Chapter 7-5

Page 2: Responsibility of Company for Actions of the BoD or General Manager

• Powers of the BoD

  • Complete powers in managing the Company as defined in the Memorandum of Association.

  • Actions are binding on the company against bona fide third parties.

• Recourse Rights

  • The Company has the right to recourse against the BoD for compensation due to their actions.

Page 3: Public Shareholding Companies (PLC)

• Formation of a PLC

  • Minimum of two founders required to subscribe for shares.

  • Shares can be listed on the Stock Exchange.

• Single Founder Exception

  • Minister can allow a PLC formation by a single individual under certain conditions.

Page 4: Address and Duration of the PLC

• Company Name

  • Must reflect the objectives and include 'PLC'.

• Duration

  • Indefinite unless tied to a specific business objective, then it ends upon completion of that business.

Page 5: Financial Liability of the PLC

• Liability Structure

  • PLC's liability is separate from the shareholders'.

  • Shareholders are liable only in proportion to their shares.

Page 6: Operations Exclusive to PLC

• Exclusive Operations

  • Certain operations (banking, insurance) are restricted to PLCs that comply with legal provisions.

Page 7: Acceptance and Rejection of Company Registration

• Minister's Decision

  • Must issue a decision on company registration within 30 days based on the Controller's recommendation.

  • If no decision, the application is deemed approved.

• Challenging Rejections

  • Founders can challenge the Minister's decision in the Higher Court of Justice.

Page 8: Capital and Shares of the PLC

• Capital Requirements

  • Authorized capital must be at least 500,000 Dinars.

  • Subscribed capital must be at least 100,000 Dinars or 20% of authorized capital.

Page 9: Board of Directors (BoD)

• BoD Composition

  • Members must be between 3 to 13 as per the Company Memorandum.

• Elections

  • Members elected by secret ballot for a four-year term.

• Eligibility Criteria

  • Must be at least 21 years of age and not a government employee.

Page 10: Shares for BoD Membership

• Share Requirements

  • Memorandum specifies the number of shares required for BoD nomination.

  • Shares must not have encumbrances preventing disposal.

• Holding Period

  • Shares must be held for the duration of BoD membership and an additional six months post-term.

Page 11: Prohibited Persons for BoD Membership

• Eligibility Restrictions

  • Individuals convicted of felonies, certain misdemeanors, or declared bankrupt cannot be nominated for the BoD.

Page 12: Loan Prohibition for BoD Members

• Loan Restrictions

  • PLC cannot loan money to its chairman, BoD members, or their relatives, with exceptions for banks.

Page 13: Duties of the BoD

• Financial Reports

  • BoD must prepare annual accounts, including balance sheets and profit/loss statements, within three months of fiscal year-end.

  • Reports must be sent to the Controller 21 days before the General Assembly meeting.

Page 14: Publishing Financial Results

• Public Disclosure

  • BoD must publish annual financial reports within 30 days of the General Assembly meeting.

Page 15: BoD Compensation and Privileges

• Transparency

  • Annual report detailing compensation for BoD members must be available for shareholders prior to meetings.

Page 16: General Assembly Meeting Invitations

• Meeting Protocol

  • Invitations must be sent at least 14 days prior.

  • Detailed agenda and reports should be enclosed.

Page 17: Publication of Meeting Dates

• Announcement Requirements

  • Meeting dates must be announced in local newspapers and potentially on radio/TV.

Page 18: Multiple BoD Membership

• Limitations

  • Individuals can serve on the boards of up to three PLCs concurrently.

Page 19: Powers of the Chairman of the BoD

• Representation

  • Represents the Company and may delegate authority.

• Approval for Role

  • Must receive BoD approval for dual roles and compensation.

Page 20: General Manager's Duties and Powers

• Appointment and Oversight

  • BoD appoints GM with defined powers; must inform Controller of any changes.

Page 21: Third-Party Transactions

• Bona Fide Third Parties

  • Assumed to be acting in good faith unless proven otherwise, without obligation to verify restrictions in the BoD's powers.

Page 22: Liability for Company By-law Violations

• Liability Structure

  • Members accountable for breaches; consent from assemblies does not absolve responsibility.

