Corporate Law
Registration of Nonprofit Companies (Private Joint‑Stock): Rules and Procedures
A concise overview of Jordan's legal framework for companies that do not aim to make profit, as regulated by the Companies Law and its implementing rules. The summary focuses on the features of such entities when formed as a private joint‑stock company, the registration steps, operational requirements and limits on distributing returns.
Updated: 7 February 2023
Prepared and reviewed by: Ashraf Al-Khawaja
Nature and Legal Framework
The Jordanian legislator recognized entities intended to serve public purposes without profit motives in Companies Law No. 22/1997, with detailed rules later set out in Regulation No. 60/2007 and Law No. 73/2010. These entities are entered in a special register and must comply with specific rules that define their objectives, organizational requirements and governance procedures.
Characteristics and Operational Limits
Upon registration the company acquires legal personality and must display the phrase “does not aim to achieve profit” on its name and documents to protect third parties. Its primary purposes are social, educational, health‑related, microfinance or community training activities; any net proceeds must be retained for the company’s objectives or expansion and may not be distributed to members. Such companies may benefit from conditional income tax exemption pursuant to tax law and implementing regulations.
Substantive Distinction from For‑Profit Companies
These entities are not formally different in corporate form — the law permits their incorporation under any company type provided in the Companies Law — but the distinguishing factor is substantive: the non‑profit objective within the statutorily defined sectors. That substantive distinction triggers specific constraints regarding the use of proceeds and permissible activities even where the legal form mirrors a commercial company.
Founding Documents Requirements for a Private Joint‑Stock
If formed as a private joint‑stock company, the memorandum and articles must include mandatory corporate particulars consistent with private joint‑stock rules while respecting the prohibition on profit distribution. The documents must show the company name with the “does not aim to achieve profit” phrase, registered office and address, statutorily permitted objectives, founders’ names/nationalities/shares, authorized and subscribed capital and share values, management arrangements and board composition, and founders responsible for convening the inaugural general meeting. A subscribed capital of no less than JD 50,000 is required for the private joint‑stock form.
Registration Steps and Practical Effects
Registration applications are submitted to the Registrar (or authorized delegate) together with the memorandum and articles; the registrar issues a decision within a short statutory period and may refuse registration if legal violations are detected and must be remedied. Founders may challenge refusal to the Minister and then to the High Court. Once registration is approved, proof of payment of the required minimum capital must be provided, a registration certificate is issued and publication in the official gazette follows. Practically, the process involves document review, interagency communications if necessary, payment of fees, and issuance of the registration certificate before commencing official operations.
Legal notice
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Sources and references
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