Merger of companies Jordanian Law

Jordanian Companies Law No. 22 for the year 1997 (JCL) provided for the merger and acquisition in Articles (222 – 239). Merger Article 222 (A) provides that the merged companies must have similar or complementary objectives. There are three types of mergers provided for in JCL:

Merger by the consolidation of one company or more (Merged Company) in one company or more (Merging Company) whereby the legal identity of the Merged Company dissolved and the right and obligations of it transfers to the Merging Company after cancellation of the Merged Companies registration. Merger of two companies or more (Merged Companies) in order to establish a new company which is the result of the merger while the legal identity of the Merged Companies shall be dissolved. Merger of the branches and agencies of foreign companies working in Jordan (Merged Branches/Agencies) in an existing Jordanian company or new company incorporated for this purpose whereby the legal identity of the Merged Branches/Agencies shall be dissolved. Acquisition

Article 222 (B) provides that the company may own another company by owning the shares of this company. The following procedures must be followed:

- A decision is issued by the extraordinary General Assembly of the company wishing to purchase, approving the ownership of another Company's shareholders' shares.

- A decision is issued by the extraordinary General Assembly of the company wishing to sell, approving the selling of its shareholders shares to another company.

- Completion of the stipulated approval, registration and publication procedures to transfer the shares of the shareholders of the company that decided to sell to the purchasing company. This ownership shall not be recognised until its registration and authentication are completed in accordance with the provisions of Companies Law and the Securities Law.

- The purchasing company shall pay the shares' value that is agreed upon to the selling company. This will be deposited in a special account in order to be distributed among shareholders registered on the date of the General Assembly issuing the decision to sell their shares.

- The company which shares become owned by the new shareholders shall invite the General Assembly in accordance with the provisions of Companies Law to realise the necessary amendments to its Article and Memorandum of Association and to elect a new Board of Directors.

Due diligence

Due diligence is the process of conducting an intensive...