Types of companies in the Hashemite Kingdom of Jordan
Types of companies in the Hashemite Kingdom of Jordan
people companies
Persons companies: It is based on personal consideration and consists mainly of a limited number of natural partners “2-20”. The death, bankruptcy or interdiction of one of the partners results in the liquidation of the company, unless the remaining partners decide to continue the company among them in accordance with the company’s contract. They are of three types:
# Al Tadhamon Company
# Simple Recommendation Company
# joint venture
money companies
Money companies: They are companies that are based on financial considerations, so that the personality of the shareholder / partner does not have an impact on them, and these companies are not affected by what may happen to the person of the shareholder / partner as his compensation, bankruptcy or interdiction. They are of three types:
# Public Shareholding Company
# Private Joint Stock Company
# Limited Liability Company
Sole Proprietorship
Sole Proprietorship: It is a legal individual form of conducting business, and it consists of one natural person. There is no separation between its financial liability and its owner, and it does not have a legal personality.
The best types of joint stock companies in terms of financial consequences, public responsibility and ease of dealing between partners
Limited Liability Companies
A limited liability company combines the characteristics of people companies and money companies. A partner in a limited liability company is not asked about the company’s debts except to the extent of the share he provides to the company, and it is one of the most prominent features that brings it closer to money companies, where the partner is only asked to the extent of his share.
However, the limited liability company does not have the right to offer its shares for public subscription or to issue a negotiable loan bond. These advantages bring the company closer to the companies of persons. In other words, the legislator has established for businessmen a new model of types of companies that combines determining the responsibility of the partner and maintaining personal consideration:
First: Defining a Limited Liability Company
The limited liability company consists of two or more people. The company’s financial liability is considered independent of the financial liability of each partner in it. The company, with its assets and money, is responsible for the debts and obligations arising therefrom, and the partner is not responsible for those debts, obligations and losses except to the extent of his shares in the company.
The Companies Controller may approve the registration of a limited liability company consisting of one person or that it becomes owned by one person. If any partner dies in the company, his share shall pass to his heirs.
Second: The characteristics of the limited liability company:
This type of company is characterized by several characteristics, which are as follows:
1. Partner Responsibility:
Each partner in the company is responsible for the company’s debts to the extent of his share in the company’s capital. What is meant by defining the partner’s liability is that the partners in the company do not bear the obligations of the company except to the extent of their share thereof, excluding their own money, which distinguishes this type of company from general partnership companies and therefore the partner does not acquire In the limited liability company, the capacity of the merchant is a partner in it, but this capacity is limited to the company as a legal person independent of the persons of the partners. Since the partner is not responsible for the company’s obligations except to the extent of his share, the legislator requires each partner to submit documents proving that they have paid no less than (50%) of the company’s capital, and the rest is to be paid within two years from the date of registration.
2. Prohibition of public subscription or issuance of shares or bonds:
The company may not offer its shares or borrow by way of subscription, nor may it issue negotiable shares or bonds.
3. Non-dissolution of the company due to the death of one of the partners:
The company shall not be dissolved upon the death of one of the partners, but the share of each partner shall pass on his death to his heirs.
4. Restriction of Assignment of Shares of Partners:
The capital of the limited liability company is divided into shares, the value of each share is not less than one Jordanian dinar. The share is not negotiable by commercial methods. However, the partners may assign their shares to the partners or to others after the partners have no objection, as the priority is given to the partners.
5. The name of the limited liability company:
The limited liability company derives its name from its objectives, and the phrase (with limited liability) must be added to it, and its name, the amount of its capital, and its registration number should be included in all papers and publications that it uses in its business and in the contracts it concludes, in order to protect others who deal with the company.
6. Capital and shares:
The company’s capital is determined in Jordanian dinars, provided that it is not less than one thousand Jordanian dinars divided into equal shares, the value of each share is at least one indivisible Jordanian dinars, provided that each partner deposits (50%) of the value of his share in the company’s capital before completing the registration procedures and pays The rest is within two years from the date of registration.
7. Objectives of the company:
The legislator does not allow the limited liability companies that the company’s objectives be to carry out the work of banks, financial companies, insurance of all kinds, and franchised companies. The wisdom of this prohibition is that these actions relate to investing the money of others, and they are operations that involve a lot of risks, which necessitates providing a guarantee for people who invest their money in these operations. As this guarantee in limited liability companies is not available because their capital is mostly limited and they are not subject to major regulatory authorities.
