In its pursuit of enhancing the investment environment and reinforcing its position as a regional hub attractive to business, the Hashemite Kingdom of Jordan has adopted a flexible legislative approach that supports the entry of foreign companies. One of the most prominent manifestations of this approach is the complete exemption granted to non-operating foreign companies from registration fees, reflecting a clear vision aimed at attracting expertise and paving the way for future investment.
In this context, Melhem Law and Business Office, established in 1989, plays a notable role. Since 2020, the firm has contributed to the registration of more than 55 non-operating foreign companies in Jordan, including Saudi, Emirati, Gulf, and European companies, reflecting advanced practical expertise in this field.
The presence of such companies is not merely formal; rather, it constitutes a strategic step toward market research and relationship-building through representative offices that operate on behalf of parent companies without engaging in commercial activities within the Kingdom. This article provides a concise analytical overview of the nature of such companies, the procedures for their registration, and the lawyer’s role in their establishment in accordance with applicable legal principles.
This article addresses the most important aspects related to non-operating foreign companies (regional offices) under Jordanian law, and their implications in terms of obligations, privileges, and legal restrictions, as follows:
- The nature and legal characterization of non-operating foreign companies
- Legal framework and registration procedures
- Legal advantages granted to such companies
- Legal obligations imposed on them
- Obligations upon deregistration
- The role of a Jordanian lawyer in registration and management
First: Nature and Legal Characterization of Non-Operating Foreign Companies
Definition
A non-operating foreign company in Jordan refers to a company whose head office is located outside the Kingdom and which establishes a regional or representative office within Jordan to conduct activities performed outside the Kingdom. Such a company retains its original name, maintains the same capital as the parent company, and is limited to administrative, coordination, marketing, and market research activities, without engaging in any commercial activity or generating profits within Jordan.
Upon registration, the company acquires legal personality in Jordan to the extent necessary to carry out its permitted activities, such as contracting with employees or consultants and opening bank accounts.
Legislative Purpose
Jordanian legal scholars consider that the legislator aimed, through regulating this type of company, to encourage foreign companies to establish regional offices in Jordan, thereby attracting capital, creating employment opportunities, transferring technical and administrative expertise, and preparing the local market for future direct investments.
Second: Legal Framework and Registration Procedures
Documentation Preparation and Authentication
The legislator requires foreign companies wishing to establish a regional office in Jordan to submit essential documents, including:
- Certificate of incorporation of the parent company
- Memorandum and Articles of Association
- Legal authorization for a representative in Jordan
- Financial statements
All documents must be authenticated by the competent authorities in the country of origin, the Jordanian diplomatic mission, and the Jordanian Ministry of Foreign Affairs. They must also be legally translated into Arabic and certified before a notary public in Jordan.
Registration with the Companies Control Department
A formal application must be submitted to the Companies Control Department at the Ministry of Industry and Trade, accompanied by authenticated documents, including:
- Parent company registration certificate
- Memorandum and Articles of Association
- Legal authorization for a resident representative
- Audited financial statements (last two years)
- Power of attorney for the lawyer
- Additional documents (e.g., ultimate beneficial owner declaration and undertaking not to conduct business)
Legal Personality
Upon approval and registration, the company is entered into the register of non-operating foreign companies and acquires legal personality, evidenced by a special commercial registration certificate.
Post-Registration إجراءات
These may include:
- Obtaining a professional license (if required for administrative purposes)
- Obtaining a tax number
- Registering with social security (if employing Jordanians)
- Leasing office premises
- Obtaining work permits for foreign employees
Third: Legal Advantages
Financial and Procedural Exemptions
- Full exemption from registration and publication fees
- Exemption of income generated outside Jordan from income tax and social services tax
Exemption from Professional Registration
Such companies are exempt from registration with chambers of commerce, industry, and professional associations.
Salary and Customs Exemptions
- Salaries of non-Jordanian employees are exempt from income tax
- Office equipment, samples, and furniture may be imported free of customs duties
Fourth: Legal Obligations
Prohibition of Commercial Activity
Non-operating foreign companies are strictly prohibited from engaging in any commercial activity within Jordan. Violation results in deregistration and legal liability.
Physical Presence
The company must maintain a real office in Jordan; otherwise, registration may be cancelled.
Employment of Jordanians
At least 50% of employees must be Jordanian nationals, with proper documentation submitted to authorities.
