The CMA announces the launching of the new Rules for Crowdfunding Platforms in the Sultanate of Oman and Exemption from Licensing Fees until 1 January 2023.

In the implementation of the Oman Vision 2040 and in response to the requirements of the capital market participants and entrepreneurs, the Executive President of the Capital Market Authority, His Excellency Abdullah Salim Al Salmi, announced that the new Rules for Crowdfunding Platforms is ready and operational for those who wish to practice the business in the Sultanate of Oman and they are available on the CMA’s electronic media, adding that the regulation for such type of funding is very flexible with adequate facilities.

Under the recent amendments to the Executive Regulation of the Capital Market Law (ERCML) published in the Official Gazette Issue No. 1417, the companies intending to practice the business will be exempted from the licensing fees of RO155,000 in total until 1 January 2023. The move to exempt the fees comes within the endeavors of the government to ease the commercial business, to stimulate the economic recovery, to encourage the creation of the largest possible number of various types of crowdfunding platforms and to attract both local and foreign investors into the Sultanate of Oman for the purpose of supporting the entrepreneurs and to transform the results of research and development and innovations into small and medium enterprises (SMEs) able to achieve growth to enhance the GDP.

His Excellency added that the preparation of the regulation was made in consultation with the community and all stakeholders, taking into account best international and regional practices in this field and the nature of the small, medium and micro enterprises in the Sultanate of Oman, as well as the needs of the national economy in view of the transformation into a productive economy.

Al Salmi added that the Rules for Crowdfunding Platforms are adequately flexible and contribute to supporting SMEs. The regulation states that the capital of the company intending to carry out the activity must not be less than RO25,000 which is an opportunity for Omani companies to launch or use such funding platforms to finance the investment initiatives in any economic or productive sector. Al Salmi emphasized that availing such funding platforms for the entrepreneurs and SMEs addresses one of the key challenges facing companies in obtaining funding due to the inherent risks and lack of adequate guarantees as required by financial institutions.

On the key features of the Crowdfunding regulation, the Executive President of the Capital Market Authority said the directives allow the operator of the platform to provide funding through four (4) ways - (1) Donation Crowdfunding, (2) Reward Crowdfunding, (3) Equity Crowdfunding, and (4) Peer to Peer Crowdfunding. Obtaining funding through the platforms will be restricted to companies and enterprises, not individuals.

The directives to limit the risk of investors with low solvency and lack of investment experience, placed limits to the funds that can be invested, based on the type of funding provided by the platform. The directives allow the operator of the platform to attract investors and donors inside and outside the Sultanate of Oman and may provide funding to any company or enterprise in the Sultanate of Oman or abroad in accordance with the specific terms and conditions.

The directives include a number of obligations to be satisfied by the operator companies of the crowdfunding platforms toward the CMA as the CMA will monitor the performance of the company licensed to operate the platform to ensure compliance with the regulation as well as the obligations of each party in the funding process. His Excellency emphasized that the key obligation that will contribute to enhancing the confidence and protect all parties is the provision of written information security policy to protect the confidentiality, safety and quality of information and IT assets based on best international and local practices in information security, and the operator will be obliged to display all the information and disclosures issued by the applicant for funding on the same platform and to do the due diligence to ensure they are correct and fair as well as immediate disclosure on the platform of any errors or misleading information or statements or investment risks related to the applicant for funding or their investment undertakings. The rules also oblige the operator of the platform to put in place anti-money laundering and combating terrorism procedures.

The statement comes after the approval by His Excellency Sultan Salim Said Al Habsi, Minister of Finance and Chairman of the Capital Market Authority on Decision No. E/151/2021 amending the ERCML and sanctioning the carrying out of Crowdfunding Platforms activity in the Sultanate of Oman published in the Official Gazette issue No. 1417. Hence, the Executive President of the Capital Market Authority issued Decision No. E/153/2021 approving the directives for the activity.