FSA issues bond and sukuk regulations
Oman's Financial Services Authority (FSA) has issued bonds and sukuk regulations to regulate the long-term debt market in the sultanate. Bonds and sukuk are among the financing options provided by the capital market to support the expansion of projects and new investment initiatives in the private sector.
H E Sultan Salim al Habsi, Chairman of FSA, issued the decision to enact the regulation. The regulation is considered flexible legislation that encourages innovation by including diversified financing products such as green and sustainable bonds, sukuk, and Waqf sukuk, FSA said in a press statement.
It also provides for special types of bonds and sukuk that cater to the financing needs of both investors and issuers. The new regulations include a chapter on disclosure rules, specifically related to disclosures for green and sustainable bonds and sukuk. Issuers will be obliged to implement these rules and terms and conditions to enhance the integrity of the capital market and encourage conventional investors and those interested in sustainability issues to invest in such securities.
H E Sheikh Abdullah Salim al Salmi, Executive President of
FSA, emphasised the importance of issuing the bonds and sukuk regulations. He said that the issuance of the regulation aligns with FSA'S strategic plan to complete the legislative infrastructure of the capital market, following the issuance of the Commercial Companies Law and the Securities Law. This ensures that the sector can align with the latest global practices and standards.
H E Salmi highlighted that the regulation would contribute to designing debt instruments as one of the main financing options, providing an appropriate investment environment while allowing for additional alternative instruments for local and foreign investors. This, in turn, would make the capital market a sustainable engine for comprehensive economic development and wealth creation.
He added that the regulation is resilient enough to encourage innovative and diversified financing products according to the nature of financing needs of projects. Besides traditional bonds and sukuk, there are specific rules for the issuance of sustainable and green bonds and sukuk to encourage such issuances in Oman, given the interested investors and promising market for such types of financing, especially in light of the country's commitment to reaching net zero carbon emissions by 2050.
Moreover, H E Salmi explained that the regulation incentivizes Waqf sukuk to support the ongoing development of the Waqf sector in Oman. This aims to activate monetary Waqf and develop Waqf institutions, whether civil or charity institutions, to expand the base of subscribers and participants in activities benefiting the national economy and generating fair returns serving the purpose of the Waqf, whether educational, medical, social, etc.
The Executive President of FSA informed that the bonds and sukuk regulation underwent public consultation, engaging various stakeholders such as public joint-stock companies, audit firms, law firms, and relevant government entities to formulate regulations in accordance with a mutual vision. FSA responded to public feedback, reviewed issuance requirements, and reduced the period required for every issuance process.
Regarding other features of the regulation, H E Salmi stated that the clauses expressly state that bonds and sukuk can be issued in the sultanate in any convertible currency, and FSA allows prospectuses addressing private placement to be in English.
The regulation comprises 12 chapters, including chapters on the issuance of bonds and sukuk, private placement, rights issues and assignment, special purpose companies, financial trusts, Shariah compliance, agents of beneficiaries or issuers, disclosure rules, general meetings, and a chapter on the rules for issuance of green and sustainable bonds and sukuk.
Regulation is resilient to encourage innovative financing products such as sustainable and green bonds, sukuk, and Waqf sukuk H E SHEIKH ABDULLAH SALIM AL SALMI