Some companies end because their purpose has been achieved, some because the partners decide to separate, and some because losses make continuing impossible. In every case, a company does not end by closing its doors or stopping trading, but through a legal process of dissolution and liquidation. An unmanaged wind-down can leave partners and managers exposed to creditor claims for years. This article explains the grounds for dissolving a company in Oman, voluntary and court-ordered liquidation, the liquidator's role, creditors' rights and the competent court.
The legal framework
Dissolution and liquidation are governed by the Commercial Companies Law issued by Royal Decree 18/2019. Dissolution and liquidation cases now fall within the jurisdiction of the Court of Investment and Commerce, heard according to the Court's guide by a three-judge circuit, with a fee of OMR 300 under the fee schedule.
Grounds for dissolution
- Expiry of the company's term under its articles, or achievement or impossibility of its purpose.
- Agreement of the partners or a resolution of the extraordinary general meeting.
- Loss of all or most of the capital so that the remainder cannot be used effectively.
- Bankruptcy of the company.
- Failure to start business since incorporation, or a halt in business for more than two years.
- A fall in capital below the required minimum with no increase within the set period.
- Shares or interests passing to fewer partners or shareholders than the legal minimum.
- A court order at the request of interested persons or the competent authority, for example where a serious dispute between partners paralyses the company.
Voluntary and court-ordered liquidation
- Voluntary liquidation: by agreement of the partners or an extraordinary general meeting resolution, which appoints the liquidator and sets fees and duration.
- Court-ordered liquidation: by judgment, which appoints the liquidator and sets fees and duration, usually where partners disagree or an interested party applies.
The liquidator
The law requires the liquidator to be licensed to practise accountancy and audit and approved by the competent authority. The liquidator:
- Takes stock of the company's assets and liabilities.
- Notifies creditors by registered letter and publication, giving them 180 days to submit claims.
- Collects amounts owed to the company and sells its assets.
- Pays debts in their legal order of priority.
- Distributes any surplus to the partners according to their shares.
- Keeps detailed records and submits periodic reports.
Liquidation must be completed within three years unless extended. A liquidator is removed in the same way they were appointed, or by petition order of the president of the court that ordered liquidation where the appointment was judicial.
The company during liquidation
The company keeps its legal personality to the extent needed for the liquidation, and the words "under liquidation" are added to its name throughout. The liquidator may not start new business except as needed to complete existing work.
Creditors' rights
If you are owed money by a company in liquidation, submit your claim with supporting documents to the liquidator within the deadline and make sure it is listed. If the claim is rejected or payment is delayed without reason, or the liquidator acts against creditors' interests, you can go to court. If the company has stopped paying its debts, bankruptcy or preventive composition may be the more suitable route.
Common mistakes when closing a company
- Leaving a dormant company undissolved, so fees, obligations and penalties accumulate.
- Distributing assets to partners before creditors are paid.
- Failing to notify and publish to creditors as required, so claims remain open.
- Overlooking tax and labour obligations before the registration is cancelled.
Frequently asked questions
How long does liquidation take in Oman?
The resolution or judgment sets the duration; liquidation must be completed within three years unless extended, with 180 days for creditors to submit claims.
Who can act as liquidator?
A person licensed to practise accountancy and audit and approved by the competent authority.
Can a company be dissolved by court if a partner refuses?
Yes. Interested persons may apply for judicial dissolution in the cases set by law, before the Court of Investment and Commerce.
What is the court fee for a liquidation case?
OMR 300 according to the fee schedule in the Court's guide.
Sources: the Commercial Companies Law issued by Royal Decree 18/2019 and the Unified Guide to Litigation Procedures before the Court of Investment and Commerce, as at the date of publication.
If you want to dissolve and liquidate your company properly, or you are a partner or creditor of a company in liquidation, see our corporate disputes service or contact Dr. Abdullah Al Rashdi Office on WhatsApp or +968 92000841.