Oman’s Commercial Companies Law, promulgated by Royal Decree 18/2019, sets out the legal framework governing the establishment of joint stock companies and the role of their founders.
Speaking to Times of Oman, Dr. Mohammed Ibrahim Al Zadjali, Chairman of Mohammed Ibrahim Law Firm, explained that “a founder is anyone who practically participates in the procedures of establishing a joint stock company with the intention of assuming responsibility for it. Anyone who signs the Constitutive Documents, or provides a share in cash or in kind upon the company’s establishment, shall particularly be deemed to be a founder. Whoever, other than the shareholders, carries out the preparation or review of the Constitutive Documents shall not be deemed to be a founder.”
“A founder shall exert the care of a prudent person in dealing with the company under establishment or for its account. Founders shall be jointly liable for any damage sustained by the company or third parties as a consequence of their default. A founder who receives information or funds belonging to the company under establishment must inform the company of such information and refund such funds and any profits obtained as a result of what was received,” he said.
He added that “any action performed by the founders with third parties in the name of the company under establishment is effective against the company if it was necessary for its establishment, and must be approved by the constitutive general meeting. Before approving any of these actions, the meeting must be informed of the facts relating to the action. Whoever violates this obligation is liable, to the extent of his/her property, for the damage the company sustains as a result of the action that has been approved, and if the persons responsible are several, they are jointly liable for such damage. If any of the aforementioned actions are not approved, the founders are jointly liable for the effects and obligations arising from the action.”
“The company shall not raise its invalidity as a defence because of a defect in the procedure of its establishment. The founders shall be jointly liable for the damage resulting from the dissolution of the company by reason of a default in the procedure of its establishment,” he said.
“The Constitutive Documents shall not contain any condition absolving the founders, or some of them, from any responsibility resulting from the establishment of the company, and any condition absolving them from such responsibility shall be null and void,” he concluded.
(Mohammed Ibrahim Law Firm ([email protected]), (+968 244 87 600) was established on 14th December 2006 and is serving clients through its offices in Muscat and Sohar, as well as operating on a request basis in other areas. It offers legal representation across a wide range of practice areas that include Labour Law, Corporate, Commercial, Contracts, Banking and Finance, International Trade, Foreign Investment, Maritime Law, Construction and Engineering Contracts, International Arbitration, Intellectual Property and more).