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Oman

Law and regulation of Covid-19 loan moratoriums in Oman

Table of contents
  1. Description of the legislation
    1. Is there a moratorium on loans legislation implemented in your jurisdiction?
    2.  If no: Are there any ongoing discussions regarding a potential introduction of such measures?
    3. What is the name of the relevant legislation (the “Relevant Act”)?
    4. What is the duration of the measures (period of moratorium)?
    5. Does the legislation provide for an extension of the period of moratorium?
    6. Is the moratorium mandatory, or can each borrower opt out should they wish to simply continue payments, or opt in if they want to be protected by the moratorium?
  2. Parties and agreements affected by the Relevant Act
    1. Is the moratorium available for both corporate and consumer loans?
    2. Who are the affected Lenders?
    3. Does it make a difference whether loans are granted by a foreign entity and governed by foreign law?
  3. Impact on the loan agreements
    1. Is there a cut-off date with respect to loan agreements to which the Relevant Act will apply (e.g. not applicable to loan agreements entered into after the cut-off date)?
    2. Does the moratorium apply to principal only, or also to interest and/or fees?
    3. Will the maturity of the loan automatically be extended by the moratorium period?
    4. Are repayments and interest which have become due and payable under the contract before the Relevant Act has come into force covered by the moratorium?
    5. Will lenders be able to terminate a loan due to an event of default other than non-payment (e.g. breach of financial covenants)?
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1. Description of the legislation

1.1 Is there a moratorium on loans legislation implemented in your jurisdiction?

Yes.

1.2 If no: Are there any ongoing discussions regarding a potential introduction of such measures?

Not applicable.

1.3 What is the name of the relevant legislation (the “Relevant Act”)?

Central Bank of Oman circular dated 18 March 2020.

1.4 What is the duration of the measures (period of moratorium)?

6 months.

1.5 Does the legislation provide for an extension of the period of moratorium?

No.

1.6 Is the moratorium mandatory, or can each borrower opt out should they wish to simply continue payments, or opt in if they want to be protected by the moratorium?

Moratorium is optional.

2. Parties and agreements affected by the Relevant Act

2.1 Is the moratorium available for both corporate and consumer loans?

Corporate only. 

There are separate decisions dealing with consumer loans.

2.2 Who are the affected Lenders?

Any lender regulated by the Central Bank of Oman.

2.3 Does it make a difference whether loans are granted by a foreign entity and governed by foreign law?

Yes, moratorium only covers loans granted by lenders regulated by the Central Bank of Oman, i.e. it doesn’t cover foreign lenders.

Governing law of the loan is not relevant.

3. Impact on the loan agreements

3.1 Is there a cut-off date with respect to loan agreements to which the Relevant Act will apply (e.g. not applicable to loan agreements entered into after the cut-off date)?

There is no cut-off date.  

3.2 Does the moratorium apply to principal only, or also to interest and/or fees?

The relevant provision refers to loan instalments, interest and profit.

3.3 Will the maturity of the loan automatically be extended by the moratorium period?

There is no guidance on how the deferment of loan instalments, interest and profit will be dealt with. This will need to be agreed between the borrower and the lender.

3.4 Are repayments and interest which have become due and payable under the contract before the Relevant Act has come into force covered by the moratorium?

No.

3.5 Will lenders be able to terminate a loan due to an event of default other than non-payment (e.g. breach of financial covenants)?

There is no guidance on this point.

Please note that Capital Market Authority circular no. 7/2020 extends the period for holding an annual general meeting to approve the annual audited financial statements up to the end of June 2020 (a 3-month extension) for public joint stock companies.  The Ministry of Commerce and Industry provided a similar extension for closed joint stock companies by a notice dated 17 March 2020.  

These extensions will also need to be taken into consideration by the lenders for joint stock companies as the borrower may not have been able to provide approved audited financial statements to the lenders within the required time limits.

Authors

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Portrait ofBen Ewing
Ben Ewing
Partner
Muscat
Portrait ofHelen Dean
Helen Dean
Senior Associate
Muscat