Chapter Two Merger of Companies
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| Article (222) | Conditions and Methods of Merging | |||
| A- | The merger of the companies stipulated in this Law shall be accomplished by any of the following methods, provided that the objectives of the companies wishing to merge are identical or complementary. | |||
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1.
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Through the merger of one company or more with other companies called the (merging company). The company or companies merged therein, and the corporate identity of each, shall no longer exist. The rights and obligations of the merged companies shall be carried over to the merging company, after the merged companies registration is cancelled in accordance with the following procedures: | |
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· | The issuance of a decision by the merged company stating its merger with the merging company. | ||
| · | Evaluation of the merger Company net assets and liabilities in accordance with the evaluation provisions stipulated in this Law and the regulations and instructions issued in pursuance. | |||
| · | The merging Company issuance of a decision to increase its capital by an amount not less than the evaluation value. | |||
| · | The partners and shareholders of a merger company shall bear the increase in the merging Company capital in proportion to their interest or shares therein. | |||
| · | If the merging company is a Public Shareholding Company and the period stipulated in the Securities Law has passed since its founding, then these shares can be negotiated upon their issuance. | |||
| · | Completion of the approval, registration and publication procedures stipulated in this Law. | |||
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2.
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Through the merger of two companies or more to form a new company which will be the result of that merger; the companies that have merged in the new company and the corporate identity of each of them shall no longer exists. | |||
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3.
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Through the merger of the branches and agencies of foreign companies operating in the Kingdom, with an existing or new Jordanian company established for this purpose; the said branches and agencies shall expire and the corporate entity of each of them shall no longer exist. | |||
| B- |
A company may own another company in accordance with the provisions of this Law by observing the following procedures:
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1.
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A decision is issued by the extraordinary General Assembly of the company wishing to purchase, approving the ownership of another Company shareholders’ shares. | |||
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2.
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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. | |||
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3.
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Completion of the stipulated approval, registration and publication procedures to transform the shares of the shareholders of the company that decided to sell to the purchasing company. This ownership shall not be recognized until its registration and authentication are completed in accordance with the provisions of this Law and the Securities Law. | |||
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4.
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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 with it on the date of the General Assembly issuing the decision to sell their shares. | |||
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The company whose shares become owned by new shareholders shall invite the General Assembly in accordance with the provisions of this Law to realize the necessary amendments to its Articles and Memorandum of Association and to elect a new Board of Directors.
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| Article (223) |
Merging of Two Companies of the Same Kind, and Companies Permitted to Merge into a Public Shareholding Company
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| Should two companies or more of the same kind merge with an existing company or form a new company then the merging company or the company resulting from that merger shall also be of that kind. However, a Limited Liability Company or a Limited Partnership in Shares or a Private Shareholding Company may merge with an existing Public Shareholding Company or form a new Public Shareholding Company. | ||||
| Article (224) |
Exemption of Merging and Merger Companies from Taxes and Fees
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The merger company, along with its shareholders or partners therein, and the merging company or the company resulting from the merger, along with its shareholders or partners therein, shall be exempted from all taxes and fees, including the title transfer fees, due to the merger or as a result thereof.
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| Article (225) |
Statements and Documents Accompanying the Merger Application
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The application for merger shall be submitted to the Controller together with the following statements and documents:
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A-
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The decision of the extraordinary General Assembly of each company wishing to merge, or the decision of all partners, as the case may be, approving the merger pursuant to the terms and statements specified in the merger agreement including the date set for the final merger.
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B-
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The merger agreement concluded between the companies wishing to merge duly signed by the authorized signatories on behalf of their companies. | ||
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C-
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The financial position statement of each company wishing to merge, whose date shall be closest to the date of the General Assembly decision of each company, or the decision of partners approving the merger. It shall be authenticated by the Company auditors.
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D-
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The financial statements of the last two fiscal years of the companies wishing to merge, authenticated by the auditors.
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E-
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A preliminary evaluation of the assets and liabilities of the companies wishing to merge, at the actual or market value.
