Background

In the overall effort to reduce the spread of the Covid-19 pandemic within the Sultanate of Oman, the Capital Market Authority (CMA) has issued decision E/25/2020 outlining the 'Rules for Convening General Meetings of Public Joint Stock Companies and Investment Funds through Electronic Means’ (the New Rules). The CMA has also issued circular E/8/2020 which explains the procedures to be followed in convening and administering online general meetings and the New Rules are in response to CMA Circular E/3/2020 dated 18 March 2020 which barred the convening of general meetings. As per a further CMA Circular (E/9/2020), the last date for convening general meetings suspended by Circular E/3/2020 will be 30 June 2020.

Due to the restrictions put in place in response to Covid-19, personal attendance at general meetings is not currently possible. Through the New Rules, the resulting challenges relating to the convening of general meetings by public joint stock companies and investment funds only are intended to be addressed by the creation and implementation of a new secure local electronic portal provided by Omantel and Blockchain Solutions and Services LLC in collaboration with Muscat Clearing and Depository Company SAOC (MCDC) (the Portal).

Summary
  • The agenda of the general meeting, duly vetted and approved by the chairman, the legal adviser and the external auditor, must be submitted at least 11 days prior to the meeting for approval by the CMA.
  • Following CMA approval, the agenda of the general meeting should be published by the company 10 days (in the current circumstances) prior to the general meeting on its website, the Muscat Securities Market (MSM) website and in one daily e-newspaper. Ordinarily, it must be published 15 days prior to the meeting.
  • An electronic copy of the agenda must be sent to the MCDC not later than the end of the next business day and the company or investment fund should coordinate with the MCDC in relation to hosting the general meeting on the Portal.
  • In advance of the general meeting, a link to view the agenda and an invitation to attend the meeting will be sent by the MCDC to the mobile numbers and email addresses of all registered shareholders[1] . The MCDC will not be liable if shareholders are unable to participate in the meeting due to incorrect or incomplete contact details being registered at the MCDC.
  • Through the Portal, the agenda and notice can be viewed by shareholders electronically and shareholders can vote remotely on the resolutions proposed. Shareholders will be able to register their votes online up to three days prior to the scheduled date of the general meeting. These votes will be kept confidential and can be changed at any time until voting at the meeting commences.
  • The Portal will be linked to the MCDC clearing system to ensure that votes are only cast by shareholders registered at the time of the general meeting. If a shareholder votes and subsequently sells any shares prior to the meeting, any votes it has previously registered in respect of such shares will be invalid.
  • Shareholders attending electronically via the Portal will be counted in the quorum and their votes will be counted as if they were personally in attendance at the general meeting. The quorum for a general meeting will be constituted through shareholders attending in person (when circumstances allow), through the Portal on the day of the meeting or by voting in advance via the Portal prior to the meeting. 
  • Only a juristic shareholder is permitted to authorise a person to attend and vote at the general meeting on its behalf. An individual can no longer appoint a proxy on the basis that the Portal removes the need to be physically present at the meeting. 
  • Submission of candidacy for membership of the board of directors should be done five days prior to the general meeting and the CV of any candidates should be published three days prior to the meeting on the MSM website.
  • Following the general meeting, the minutes of the meeting may be submitted to the CMA by email but a hard copy of the minutes must follow as soon as possible thereafter. 
Conclusion

In addition to the provision of a digital solution for the health and safety issues posed by the Covid-19 crisis, the New Rules set out a framework for the future convening of general meetings of public joint stock companies and investment funds, with potential for greater transparency and shareholder participation beyond the end of the current pandemic. If the New Rules prove to be a success, a natural next step would be to expand their application to other types of entities such as closed joint stock companies (SAOCs).

It remains to be seen how the New Rules will be received by individuals who are no longer permitted to appoint proxies but for some reason are unable to attend general meetings even electronically (for example, due to serious illness).

The MCDC has published practical guidance in relation to the New Rules which can be accessed here

Our team would be delighted to advise you on what the New Rules and more generally the impact of Covid-19 might mean for you and your business. If you would like to discuss any of the issues raised above then please contact Oliver Stevens or James Campbell.

Key Contacts

Oliver Stevens

Oliver Stevens

Partner, Head of Corporate, Corporate Finance
Oman

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James Campbell

James Campbell

Associate, Corporate Finance
Oman

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1 In relation to investment funds, the terms "shareholder" and "shareholders" should be read as "unit-holder" and "unit-holders" respectively.