Muscat – The Ministry of Commerce, Industry, and Investment Promotion (MoCIIP) has issued a ministerial decision regarding the principles of governance for closed joint-stock companies. Ministerial Decision No (5/2025) states that closed joint-stock companies must operate in accordance with governance principles, except for those in which the government holds stakes.

The decision requires companies to amend their Articles of Association in a way that does not conflict with the provisions of these principles, and the ministry will monitor the companies’ compliance with this requirement.

In a press statement, H E Dr Saleh Masan, Undersecretary of MoCIIP, said that the decision on the principles of governance for closed joint-stock companies contributes to stimulating companies and aligning their operations with the best practices in company management, in line with global standards.

He emphasised that it is a fundamental pillar in developing their operations and enhancing the performance of these companies from administrative, technical, and commercial perspectives, which in turn strengthens their position and contributes to building a strong and resilient economy. He further explained that corporate governance enhances the continuity of companies by delivering the best practices in company management.

Disclosure and transparency standards

The ministerial decision stipulates that closed joint-stock companies must adhere to the disclosure and transparency standards outlined in these principles. Companies are required to prepare unaudited semi-annual financial statements, along with audited statements at the end of the financial reporting period, and submit them to the ministry within two working days of approval by the board of directors. Additionally, an annual report must be prepared at the end of each financial period, which should be audited by an external auditor.

The decision also specifies that the board of directors must consist of members who possess competence, experience, and skills, meeting the required membership criteria, with independent members included. The company’s articles of association should specify the number of board members, which must be between a minimum of three and a maximum of eleven members. The composition of the board must be individual.

The ministerial decision further stipulates that, before starting the procedures for holding a general assembly meeting listed on the agenda to elect the board of directors, the company must issue a public announcement at least 14 days prior to the meeting date, inviting those interested in running for board membership as independent members. The list of candidates for the board of directors must be submitted to the company’s legal advisor at least seven days before the date of the general assembly meeting.

Board of Directors’ duties

According to the ministerial guidelines, the chairman of the board must possess strong leadership skills that qualify them to manage the board effectively. Upon its election, the board must appoint a secretary from among individuals with expertise and qualifications in law, accounting, auditing, or corporate secretarial work. The appointed secretary must have practical experience in management for a period of no less than three years.

The board of directors is required to hold at least four meetings per year. According to the decision, the responsibilities of the board include determining the company’s future vision, its organisational structure, and setting actionable performance indicators within a reasonable timeframe, which should be updated periodically. The board is also responsible for approving commercial and financial policies related to the company’s operations and achieving its objectives.

The board must also approve internal regulations concerning the company’s operations, adopt a policy for disclosing periodic data, and review the company’s governance report and ensure its implementation. Additionally, the board is responsible for approving policies related to delegating authority to the executive management and updating them regularly. These delegations encompass various functions related to financial and administrative affairs, personnel matters, and other essential functions needed for the efficient operation and management of the company.

Audit and risk management committee

The decision also stipulates that no board member is allowed to make any statements, data, or information without prior written approval from the board or its chairman. The board must designate one or more official spokespersons to represent the company.

Furthermore, the ministerial decision prohibits combining the chairmanship of any of the committees established by the board. It also prohibits combining the chairmanship of the udit and eisk management committee with the chairmanship of the board, unless the risk management committee is separated from the audit committee.

The audit and risk management committee is specifically responsible for several duties, including overseeing the internal audit activities within the company, reviewing and assessing the internal control system, ensuring the adequacy and effectiveness of the company’s internal controls, recommending the appointment and termination of external auditors, determining their fees, reviewing the audit offices’ work plans and the results of the auditing process, as well as examining the company’s accounting policies and providing recommendations to the board on the matter, among other responsibilities.

The decision also specifies that the board of directors of a closed joint-stock company should undergo performance evaluations at least once per term. MoCIIP will determine the criteria for measuring the board’s performance and hold its members accountable.