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.