Limited liability companies in the Jordanian corporate law are a separate legal entity from its owners, with the partners’ liability limited to the amount of their shares in the capital. The Jordanian Companies Law aims to regulate these companies and provide a legal framework to protect them and protect partners and creditors. The following is a summary of the most important items relating to Limited Liability Companies, in accordance with the Jordanian Companies Law:
- Establishment:
- Number of Partners: A limited liability company can be established by only one person, or more.
- Limited Liability:
- Partners shall not be liable for the company’s debts or obligations, except in the amount of their shares in the capital. That is, the financial liability of the partners is as limited as their investments.
- Management
- The company can be managed by a manager or board of directors, and the partners determine how the managers are appointed and their powers in the company’s founding contract or articles of association.
- The manager may be a partner or a person outside the company, and the company’s articles of association or articles of association are determined by the manager’s powers and duties.
- Classes:
- The shares of the partners in the LLC are not considered negotiable, and the ownership of the shares can only be transferred in accordance with the terms specified in the company’s incorporation contract.
- The transfer of quotas to third parties requires the consent of the other partners, unless the articles of association stipulate otherwise.
- Trade name:
- The LLC shall contain a name indicating its primary purpose and to add to it a ‘limited liability company’ or ‘L.L.’ to refer to the type of company.
- Filter:
- If the company decides to stop working, it can be resolved in accordance with the terms and procedures stipulated in the law. The company may enter the stage of voluntary liquidation by decision of the partners, or it may be forcibly liquidated by a court order in certain cases, such as bankruptcy or inability to meet the financial obligations.
- Financial control:
- Limited liability companies are subject to financial control through the official authorities, and they must deposit an annual budget with the Companies Supervisor Department, attached to the minutes of an ordinary general assembly meeting, approving the financial statements of the previous year and electing an auditor for the current year.
- Legal Amendments:
- The company may make amendments to its articles of association or articles of association based on a decision of the partners, provided that the approval of the concerned authorities is obtained.
- Compulsory and optional reserve:.
- It is legally obliged to establish a compulsory reserve of 10% of the company’s annual net profit until the reserve’s size reaches the registered company’s capital..
- The General Authority may decide to deduct 20% of the annual net profit as an optional reserve.
- Company losses:
- In the event that the company’s losses amounted to more than 50% of the company’s capital, the general assembly, in an unusual meeting, should correct the situation or take a decision to liquidate the company voluntary liquidation.
- In the event that the company’s losses amount to more than 75%, the General Assembly, with an extraordinary meeting, must liquidate the company or take a decision to increase its capital or extinguish the losses.