Employment of Foreign Workers
Permitted subject to:
- Approval under Jordanian labor law
- Proof of lack of local expertise
Bank Account Requirement
The company may open bank accounts in Jordan, provided that funds are transferred from abroad.
Fifth: Obligations upon Deregistration
To terminate operations, the company must:
- Settle all financial and legal obligations
- Submit closure notice
- Provide clearance certificates from authorities
- Settle customs-related exemptions
General liquidation rules apply in the absence of specific provisions.
Sixth: Role of the Jordanian Lawyer
Legal Basis
Jordanian law mandates companies, including foreign ones, to appoint a licensed Jordanian lawyer as a legal advisor under Article (43) of the Bar Association Law.
Failure to appoint a lawyer within three months results in daily penalties.
Role in Registration
The lawyer:
- Prepares and submits the registration application
- Ensures completion of documentation
- Follows up with authorities until issuance of registration
Role in Licensing and Administration
- Obtaining administrative approvals
- Drafting and notarizing lease agreements
- Representing the company before authorities
Role in Banking
- Opening bank accounts
- Ensuring compliance requirements
- Signing on behalf of the company
Work Permits
- Obtaining permits for foreign employees
- Preparing employment contracts
- Ensuring compliance with labor laws
Social Security
- Registering the company with the Social Security Corporation
- Managing employee records
Tax Representation
- Obtaining tax number
- Representing the company before tax authorities
Prepared by:
Lawyer Alaa Al-Deen Melhem
Lawyer Afaq Al-Salahin
Investment in Non-Operating Foreign Companies (Regional Offices) in Jordan
In the context of its ongoing efforts to enhance the investment environment and solidify its position as a regional hub attractive to business, the Hashemite Kingdom of Jordan has adopted a flexible legislative approach that keeps pace with the requirements of the modern economy. One of the most prominent manifestations of this approach is the full exemption granted to non-operating foreign companies from registration fees, reflecting a clear policy aimed at attracting expertise and paving the way for future investments.
In this context, the role of Melhem Law and Business Office, which has been providing its services since 1989, becomes evident. Since 2020, the firm has contributed to the registration of more than 55 non-operating foreign companies in Jordan, including Saudi, Emirati, Gulf, and European companies, reflecting advanced practical expertise in this field.
The presence of such companies is not merely formal; rather, it constitutes a strategic step toward studying the market and building relationships through representative offices that operate for the benefit of the parent companies without engaging in any commercial activity within the Kingdom. Accordingly, this article provides a concise yet structured legal overview to understand the nature of such companies, the mechanisms of their registration, and the role of the lawyer in establishing and preparing them in accordance with applicable legal principles.
This article addresses the most important matters relating to non-operating foreign companies (regional offices) under Jordanian law and their impact on legal obligations, privileges, and restrictions, as follows:
- First: The nature and legal characterization of the non-operating foreign company
- Second: The legal framework and procedures for registering a non-operating foreign company
- Third: The legal advantages granted to such companies
- Fourth: The legal obligations imposed on them
- Fifth: Obligations upon deregistration
- Sixth: The role of appointing a Jordanian lawyer
First: The Nature and Legal Characterization of the Non-Operating Foreign Company
Concept of the Non-Operating Foreign Company
A non-operating foreign company in the Kingdom refers to a company whose head office is located outside Jordan, and which establishes within the Kingdom a headquarters or representative office for activities conducted outside its territory. Such company retains its name as registered in its country of origin, and its capital remains identical to that of the parent company.
Its role is limited to administrative, coordination, marketing, and market research activities, without engaging in any commercial activity or generating any profit within Jordan.
The registration of a non-operating foreign company results in the acquisition of legal personality within the Kingdom to the extent necessary for carrying out its legally permitted activities, such as entering into contracts with employees or consultants and opening bank accounts.
The Philosophy of the Jordanian Legislator
A segment of Jordanian legal scholars holds that the legislator, through regulating non-operating foreign companies, intended to encourage foreign entities to establish regional offices within the Kingdom. This contributes to attracting capital, employing Jordanian labor, transferring technical and administrative expertise, and preparing the Jordanian market for future direct investments.
Second: Legal Framework and Procedures for Registration
Stage One: Preparation and Authentication of Documents
The Jordanian legislator requires any foreign company wishing to establish a regional office in Jordan to submit a set of core documents, most notably:
- Certificate of incorporation of the parent company
- Memorandum of Association and Articles of Association
- Legal authorization for an appointed representative within the Kingdom
- Financial statements
These documents must be duly authenticated by the competent authorities in the country of origin, then by the Jordanian diplomatic missions (embassy or consulate), and subsequently by the Jordanian Ministry of Foreign Affairs.
