The Companies Law No. 1 of 1989 provides for the following forms of business organisations to be established in Jordan:
- General Partnerships
- Limited Partnerships
- "Mahasa" Companies (unregistered companies)
- Private Shareholding Companies with Limited Liability
- Limited Partnerships in Shares
- Public Shareholding Companies
- Holding Companies
- Joint Investment Companies (Mutual Funds)
- Exempt Companies (Offshore Companies)
- Operating Foreign Companies (Branch or Project Offices)
- Non-Operating Foreign Companies (Regional Offices)
The most appropriate choices for foreign investors are the following:
PRIVATE SHAREHOLDING COMPANIES WITH LIMITED LIABILITY (PSCS)
A PSC is formed by at least two and a maximum of fifty shareholders, who may be natural or juristic persons. The liability of the shareholders is limited to their shares in the company's capital. The minimum authorised capital is set at JD. 30,000, although in the event that non-Jordanians wish to invest in such a company then the minimum amount that each non-Jordanian shareholder may invest in a PSC is JD. 100,000. The shares of a PSC cannot be offered to the public for subscription.
The management of a PSC can be entrusted to a single managing director or to a Board of Directors of 2 to 5 members who are elected for a two year term.
Foreign investors often choose to establish PSCs because of the wide freedoms available in relation to the Articles and Memorandum of Association. In general, the shareholders in a PSC are at liberty to incorporate into the Articles and Memorandum appropriate provisions specifying the number of directors representing them on the Board of Directors or adapting the required quorums and voting requirements of the ordinary and extraordinary General Assembly meetings in order to safeguard the rights and interests of minority shareholders.
PUBLIC SHAREHOLDING COMPANIES (PLCS)
A PLC is formed by two or more promoters who may be natural or juristic persons. The liability of each shareholder is limited to his shares in the company's capital. The minimum authorised capital is set at JD. 500,000, although in certain sectors the minimum share capital may be set at a different minimum (eg for banks the minimum authorised capital is currently JD. 20,000,000). The minimum amount that may be invested by a non-Jordanian investor is JD. 1,000. No single promoter may subscribe to more than 10% of the share capital of a PLC except with the prior approval of the Council of Ministers. A promoter may, however, increase his holding in the PLC subsequent to its incorporation. Shares become eligible for trading on the Amman Financial Market upon payment of 50% of the PLC's share capital.
Banks, financial companies, insurance companies and concession companies must be incorporated as PLCs, and also certain activities may only be undertaken by PLCs, such as touristic transport.
A PLC is managed by a Board of Directors consisting of 7 to 13 members who are elected for a four year term, and who must be shareholders in the PLC.
REGIONAL OFFICES
A foreign company may establish a regional office in Jordan. Regional offices can operate from Jordan anywhere in the world, but cannot operate in Jordan. The benefits enjoyed by regional offices include exempting the foreign company, the regional office and its non-Jordanian employees from all local taxes, including income tax and social services tax; the regional office may import its office equipment, furniture and business samples free of customs duties, import fees and all other related charges; and no government fees are payable upon registration of, or in connection with the operation of, the regional office.
BRANCH OFFICES
A foreign company that has been awarded a contract in Jordan requiring execution of work therein must register a branch office. A branch office is registered as a foreign operating company for the purposes of the contract and for the duration thereof. If the company obtains other contracts in Jordan, then the said registration will be extended to cover such new contracts. If no new contracts are obtained, then the branch office should be closed and liquidated in respect of the contract in respect of which the registration was effected.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Ali Sharif Zu'bi & Sharif Ali Zu'bi Law Office - Amman, Jordan - Fax: (962) 6 634277.
