which often take the form of a limited liability company (LLC).

According to the data available at WAF News, until the date of publication of the report, the number of government companies that meet the description of being subject to the principles of the unified government approved by the CMA is at least 80 companies owned by government employees’ retirement funds and other government agencies such as the Public Establishment for Industrial Estates (Madayn), the Diwan of the Royal Court, Sultan Qaboos University, and some military and security authorities.

CMA’s approved guidelines define “Government” as “the units of the state’s administrative apparatus, including the Council of Ministers, the Omani Investment Authority, the ministries and the administrative and technical bodies that follow, specialised councils, public bodies and institutions, and other public legal persons or any administrative unit that derives its authority from the state.”

The number of companies owned by government employees retirement funds is about 31 companies. These companies operate – according to the activities registered in the official commercial records – mainly in the fields of investment, tourism, real estate development, transportation and communications.

As for Oman National Investment Development Company (TANMIA) and Muscat National Development and Investment Company (ASAAS), they are the two most prominent companies in which the Oman Investment Authority has a minority stake, and therefore they are not subsidiaries. 

These two SOEs are majority-owned by several government bodies. TANMIA is 81.6% owned by OIA and eight state-employees pension funds. The Public Authority for Social Insurance (PASI), which is the largest pension fund for government and private company employees, owns the remaining shares. PASI holds again a minority share in ASAAS, where the other nine shareholders are OIA, Civil Service Pension Fund, Muscat Municipality, The Sultan Special Force Pension Fund, Ministry of Defense Pension Fund, Royal Oman Police Pension Fund, TANMIA, Internal Security Service Pension Fund, and the Royal Office Pension Fund.

Accordingly, the government controls these two companies and influences their objectives. TANMIA and ASAAS own 50% or more shares in at least nine companies.

Madayn, which acts as the arm of the Ministry of Commerce and Industry and Investment Promotion for the development of industrial zones in the governorates, holds more than 50%-shares in 23 companies – including industrial zones. It also has a 50/50 partnership in another three companies. Most of Madayn’s investments are made through its arms, Oman Investment and Development Holding Company (Mubadara) and Shumookh Investment and Services Company.

Among the other government companies that are specifically active in the technology and communications sector, Oman 70 holding, is wholly owned by the Royal Office, and the company fully owns six commercial entities.

Petroleum Development Oman, which is owned by 60% of the Sultanate’s government, is expected to be subject to the unified governance standards that have been approved, noting that the company has been excluded from being under the umbrella of OIA under Royal Decree No. 61/2020.

According to CMA, companies -which will be subject to the principles of SOEs corporate governance- have a period of 12 months to adhere to the guidelines, which includes the principles for establishing government companies and determining their purpose and the legal form of the company.

The newly-passed guidelines sets-up the conditions for forming SOEs boards of directors, which means unifying the legal form for companies to include boards of directors. Especially with about 70% of the companies mentioned above formed as limited liability companies, which is a legal form that does not require a board of directors or a general assembly.


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CMA approves new governance guidelines of SOEs

Oman merges SWFs and SOEs under one new entity

Oman’s government’s investments, scattered despite OIA