Furthermore, they must be translated into Arabic through a certified legal translation, particularly where the original language is not Arabic, and notarized before a public notary in the Hashemite Kingdom of Jordan.
Stage Two: Registration before the Companies Control Department
A formal application must be submitted to the Companies Control Department at the Ministry of Industry and Trade, accompanied by the required documents, provided that all documents are authenticated by the Jordanian embassy in the country of origin and the Jordanian Ministry of Foreign Affairs, and translated into certified legal Arabic.
The required documents include:
- Certificate of registration of the parent company in its country
- Memorandum and Articles of Association
- Legal authorization for a resident representative in Jordan who will act before official authorities and be appointed as the authorized signatory
- Audited financial statements for the last two years
- A general or special power of attorney granted to the lawyer handling the registration procedures and representing the company before Jordanian ministries, departments, and public institutions
- Additional documents requested by the Companies Control Department, such as disclosure of the ultimate beneficial owner and an undertaking not to conduct any commercial activity
- Completion of the registration application form, which is submitted through the appointed lawyer
Stage Three: Submission and Acquisition of Legal Personality
The application for registration is submitted along with all required documents. A registration decision is issued after verifying compliance with all legal requirements and examining the application.
Once the company is registered in the special register of non-operating foreign companies, it acquires legal personality within the Kingdom, and a special commercial registration certificate is issued confirming its legal status.
Stage Four: Post-Registration Procedures
Following registration, the company may be required to undertake several regulatory procedures, including:
- Obtaining a professional license where necessary
- Obtaining a tax number for organizational purposes
- Registration with the Social Security Corporation if Jordanian employees are hired
- Leasing premises within Jordan
- Obtaining work permits for foreign specialized labor from the Ministry of Labour
It should be noted that such procedures do not constitute authorization to conduct commercial activity.
Third: Legal Advantages Granted to Non-Operating Foreign Companies
Procedural and Financial Exemptions
Article (248) of the Jordanian Companies Law provides that non-operating foreign companies are exempt from registration and publication fees imposed on operating foreign companies, in line with their non-profit nature within the Kingdom.
Furthermore, profits generated from the company’s activities conducted outside Jordan are exempt from income tax and social services tax, as their source lies outside the Jordanian territory.
Exemption from Registration with Professional Entities
The law exempts non-operating foreign companies from registration with chambers of commerce and industry, as well as professional associations, and from any financial or regulatory obligations toward such entities, provided that the company does not engage in any commercial activity within the Kingdom.
Exemptions Related to Salaries and Customs Duties
The legislator exempts salaries and wages paid by non-operating foreign companies to non-Jordanian employees from income tax and social services tax.
Additionally, such companies are permitted to import samples, commercial models, office furniture, and equipment necessary for their operations, free from customs duties and other applicable fees, through an exemption request submitted by the company’s lawyer to the Companies Control Department.
Fourth: Legal Obligations Imposed on Non-Operating Foreign Companies
Prohibition of Conducting Commercial Activities within the Kingdom
Article (245/b) strictly prohibits non-operating foreign companies from engaging in any commercial activity within Jordan, including acting as commercial agents or intermediaries.
Violation of this provision results in the deregistration of the company and its liability for any damages caused to third parties.
This obligation is fundamental, and any breach thereof leads to cancellation of registration by a decision of the competent minister upon recommendation of the Companies Controller.
Obligation to Maintain a Physical Presence
The legislator requires the company to maintain an actual office or representative headquarters within the Kingdom as a condition for both registration and its continuation.
Failure to maintain such a presence constitutes grounds for deregistration.
Obligation to Employ Jordanian Nationals
Article (249) of the Companies Law mandates that the number of Jordanian employees must not be less than 50% of the total workforce of the non-operating foreign company.
The company must submit lists of employees, including their nationalities and duly certified employment contracts.
Failure to comply with this requirement constitutes a violation that may lead to deregistration.
Employment of Foreign Workers
The legislator permits non-operating foreign companies to employ foreign workers, subject to obtaining the necessary approvals in accordance with the provisions of the Jordanian Labour Law.
Such employment is conditional upon demonstrating that the required expertise is not available locally (i.e., specialized professions), and accordingly, work permits must be obtained for foreign labor.
