The Capital Market Incentives Programme is launched by Oman’s Financial Services Authority

20 November 2024

Bini Saroj

Oman’s Financial Services Authority (FSA) has unveiled its Capital Market Incentives Programme (CMIP), a comprehensive initiative designed to stimulate economic growth and attract investment to the Sultanate.

Muscat: The five-year CMIP introduces key reforms and incentives aimed at enhancing the country’s capital market. The programme is structured around three main initiatives:

1. Facilitating the creation of new public joint-stock companies through both new and existing family businesses.
2. Establishing a “Promising Companies Market” on the Muscat Stock Exchange (MSX) to support smaller businesses.
3. Encouraging the conversion of Limited Liability Companies (LLCs) into closed joint-stock companies.

These reforms aim to elevate the profile of the MSX and improve its capacity to attract both local and international investments.

I.    Impact on the Muscat Stock Exchange (MSX)

The CMIP includes several key measures that will impact listed companies and those looking to list:

• Tax Incentives: The Ministry of Finance has proposed income tax incentives, while the Tax Authority allows for the payment of income tax in instalments over a period of up to six months.
• Preference in Tendering: Listed companies will be given preferential treatment in government procurement processes, benefiting those regularly involved in tenders.
• Investment and Rating Enhancements: Financial incentives will help listed companies seek investment both regionally and internationally. Additionally, international investors and rating agencies are likely to view these reforms favorably.
  
  

II.   The Promising Companies Market

The introduction of the Promising Companies Market provides an opportunity for businesses that have outgrown their LLC status and family-owned entities seeking further investment or an exit strategy. This market will open doors for small and medium-sized enterprises (SMEs) to access funding that they may not have had previously.

In the future, this market could serve as a stepping stone to the primary market, assuming there is enough market liquidity and a sufficient number of companies ready to list on the Promising Companies Market.

III. Sectoral Impact and Market Response

The reforms are expected to benefit a wide range of sectors, especially those not currently regulated by industry regulators, such as family-owned businesses in mining, construction, technology, and real estate. However, the market’s response to these new regulations will likely be gradual, requiring ongoing interaction between the relevant authorities and market participants to ensure the full utilization of the incentives.

Overall, the CMIP is seen as a significant step forward in enhancing Oman’s capital markets, with the potential to drive substantial investment and growth in the country’s economy.

In Conclusion

A measured response is anticipated from the market in response to the implementation of this particular legislation, and there will be a requirement for consistent engagement between the appropriate organizations and the market in order to encourage the utilization of the incentives.

ALKETBI TOUCH

Contact ALKETBI team of experts, for a customized strategy on understanding how the CMIP may be beneficial for your company and whether you are eligible for the incentives. Our staff can assist you in creating a solid structure to benefit of this programme in Oman reflecting our vast regional experience.