Jordan Companies Law is the legal framework that regulates the establishment and management of companies in Jordan. This law defines the types of companies, the rights and obligations of partners and shareholders, and how companies are managed and liquidated. Here are the main points of Jordanian corporate law:
1- Types of companies:
The Jordanian Companies Law defines several types of companies that can be established, most notably:
- Solidarity companyIt shall be between two or more persons, and the partners shall be fully bound by the company’s debts.
- Simple recommendation companyIt includes joint partners (responsible for debt) and recommended partners (their liability is limited to their contribution to the capital).
- Limited Liability CompanyPartners or shareholders shall not be liable for the company’s debts, but their liability shall be limited by their contribution to the capital.
- public shareholding companyIt has negotiable shares, and its capital is distributed over the shares, and the shareholders shall not be liable except to the extent of their contribution to the company.
- private joint stock companyIt is similar to a public shareholding company, but it is closed and its shares are not traded in the open market.
2- Establishment and registration:
The basic requirements to register any company in Jordan :
- Submit an application to Ministry of Industry and Trade.
- Determine the name of the company, its purpose, the names of the partners or founders, and the address of the company.
- Determine the company’s capital, and how to distribute the shares between partners or shareholders.
3- capital:
- Each company must have a specific capital that is officially registered.
- In limited liability companies and public and private joint stock companies, a certain part of the capital must be paid upon establishment.
4- Corporate management:
- Solidarity company and simple recommendation companyManaged by the joint partners, and decisions are taken by consensus.
- Limited Liability CompanyIt is administered by a manager or board of directors elected by the partners.
- public shareholding company: administered through board of directors Selected by the shareholders.
5- Legal liability:
- Solidarity and recommendation companiesCommon partners are fully responsible for the company’s debts and obligations.
- Limited liability companies and joint stock companiesShareholders’ legal liability is limited to their capital contribution.
6- Financial disclosure and disclosure:
- Public joint stock companies must provide Annual financial reports The company’s audit is reviewed by a separate auditor.
- Companies must disclose and make their financial reports available to shareholders and the public (in the case of public companies).
- This aspect is organized under the supervision of Securities Authority.
7- Distribution of profits:
- The dividend is distributed according to the shareholding ratios of the capital or shares, unless the company’s contract stipulates otherwise.
- In public shareholding companies, the decision to distribute profits is taken by the General Assembly upon the recommendation of the Board of Directors.
8- Merger and acquisition:
- Jordanian law allows the merger of companies, as one company can merge with another, and another company can acquire another company.
- Partners or shareholders must agree to the merger or acquisition process, and the procedure is under the supervision of the Ministry of Industry and Trade.
9- Filtering and Bankruptcy:
- The law contains clear texts on how to liquidate companies in case of bankruptcy or the desire to terminate the company.
- Upon liquidation, the company’s assets are sold out, its debts are paid, and the remaining (if any) is distributed to the partners or shareholders.
10- Changes in capital:
- The company’s capital may be increased or reduced by a decision of the partners in the limited liability companies, and from the general assembly of the public shareholding company, and this procedure must be carried out in accordance with the law and with official documentation.
11- Shareholders and Partners’ Equity:
- Shareholders have the right to vote in the General Assembly, get profits, and review financial reports.
- Partners or shareholders are also entitled to resort to the judiciary in the event of disputes over management of the company or the distribution of profits.
12- Conflict resolution:
- In the event of disputes between partners or shareholders, arbitration or courts may be resorted to to resolve the dispute, in accordance with the terms stipulated in the Company or bylaw.
Conclusion:
Jordanian corporate law provides a comprehensive legal framework that regulates all aspects of corporate establishment and management, from registration to liquidation. This law aims to enhance transparency, protect the rights of partners and shareholders, and ensure compliance with legal and regulatory rules.