Jordan is becoming an increasingly attractive destination for foreign investors, especially in sectors such as real estate, manufacturing, information technology, and tourism. One of the main questions many potential investors have is whether foreigners are allowed to establish a company in Jordan and, if so, what the administrative requirements are. In this article, we will provide a comprehensive overview of the process for foreigners who wish to set up a business in Jordan, along with the necessary steps and documentation required.
Establishing a Company in Jordan: A Foreign Investor’s Guide
The Jordanian government has made significant strides in recent years to improve the business climate and attract foreign investment. As part of these efforts, foreign investors are permitted to establish companies in Jordan, subject to certain conditions and legal frameworks. This makes Jordan an appealing destination for global entrepreneurs and businesses looking to expand into the Middle East and North Africa (MENA) region.
Types of Companies Foreigners Can Establish in Jordan
Foreign investors have the option to establish several types of companies in Jordan, including but not limited to:
- Limited Liability Company (LLC): This is one of the most common types of company structure in Jordan for foreign investors. An LLC in Jordan requires a minimum of two shareholders, who may be individuals or corporations. While the majority of shares can be owned by foreign investors, there is a requirement for a local Jordanian partner who must own at least 50% of the shares in certain sectors, although this may not apply to all industries.
- Joint Stock Company (JSC): A Joint Stock Company is another option, especially for larger investments. It requires a minimum of two shareholders and a capital investment, which can be substantial depending on the size of the business. JSCs are typically preferred for larger, more capital-intensive projects.
- Branch of a Foreign Company: Foreigners can also establish a branch of an existing foreign company in Jordan. This type of business operates under the name of the parent company and carries out activities related to its existing business.
- Representative Office: While not technically a fully operational company, a representative office is another way for foreign entities to establish a presence in Jordan. This office is limited to market research and promotional activities, but cannot engage in direct sales or business activities.
Administrative Requirements for Establishing a Company in Jordan
While the process for establishing a company in Jordan is generally straightforward, it does involve several key administrative steps and requirements. Below is an overview of the necessary actions for foreigners looking to set up their business.
- Business Plan and Investment Proposal: The first step for any foreign investor is to draft a comprehensive business plan and investment proposal. This document will outline the nature of the business, its objectives, target market, financial projections, and a detailed breakdown of the planned activities. A well-prepared business plan is essential for obtaining approval from the Jordanian authorities.
- Registering the Company Name: The next step is to choose a name for the company and ensure that it is available. The chosen name must be unique and not similar to existing business names. The registration of the company name is handled by the Companies Control Department, a division of the Ministry of Industry, Trade, and Supply.
- Legal Documents and Licenses: Foreign investors are required to submit several legal documents as part of the company registration process. These include:
- A copy of the foreign investor’s passport.
- Proof of legal residence or a visa in Jordan (if applicable).
- A certificate of good standing from the investor’s home country (if applicable).
- A signed partnership agreement or memorandum of association (for LLCs).
- Proof of address for the company’s office or commercial premises.
- Other documents may be required depending on the type of business being established.
Additionally, depending on the nature of the business, specific licenses or approvals may be required from relevant government departments or ministries. For example, businesses in regulated sectors such as finance, healthcare, or telecommunications will require additional licenses or certifications.
- Capital Requirements: For most types of companies, particularly LLCs and JSCs, there is a minimum capital requirement that must be deposited into a local bank account. The capital requirements vary depending on the type of company being established and the industry. Generally, the required capital for an LLC is around JD 1,000 (approximately USD 1,400), but this amount can be higher for other company types or sectors that require more investment.
- Registering with the Chamber of Commerce: After obtaining the necessary approvals and completing the paperwork, the next step is to register the company with the Jordan Chamber of Commerce. This registration provides the company with an official certificate that allows it to operate within Jordan. This registration process also includes the issuance of a tax identification number (TIN) and VAT registration if the company is expected to generate revenue above a certain threshold.
- Opening a Bank Account: Once the company is registered, it is essential to open a corporate bank account with a Jordanian bank. This account will be used for all financial transactions related to the business. Banks in Jordan generally require documentation such as the company’s registration certificate, articles of incorporation, and identification documents for the shareholders.
- Hiring Employees: If the company intends to hire employees, it must also comply with the Jordanian labor laws. This includes registering employees with the Social Security Corporation and ensuring that the company adheres to the country’s labor regulations, including wage laws, working hours, and employee benefits.
Investment Incentives for Foreigners in Jordan
Jordan offers several incentives to encourage foreign investment, including tax exemptions, customs duty reductions, and other financial incentives for businesses in specific sectors such as renewable energy, technology, and infrastructure. The Jordan Investment Commission (JIC) is responsible for promoting and facilitating foreign investment in Jordan and can assist foreign investors in navigating the regulatory process.
One key incentive for foreign investors is the ability to own 100% of the shares in certain sectors such as industry, information technology, and tourism, without needing a local partner. This policy is designed to make Jordan more attractive to international investors and promote economic growth.
Conclusion
In conclusion, it is certainly possible for foreigners to establish a company in Jordan, provided they meet the necessary administrative requirements and follow the outlined process. Jordan’s business environment is relatively investor-friendly, and the government continues to make efforts to streamline business registration procedures to attract foreign capital. By understanding the legal framework, preparing the necessary documents, and complying with Jordan’s regulations, foreign investors can successfully establish and operate a business in the country.
Foreigners who wish to set up a business in Jordan should be prepared to engage with local authorities, banks, and legal consultants to ensure they follow all necessary procedures. With the right guidance and planning, Jordan offers a wealth of opportunities for foreign entrepreneurs.
M. Rami Maki
Business Consultant