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F-
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Any other statements provided for by legislation in force, or deemed necessary by the Controller. | |||
| Article (226) | Suspending the Trading of Shares of the Company Wishing to Merge Until the Completion of the Merger Procedures | |||
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The Board of Directors of each company of those wishing to merge shall notify the Controller, the Commission, the Market, and the Depository Center within ten days of the date of issuing the merger decision. The trading of their shares shall be suspended as of the date of notification of the decision. Trading in the shares of the company resulting from the merger shall resume after the completion of the merger procedures and its registration. Should the companies reverse the merger their shares’ trading shall resume.
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| Article (227) |
Controller Recommendation to the Minister if the Merger Pertains to or Produces a Public Shareholding Company
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| The Controller shall examine the application for merger and submit his recommendations to the Minister, if the merger pertains to a Public Shareholding Company, or a Public Shareholding Company will result from such merger, within thirty days from the date of submitting the application. | ||||
| Article (228) |
Duties of the Committee to Evaluate the Assets of Companies Wishing to Merge
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Should the Minister approve the application for merger, he shall form an (Evaluation Committee), whose membership should include the Controller or his representative, the auditors of the companies wishing to merge, a representative of each company and suitable number of specialized and experienced persons. The Committee shall undertake to evaluate all the assets of the companies wishing to merge along with their liabilities, in order to substantiate the net equity of the shareholders or partners, as the case may be, at the date fixed for the merger. The Committee shall submit its report to the Minister along with the opening balance sheet for the company resulting from the merger, within a period not exceeding ninety days from the date of referring the issue thereto. The Minister may extend this period for another similar period should circumstances necessitate that. The wages and remuneration of the Committee shall be determined by a decision adopted by the Minister, and they shall be equally borne by the companies wishing to merge.
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| Article (229) | Companies that have Decided to Merge shall Prepare Separate Accounts as of the Date of the Merger Decision and Until its Approval | |||
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Companies which have decided to merge must prepare separate accounts of their operations under the supervision of their auditors as of the date of the Company General Assembly issuing the decision approving the merger, and until the date of the issuance of the Company General Assembly decision approving the final merger. The results of the operations of these companies, during the said period, shall be presented to the General Assembly referred to in Article (232) of this Law, or to their partners, as the case may be, by means of an authenticated report by its auditors for approval.
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| Article (230) | Executive Procedures of a Merger | |||
| The Minister shall form an executive committee from the chairmen and members of the Boards of Directors of the companies wishing to merge, or from their managers, as the case may be, and the companies’ auditors, in order to realize the executive procedures for the merger and in particular the following: | ||||
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Determining the shares of the shareholders, or the partners’ interests in the merged companies based on the evaluation made by the (Evaluation Committee) stipulated in Article (228) of this Law. | |||
| B- |
Amending the Articles and Memorandum of Association of the merging company if same is an existing company, or preparing the Memorandum and Articles of Association for the new company emerging from the merger.
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C-
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Inviting the shareholders’ extraordinary General Assembly of each of the companies entering the merger in order to approve the following, provided that decisions are taken with a majority of 75% of the shares represented for each company separately: | |||
| 1. | The Articles and Memorandum of Association of the new company, or the amended Articles and Memorandum of Association of the merging company. | |||
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2.
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The results of the re-evaluation of the assets and liabilities of the companies, and the opening balance sheet for the new company resulting from the merger. | |||
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3.
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The final approval on the merger. | |||
| D- | The executive committee referred to herein, shall furnish the Controller with the minutes of the meeting of the General Assembly of each company within seven days from the date of the meeting. | |||
| Article (231) |
Registration of the Merging Company and Cancellation of the Merger Company and Publication of Same
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| A- |
The approval, registration, and publication procedures stipulated in pursuance of this Law should be followed for the registration of the merging company, or the company resulting from the merger, and the cancellation of the registration of the merger companies.
