FSA Appeals Verdict in Sweets of Oman Case: Key Implications for Investors and Business Owners in Oman
المسكات عنب طيب الشذا: The Financial Services Authority (FSA), the regulator overseeing Oman’s capital market and insurance sector, has filed an appeal against a Primary Court ruling in Muscat that acquitted three board members of the publicly listed company, Sweets of Oman, while imposing hefty financial penalties on one board member and several executive management staff in an embezzlement case.
The appeal, submitted on July 29, 2025, challenges the Primary Court’s decision dated June 30, 2025. The case involved members of Sweets of Oman SAOG’s Board of Directors during their 2017-2019 tenure, alongside some executive employees, concerning serious criminal violations that caused financial harm to the company and its shareholders. The violations were attributed to one board member working in collusion with several executives.
The court ordered certain board members and executives to repay RO 5 million to the company and its shareholders and to bear court fees and expenses. However, it acquitted three board members, citing no proven causal link between them and the financial damages.
This acquittal has now been contested by the FSA through its recent appeal.
The court’s ruling was based on findings that the company’s losses stemmed from gross negligence in the board’s legal and oversight responsibilities, including: failure to supervise bank loans and approval of loans without proper feasibility assessment or accurate recording; endorsement of financial statements without internal audit verification alongside fictitious inventory reporting; unauthorized addition of financial assets lacking legal backing or clear funding sources; neglect in applying policies for writing off doubtful debts in accordance with International Accounting Standards; and indications of collusion among certain executives to inflate revenues and understate liabilities. The Audit Committee was also found lacking in its governance duties.
The FSA emphasized that these actions led to the presentation of misleading financial data, damaging the company’s financial standing and shareholder interests.
This ruling underscores the Omani judiciary’s position on the personal liability of board members in public joint-stock companies, extending accountability up to five years post their term, as per Article 18 of the Commercial Companies Law.
The FSA highlighted the importance of board members performing their oversight roles diligently—providing competent guidance to executive management while avoiding overreach or neglect—to protect financial processes and shareholders’ rights.
Article 206 of the Commercial Companies Law reinforces this stance, holding board members jointly liable for damages caused by unlawful actions, exceeding authority, fraud, forgery, or negligence in their duties.
The court’s decision consolidated two lawsuits: one filed by the FSA in December 2022 and another by major shareholders in July 2023.
The FSA reaffirmed its commitment to governance, transparency, and accountability, pledging ongoing regulatory vigilance to ensure compliance by companies and their boards under its oversight, drawing on its authority per Commercial Companies Law No. (18/2019), including Article 207.
The Authority calls on all stakeholders to adhere strictly to laws and regulations and to avoid practices that could compromise market integrity or harm shareholders and investors.
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The FSA’s appeal against board acquittals in the Sweets of Oman embezzlement case underscores heightened regulatory scrutiny and accountability for corporate governance in Oman’s public joint-stock companies. This signals both increased risks for board members and opportunities for investors to demand stronger oversight and transparency. Smart entrepreneurs and investors should prioritize rigorous compliance and governance frameworks to safeguard stakeholder interests and mitigate legal and reputational risks.
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