Obligation to Open a Bank Account
Article (250) allows non-operating foreign companies to open bank accounts with licensed commercial banks in Jordan, whether in Jordanian Dinar or foreign currencies, provided that the funds are transferred from abroad through official banking channels.
Fifth: Obligations upon Deregistration
When a company wishes to terminate its operations within the Kingdom, it must demonstrate that all legal and financial obligations have been fully settled.
This includes:
- Submitting a formal notice of termination of activities
- Providing a declaration from the parent company confirming closure of the branch
- Obtaining clearance certificates from relevant governmental authorities
- Settling any obligations related to customs exemptions
Where applicable, general liquidation rules shall apply, in the absence of specific provisions governing the liquidation of non-operating foreign companies.
Sixth: The Role of Appointing a Jordanian Lawyer in Registration and Management
Legal Basis for Appointing a Lawyer
The Jordanian legislator mandates that foreign companies—whether operating or non-operating—as well as exempt companies, must appoint a legal representative or advisor from among lawyers registered in the official Bar Association register.
This requirement is stipulated under Article (43) of the Jordanian Bar Association Law, which provides that:
- Foreign companies, their branches, agencies, and regional or representative offices must appoint a lawyer
- Companies registered in development zones, free zones, Aqaba Special Economic Zone, or Petra Development and Tourism Region are also subject to this requirement
- Non-profit and exempt companies are likewise included
Failure to appoint a lawyer within three months from the date of establishment or registration results in a penalty of five Jordanian Dinars per day payable to the Bar Association fund.
Role of the Lawyer in Registration Procedures
The authorized lawyer undertakes all registration procedures before the Companies Control Department, including:
- Submitting the registration application
- Attaching authenticated documents
- Following up on any deficiencies
- Obtaining the registration decision
- Ensuring the company is duly entered into the official register
The lawyer also follows up on the issuance of the registration certificate and commercial registration, activates the company’s electronic services, and represents the company before official authorities based on the granted power of attorney.
Role in Obtaining Professional Licenses
Although non-operating foreign companies are exempt from commercial licensing under Article (248), practical requirements may necessitate obtaining administrative approvals or organizational licenses related to the company’s premises.
In this regard, the lawyer undertakes:
- Submission of license applications
- Drafting and notarizing lease agreements
- Following up on fees and issuance of licenses
Role in Opening Bank Accounts
Pursuant to the granted power of attorney, the lawyer represents the company before licensed commercial banks in Jordan for the purpose of opening bank accounts.
This includes:
- Submitting required documentation
- Meeting banking compliance requirements
- Signing on behalf of the company within the limits of the authorization
Role in Obtaining Work Permits
The lawyer is responsible for obtaining work permits for foreign employees from the Ministry of Labour, including:
- Submitting applications for ministerial approval (employment or recruitment)
- Providing required documents such as the company’s professional license, commercial registration, social security number, and tax number
- Demonstrating lack of local expertise through CVs, certificates, and supporting documents
The lawyer also drafts employment contracts, ensures proper certification, and follows up on permit renewals.
Role in Social Security Registration
The lawyer handles the registration of the company with the Social Security Corporation when Jordanian employees are hired, including:
- Opening a company file
- Activating the account
- Submitting employee data
Role in Tax Representation
The company may authorize a lawyer through a general power of attorney or a formal tax representation to act before the Income and Sales Tax Department for purposes such as:
- Applying for a tax number
- Obtaining certified tax registration certificates
This procedure is organizational in nature and does not contradict the tax exemptions granted to non-operating foreign companies.
Prepared by:
Lawyer Alaa Al-Deen Melhem
Lawyer Afaq Al-Salahin
References
- Jordanian Companies Law No. 22 of 1997
- Jordanian Companies Law No. 22 of 1997
- Jordanian Companies Law No. 22 of 1997
- Jordanian Companies Law No. 22 of 1997
- Jordanian Companies Law No. 22 of 1997
- Jordanian Companies Law No. 22 of 1997
- Jordanian Companies Law No. 22 of 1997
- Jordanian Companies Law No. 22 of 1997
- Jordanian Companies Law No. 22 of 1997
- Jordanian Labour Law No. 8 of 1996
- Jordanian Companies Law No. 22 of 1997
- Jordanian Companies Law No. 22 of 1997
- Jordanian Companies Law No. 22 of 1997
- Jordan Investment Commission
- Jordanian Labour Law No. 8 of 1996
- Jordanian Social Security Law No. 1 of 2014
- Jordanian Income Tax Law No. 34 of 2014