The Companies Law

On May 15,1997 a new Companies Law was issued in Jordan, This new law is considered as one of the new laws which aim at encouraging international and local investors to invest in Jordan.
The new important provisions of the new law can be best summarized as follows:

• The possibility of setting up a new non-profit company.
• The Article Memorandum of Association can be signed not only before the Companies Controller but also before any Licensed Lawyer in Jordan.
• The heirs cannot inherit the tradename of a General Partnership unless the trade name is well-known.
• A General Partnership company must have an accountancy system if its capital is more than JD 10,000 (Ten Thousands Jordanian Dinars).
  However if its capital is more than JD 100,000 (One Hundred Thousands Jordanian Dinars) which is equivalent to US $140,000 (One Hundred and Forty Thousands US Dollars), then an Auditor shall be appointed.
• Upon the approval of the Companies'''''''''''''''''''''''''''''''' Controller, the Limited Liability Company can be formed as a "ONE Founder Partner". This concept is considered to be the same as the concept of a "One- Man Company".
• A new penalty to be imposed on the Manager of a Limited Partnership Company, if this manager simultaneously holds more than one company with the same objectives. The penalty is between JD 1,000 to JD 10,000 (One Thousands Jordanian Dinars to Ten Thousands Jordanian Dinars which is equivalent to US $ 1,400-14,000).
• The number of partners in a Limited Partnership Company must be no less than three partners.
• In general, the new law adopted simple procedures in terms of setting up the public share holding companies, as follows:
  • The feasibility study is no longer a compulsory document which should be submitted along with the application form of the company.
  • The Companies Controller has a maximum of 30 days as from the application date of registering the company to give his recommendation to the Minister of Industry and Trade regarding the establishment of the company .
    Then the Minister of Industry and Trade must give his final decision within 30 days after the controller''''''''''''''''''''''''''''''''s recommendation; otherwise, the founders will have the right to consider the company as duly registered.
• The Founders of the Partnership Company shall elect from among themselves a committee which shall undertake the responsibility of supervising the matters related to the formation of the company.
• The Founders of the Partnership Company shall pay no less than 20% of the capital and/or no less than JD 100,000 (One Hundred Thousand Jordanian Dinars).
• The Founders of the banks and the financial institutions must be more than 50 persons.
• The new law cancelled the capital tax which was mentioned in the Companies Law No. 1 in 1989.
• The new law did not include any provisions in relation to the trading of the shares, due to the fact that this matter is stated in the Law of the Amman Financial Market.

Companies law was amended by Law No. 4 in 2002  which introduced the concept of private share holding company.

The conditions of establishing this kind of companies are:-

• Its capital should not be less than $70 thousand
• Its contract should include:
  • The name of the company, its main office, its address and its aims.
  • Names of its founders, their nationalities, addresses and no. of shares owned by every one.
  • Its capital and the way of its management
  • A copy of its memorandum of Association

The said company can list its shares on the financial stock market according to the securities law.

Furthermore, Law No. 40 for the year 2002 which amended companies law authorized the state to convert any official entity to a public or private share holding company functioning according to commercial basis, and organized procedures of merging companies.