Corporate Law
Rules and Procedures for Registering an Exempt Limited Liability Company
A concise overview of the legal framework for an exempt limited liability company in Jordan, defining its activity limits and registration requirements under the Companies Law and the Exempt Companies Regulations. The summary also covers practical advantages, procedural constraints, required documents and financial guarantees.
Updated: 7 February 2023
Prepared and reviewed by: Ashraf Al-Khawaja
Concept and Legal Basis
A company is generally a contract by which two or more persons contribute to a project to share profits and losses. Article 211 of the Jordanian Companies Law defines an exempt company as a public joint-stock, partnership limited by shares, limited liability company, or private joint-stock company that is registered in Jordan but carries out its business abroad, and must include the term “exempt company” in its name. The validity of partnership contracts is also supported by traditional legal sources, and Article 6 of the Companies Law classifies the permissible company types.
Distinction from Foreign Companies and Activity Limits
An exempt company differs from a foreign company in that it acquires Jordanian registration status but conducts its business abroad, whereas a foreign company is originally registered in another state. An exempt company must not carry out its corporate purposes inside Jordan and is prohibited from offering its shares for public subscription in the Kingdom; however it may negotiate and sign contracts in Jordan and maintain a representative office for coordination. The Companies Law distinguishes between working and non-working foreign companies by reference to domicile and activity. Ownership limits for non‑Jordanian partners apply under the Regulation on Non‑Jordanian Investments for certain sectors.
Advantages, Practical Effects and Constraints
Advantages associated with exempt companies include tax exemption for income derived from activities outside Jordan under the Income Tax law, as well as potential confidentiality and asset-protection benefits depending on the jurisdiction of operation. Practically, such companies may help investors mitigate double taxation or structure ownership via the jurisdiction of registration; however they remain under the supervision of the Companies Control Department and must provide bank guarantees, disclosures and specified deposits. The prohibition on domestic public offerings and the obligation to operate only within stated purposes limit local fundraising options and non‑compliance may lead to administrative sanctions, deregistration and civil liability for losses caused.
Registration Procedures, Required Documents and Procedural Effects
Registration of an exempt limited liability company follows standard procedural steps: obtain a filing turn‑sheet, verify founders’ identities, complete the articles of association and bylaws, sign the instruments before the Companies Controller, a public notary or a licensed lawyer, and submit them for review and approval. A bank letter proving deposit of at least 50% of each partner’s contribution and a bank guarantee in the name of the Companies Controller as required by the Exempt Companies Regulations must be provided, together with any pre‑approvals necessary for certain corporate purposes and compliance with foreign‑ownership limits. Typical documents include national IDs or passports, the company contract and bylaws, and where a partner is a legal person: its registration certificate, constitutive documents and a power of attorney for the authorised signatory. Upon approval, fees are paid and the registration certificate is issued. Relevant legislative and judicial texts shape the scope of tax exemption; for example, Court of Appeal reasoning in case 1310/2022 affirmed that commission income from sales concluded abroad is exempt from tax under the Income Tax provisions.
Legal notice
Notice: This content is for general educational and informational purposes only. The original article is linked on the firm’s page; users must verify applicable laws, amendments and effective dates with official authorities. This summary does not substitute specialised legal advice; consult a licensed Jordanian lawyer for guidance tailored to the specific facts.
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