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| B- | The Controller shall announce in the Official Gazette, and in two local daily newspapers for two consecutive times, at the expense of the company, a summary of the merger agreement, and the results of the re-evaluation along with the opening balance sheet of the merging company or for the company resulting from the merger. | |||
| Article (232) | The Continued existence of the Boards of Directors of Companies that Request Merging Until the Merging Company is Registered | |||
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The Boards of Directors of the companies which decided to merge shall continue to exist until the completion of the registration of the merging company, or the company resulting from the merger, and the approval of the separate accounts, upon which the executive committee referred to in Article (230) shall take over the management of the company for a period not exceeding thirty days, during which it shall invite the General Assembly of the merging company or of the company resulting from the merger to elect a new Board of Directors. This should be realized after distributing the shares resulting from the merger. The General Assembly shall also elect the Company auditors
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| Article (233) |
Issuance of Merger Procedures and Objection Settlement Instructions
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The Minister shall issue instructions for the merger procedures, and shall settle the objections submitted thereon.
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| Article (234) |
Objection to the Merge by Corporate Bond Holders and the Merger and Merging Companies’ Creditors
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| A- | Corporate bonds holders and the creditors of the merging companies or the merged companies, and any concerned shareholders or partners may object to the Minister within thirty days of the date of the announcement in the local newspapers in accordance with the provisions of Article (231), provided that same states the subject of the objection, the reasons on which the objection is based and the damages which same claim that the merger inflicted on them | |||
| B- |
The Minister shall refer the objections to the Controller to settle them. If the Controller fails to do so for whatever reason within the period of thirty days from the date of referring the objections thereto, the objecting entity shall have the right to contest the merger before the Court. These objections or cases raised before the Court shall not suspend the decision to merge.
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| Article (235) | The Period and Contest Reasons of a Merger Contradicting the Law and Public Order | |||
| If the merger did not observe any of the provisions of this Law, or should the merger contradict public order, then any party with interest may file a case before the Court contesting the merger, provided that this takes place within sixty days from the date of announcing the final merger, and provided that the plaintiff indicates the reasons on which he based his case and especially the following: | ||||
| A- | Should it become evident that there are deficiencies which abrogate the merger agreement or should there be an essential and clear discrepancy in the evaluation of the shareholder’s equity. | |||
| B- | Should the merger involve an arbitrary use of rights, or should it aim to achieve a direct personal interest to the Boards of Directors of any of the merging Companies, or to the majority of shareholders in one of the Companies at the expense of the rights of the minority. | |||
| C- | Should the merger rest upon deceit or fraud, or should the merger cause harm to the creditors. | |||
| D- | Should the merger lead to a monopoly, or was preceded by a monopoly, and it becomes evident that the merger inflicts harm to the public economic interest. | |||
| Article (236) | Contesting a Merger does not Halt its Procedures | |||
| Contesting the legality of the merger shall not suspend the continuation thereof until the issuance of a final judicial decision deeming the merger invalid. The Court may, when considering the claim of invalidity of the merger, determine, as its sole discretion, a certain period to take the necessary procedures to correct the causes that led to contesting the invalidity, and it may dismiss the claim for invalidity should the concerned party adjust the positions prior to the Court issuing the judgment. | ||||
| Article (237) | Responsibility of the Chairman, Board of Directors’ Members, General Manager and Merged or Merging Companies’ Auditors for any Claims Preceding the Merger’s Date | |||
| The chairman, the members of the Board of Directors, the general manager and the auditors, of each of the merged or merging companies, shall be considered personally responsible towards third parties for any claims, commitments or claims that may be raised against the company, and that were not registered, or were not declared prior to the final merger. The Court may acquit same from this responsibility should it become certain that such persons were not responsible for those commitments and claims or were not aware thereof. | ||||
| Article (238) | The Merging Company is the legal Successor of the Merged Companies | |||
| All the rights and obligations of merged companies shall by operation of law be transferred to the merging company or the company resulting from the merger, after the completion of merging procedures and registering the company in pursuance to the provisions of this Law. The merging company or the one resulting from the merger shall be considered a legal successor to the merged companies and shall legally replace them in all their rights and obligations. | ||||
| Article (239) | Right of Merging Company to Claim from Merger Companies Obligations it Settled on their Behalf | |||
| Should liabilities or claims appear after the final merger on one of the merged companies, and should they have been hidden by some authorized persons or employees in the company, then these liabilities or claims shall be paid to the creditors by the merging company or by the company resulting from the merger who shall both have the right to claim what they paid from those authorized persons or employees who shall also be subject to the penalties for that act by the laws in force. | ||||
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Last update Thursday on 23-11-2023 at 15:26:57