Page 23: Disclosing Company Secrets

• Confidentiality Obligations

  • All officers must keep company information confidential under risk of dismissal and liability.

Page 24: Default Responsibility

• Negligence

  • BoD members liable for management failures. Courts determine liabilities in case of deficits.

Page 25: General Assembly Requirements

• Annual Meeting Mandate

  • Obligatory once a year, quorums and protocols defined for legality.

Page 26: Powers of the General Assembly

• Decision-Making Authority

  • Incl. reviewing prior minutes, approving financials, electing BoD and auditors, discussing borrowing and other company matters.

Page 27: Extraordinary General Assembly Meetings

• Formation Conditions

  • Can be called upon request by shareholders or auditors following specific ownership requirements.

Page 28: Quorum Guidelines

• Quorum Requirements

  • Must be above 50% for normal meetings; 2/3 for special cases.

Page 29: Extraordinary Assembly Power

• Decisions and Amendments

  • Capable of making significant governance changes such as liquidations, mergers, and capital alterations.

Page 30: General Assembly Voting Rights

• Voting Procedures

  • Requires 75% approval for significant changes, otherwise absolute majority applies for standard matters.

Page 31: Shareholder Rights in Discussions

• Participation Rights

  • Only registered shareholders 1 day before meetings may discuss and vote.

Page 32: Granting Proxy for Meetings

• Proxy Regulations

  • Shareholders may appoint proxies, with specific paperwork needed prior to meetings.

Page 33: Validity of Proxy Attendance

• Proxy Continuity

  • Valid for postponed meetings; representatives may act for shareholders.

Page 34: Controller and Auditor Attendance

• Timing for Invitation

  • Must invite relevant authorities 15 days prior to Assembly; lack of presence invalidates the meeting.

Page 35: General Assembly Decisions Binding Effect

• Legal Binding Nature

  • Decisions made in valid meetings bind all attendees and non-attendees alike.

Page 36: Contesting General Assembly Meetings

• Legal Challenges

  • Courts can adjudicate legality contestations of General Assembly actions within a 3-month window.

Page 37: Voluntary Reserve Policy

• Reserve Allocation

  • Annual deductions for reserves, used at BoD's discretion, can also be distributed.

Page 38: Auditor Elections and Responsibilities

• Auditor Appointment

  • Elected auditors must be licensed and report on company operations.

Page 39: Auditor's Responsibilities

• Duties Detailed

  • Oversight and audit of accounts, adherence to financial regulations, and reporting to the GA.

Page 40: Contents of the Auditor’s Report

• Key Reporting Elements

  • Should confirm compliance with relevant standards and accuracy of the Company’s financial status.

Page 41: Holding Companies Definition

• Key Characteristics

  • A PLC controlling subsidiaries through majority shareholding or board control.

Page 42: Prohibitions on Holding Companies

• Investment Restrictions

  • Cannot invest in partnerships or other holding companies.

Page 43: BoD Composition in Subsidiaries

• Representation Proportionality

  • Must align representation in subsidiary BoDs with shareholding proportions.

Page 44: Joint Investment Companies Regulations

• Investment Restrictions

  • Focused on managing investments according to securities laws.

Page 45: Exempt Companies Definition

• Operational Focus

  • Companies operating outside Jordan, suffix 'Exempt Company' required.

Page 46: Company Transformation Protocols

• Transformation Conditions

  • Includes procedures for changing company structures; must adhere to legal requirements.

Page 47: Joint Venture Procedures

• Merger Processes

  • Specific methods to achieve mergers must be identified as per regulations.

Page 48: Legal Identity Post-Transformation

• Continuity Assurance

  • Companies retain identity and obligations through transformations; necessary consents must be obtained.

Page 49: Merger Regulations

• Legal Successorship

  • Rights and obligations transfer to the merging entity upon completion.

Page 50: Foreign Companies Operating in Jordan

• Classification Based on Operations

  • Requirements for both active and inactive subsidiaries defined.

Page 51: Liquidation Procedures for PLCs

• Types of Liquidation

  • Voluntary and compulsory approaches with regulatory oversight required.

Page 52: Debt Settling Procedures during Liquidation

• Debt Order of Priority

  • Specific order must be followed for settling liabilities, ensuring employee and public treasury obligations take precedence.