Corporate Law
Legal rules and procedures for converting a public joint‑stock company into a private joint‑stock company or a limited liability company
A concise overview of the legal framework and procedural steps in Jordan for converting a public joint‑stock company into a private joint‑stock company or a limited liability company, focusing on formal requirements and principal legal effects. The summary explains the practical filing steps, the role of the Companies Registrar, publicity requirements and safeguards for creditors.
Updated: 7 February 2023
Prepared and reviewed by: Ashraf Al-Khawaja
Legal framing and core definitions
This section sets out core definitions used in practice: the contractual nature of a company and the company types relevant to conversion — public joint‑stock, private joint‑stock and limited liability companies. Jordanian law treats conversion as a change of legal form that preserves the company’s corporate personality, with specific statutory provisions and civil law concepts serving as interpretive references.
Formal conditions and procedural steps for conversion in Jordan
Conversion is not automatic; it requires a formal submission and shareholder/partner approvals depending on the target form — conversion to a private joint‑stock company normally requires unanimous approval. Procedural requirements include a written application to the Companies Registrar with audited financial statements for the last two years (or one year if newly registered), an assets‑and‑liabilities estimate, public notices in two daily newspapers and verification measures that may involve expert valuation commissioned by the Registrar. Ministerial approval and its public announcement are subject to objection and judicial review, and registration/publication steps must be completed before the conversion takes effect.
Legal effects of conversion
The principal legal consequence of conversion is the continuity of the company’s corporate personality: it retains its pre‑conversion rights and obligations and its financial estate remains available to creditors. The legal nature of partner/shareholder liability may change according to the new form, but existing contracts remain effective. The statutory procedure imposes safeguards — verification of in‑kind contributions and creditor protection measures — and shareholders may remain subject to certain personal guarantees predating the conversion.
Administrative and practical obstacles and practical considerations before conversion
Companies may encounter practical and legal obstacles that frustrate conversion: ongoing losses that deter shareholders, owners’ concerns about losing control, and procedural gaps in fee and expert‑fee arrangements. Practically, the Registrar usually forms a committee to assess assets and liabilities and to determine expert remuneration, yet there may be uncertainty about how certain fees are calculated. To reduce risk, companies should prepare a robust economic and financial study, engage an auditor and independent expert(s) and retain licensed legal counsel, and coordinate with the Companies Department in advance to anticipate creditor objections and administrative requirements.
Legal notice
Disclaimer: This summary is provided for general educational and informational purposes only and does not constitute binding legal advice. The original source is linked on the firm’s page; you must verify the applicable statutes, regulations and effective dates and consult the Companies Department or a licensed Jordanian lawyer before taking any action.
Sources and references
Verify the official text and latest amendments before relying on this material professionally.