Third: Establishment of a Limited Liability Company:
The application for incorporation of the limited liability company shall be submitted to the Controller, accompanied by the Memorandum of Association and Articles of Association, and shall be signed before the Controller or whomever he authorizes in writing to do so, or before a notary public or a licensed attorney. The company’s articles of incorporation must include the following data:
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1- |
The Company's name: |
It is derived from its objectives and added to it the phrase “limited liability”. |
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2- |
company goals: |
Determine the main objectives of the company |
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3- |
The main center: |
Determine the company's main business center and indicate whether it has the right to open branches inside and outside the Kingdom |
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4- |
Partner names: |
According to the civil status card or passport of the non-Jordanian partner, the nationality of each partner and the address chosen for notification. |
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5- |
The company's capital: |
Determining the company’s capital so that it is not less than one thousand dinars, unless other legislation requires its increase and a statement of the share of each partner |
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6- |
In-kind shares: |
A statement of the value of the in-kind shares in the capital, if any, and the name of the partner who provided them, their estimated value, and his commitment to transfer them to the company within a period of (30) days from the date of the company's registration. |
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7- |
Special provisions: |
Partners have the right to agree on any special provisions that do not violate applicable laws and regulations |
As for the company’s articles of association, it must include what is stated in the above-mentioned contract in addition to the following data:
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1. |
company management |
Determining if the company is managed by a manager or a board of directors, and the number of the board of directors, if chosen, must be determined so that it is not less than (2) two members and not more than (7) seven members. |
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2. |
Determine the validity |
The authority of the board of directors/manager shall be determined, including the limits and ceiling of borrowing, mortgaging assets, and guaranteeing the obligations of third parties to achieve the company's interest and objectives.. |
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3. |
waiving quotas |
Determining the terms of the assignment, the procedures to be followed, and the form in which the assignment contract must be drawn up |
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4. |
profits and losses: |
Determining how to distribute profits and losses to partners in what the partners agree upon, so that the partners may not agree to deprive one of them of the profit, or give one of the partners all the profits, or exempt one of the partners from losses, otherwise the company’s contract will be void. |
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5. |
Meetings of the General Assembly and the Board of Directors: |
Determining the legal quorum, taking decisions therein, the procedures for how to hold these meetings, and the procedures for inviting them to attend them, in a manner that does not violate the provisions of the Companies Law |
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6. |
Liquidation of the company: |
Determining the procedures in a way that does not violate the provisions of the law and the liquidation system |
Any other additional data provided by the partners (special provisions) or requested by the interested party.
The data included in the company’s memorandum of association and articles of association are not limited, but came as an example so that it may include other data provided that it does not violate the nature of the company or the general system. After completing the documentation of the company’s contract and articles of association, the following shall be done:
1. The application for company registration shall be submitted to the Controller, accompanied by the Memorandum of Association and Articles of Association, signed by all partners, before the Controller or his authorized representative, or before a notary public or a licensed lawyer, who confers on him the official capacity.
2. Upon approval of the application, the partners shall submit documents proving that no less than (50%) of the company's capital has been paid. If there are in-kind shares, their value shall be assessed by the partners. If the controller is not convinced, he shall form a committee to assess the value of the in-kind shares at the expense of the company.
3. The observer issues his decision to register and takes the following actions:
a. Pay the registration fee:
B. Issuance of registration certificate
T. Publication in the Official Gazette.
After that, the company, after its incorporation and registration, is considered a legal person of Jordanian nationality
For the purposes of the company’s practice of its business, after completing the incorporation and registration procedures, the partners shall hold a meeting to elect a board of directors and the company’s auditor and to identify the authorized signatories.
- After completing the company's registration with the Ministry of Industry and Trade, the company must be registered in the Chamber of Commerce if the company's objectives are commercial, or in the Chamber of Industry if the company's objectives are industrial.
- Then a site is chosen for the company, and the approval of the municipality to which the area belongs must be obtained before executing the lease or purchase contract, because the municipality has certain conditions in the places of distribution of the sites of shops or companies and factories and requires special approvals such as the environment, civil defense, health and others.
- After the initial approval from the municipality, the site is rented, the lease contract is signed and then certified by the municipality or the district directorate to which it belongs.
- Then the municipality issues a profession license to the company, after which the company can fully carry out its business.