Corporate Law
Rules and Procedures for Amending a Company's Capital (Increase or Decrease)
A concise overview of the legal framework and procedural steps in Jordan for increasing or reducing company capital across different corporate forms, outlining documentary and supervisory requirements. The summary addresses creditors' rights, approval and notification conditions, and specific rules applicable to joint-stock, public, private and limited liability companies.
Updated: 7 February 2023
Prepared and reviewed by: Ashraf Al-Khawaja
Legal Framework and Scope of Application
Regulation of capital increases and reductions in Jordan is governed by the Companies Law and provisions specific to each corporate form. The framework requires corporate approvals (ordinary or extraordinary general meetings) and, in certain cases, supervisory consent, while respecting statutory minimum capital thresholds for public joint-stock companies. Practically, any capital amendment must align corporate decisions with filing, publication and documentary requirements, including bank certificates and auditors' confirmations where applicable.
Mechanisms for Capital Increase and Practical Effects
Companies may increase capital by means such as issuing shares for subscription, capitalizing reserves or retained earnings, converting debts into equity with creditors' written consent, or converting convertible bonds. For limited liability companies, typical documentary requirements include an extraordinary general meeting minute, attendance list, a statement of shareholdings, a bank letter evidencing deposit of a portion (commonly 50% or the full amount depending on the case), and an auditor's certificate; the increase requires amendment of the articles and formal registration with the competent authority.
Mechanisms for Capital Reduction and Protection of Creditors
Reduction of capital is permitted where capital exceeds the company's needs or to cover losses, provided it does not fall below statutory minimums for public joint-stock companies. Reduction normally requires an extraordinary general meeting approval (often with a specified majority), submission of a creditors' list and a statement of assets and liabilities certified by the auditor, publication in two daily newspapers and notification of the regulatory officer to allow creditors to object within a specified period (the source notes a 30‑day window). The regulator may suspend reduction procedures if a court action is filed within the prescribed period.
Procedural Differences by Company Type and Required Documents
Procedural steps and documentary requirements vary by company form: exempt companies, private joint-stock, limited liability and public joint-stock companies each have specific needs such as publication requirements for reductions, general meeting minutes, attendance sheets, auditor letters and bank confirmations showing deposit of subscribed amounts. For instance, a public joint-stock capital increase may require a memorandum to the minister/competent authority for approval, while certain private joint-stock reductions call for three consecutive publications; the source also states that regulator approval is not required for reducing the unissued portion of authorized capital.
Legal notice
Note: This summary is for general educational purposes only and is based on the article linked on the original page. It does not replace review of official texts or checking for amendments and legal deadlines. Consult a licensed Jordanian lawyer to verify your specific situation and obtain actionable legal advice.
Sources and references
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