The different type of entity set up in Jordan is governed by the Companies Law of 1997 [Law No. 22 of 1997. And it amendments As of the Official Gazette No. 57 dated 1/11/2006]. Basically, it includes Jordanian entities holding a Jordanian nationality, foreign entities having the nationality of the parent company. Also, the Foreign entities are further classified as operating and non-operating to be considered as an extension of the parent company.
Jordanian Companies
There are two types of Jordanian Entity that can be set up in Jordan – namely Private Shareholding Companies (‘PSC’) and Limited Liability companies (‘LLC’). The PSC type of companies can operate on a permanent basis and can carry out the activities as mentioned in the company registration documents.
The only distinction between the two entities is the capital requirement. A PSC can be formed with a minimum share capital of Fifty Thousand (50,000) Jordanian Dinars whereas an LLC requires to have a share capital of at least One (1) Jordanian Dinars. Also, it is important to note that LLC companies have limitations of requirement to adhere to the Companies law prescribed standard-Form and requirement to follow a strict Memorandum of Association and Articles. However, PSCs are more flexible form which can also adapt a Memorandum of Association and Articles as per the requirement and approved by the shareholders of the said entity.
The Foreign Investment regulation (Regulation No. 77 of 2016) of Jordan regulating all the investment made by non-Jordanian in the country provides for restriction on ownership in the economic sector in which the said PSC or the LLC operates – which are mainly three types:
- Complete Prohibition of foreign ownership
- Foreign ownership restriction of maximum 50%
- Foreign ownership restriction of maximum 50%
As per the amended Foreign Investment regulation non-Jordanian businessman is allowed to invest in any type of entity without any restriction, provided the proposed business activity is not subject to fulfillment of particular criteria.
Place of set up: Customs Area and Special Zone
The Foreign Investment regulation of Jordan (Law No. 30 of 2014) the main objective is to encourage the foreign investment, so that the country as a whole can derive the benefit of it. In order to achieve the said objective and attract the foreign investor the foreign investment law provides for designated Zones were upon establishment of business get special advantage and ease of doing business.
The Designated zones are further classified as Development Zone and Foreign Zone. In case the Company is registered by the foreign Investor in a zone they get various advantages like wavier on requirement to have local Jordanian as Partner, reduced tax rates, etc. Also, a company registered in a particular free zone can carry out those business activities as allowed in the said special economic zone. Some of the other advantages of setting up company in special designated zone are remittance of all or part of the investment in the foreign capital, profits and revenue earned via the business operations and liquidation of the investment as on when required subject to fulfillment of regulatory requirement.
Bottom-line
The Jordanian Investment Commission the regulatory body responsible for the registration and licensing of entities which want to set up business in Jordan are trying the make the foreign Investment Law relaxed and a create more welcoming environment for the foreign Investor.As the entities operating outside the zone are not granted the tax exemption and other advantages also are required to have a local Jordanian national as a partner. Thus, the businesses planning to expand their operation in Jordan are required to consider the type of entity and also the Zone to derive the available benefits of the foreign Investment Law.
If you are looking to set up a company in Jordan reach us at [email protected]
