The concept of venture capital companies was
introduced in the Jordanian Companies Law in 2017. Subsequently, the regulation
pertaining to Venture Capital Companies was issued in late 2018. This
regulation governs all matters related to this type of company, including the
creation of a special register called the Venture Capital Companies Register
under the supervision of the controller of companies. The register is intended
for the registration of venture capital companies and for recording any
amendments or changes that occur.
اضافة اعلان
However, no company has been registered as a venture capital
company since 2018.
If we look back, a company known as a partnership limited by shares company was introduced in the Jordanian Companies Law more than 34 years ago, specifically in the Companies Law of 1989. … Despite this fact, not a single company has been registered as a partnership limited by shares company since 1989.
If we look back, a company known as a partnership
limited by shares company was introduced in the Jordanian Companies Law more
than 34 years ago, specifically in the Companies Law of 1989. This type of
company continued to exist in the Companies Law of 1997, which replaced the
Companies Law of 1989. Despite this fact, not a single company has been
registered as a partnership limited by shares company since 1989. In fact, this
type of company still exists within the provisions of the Companies Law,
despite the 11 amendments that have been made to the Companies Law of 1997 over
the past years.
Perhaps the common feature shared between these two
companies, the partnership limited by shares company and the venture capital
company, is that the manager's liability is joint and several. In other words,
the manager of the company is personally responsible for the debts and
obligations of the company, which often discourages investors from considering
these types of companies.
Investors aim to avoid the risks associated with joint and several liability. This is likely one of the main reasons for the investors' reluctance to adopt the model of the partnership limited by shares company over the past 30 years
Investors aim to avoid the risks associated with joint
and several liability. This is likely one of the main reasons for the
investors' reluctance to adopt the model of the partnership limited by shares
company over the past 30 years. Logically, for the same reason, investors would
be hesitant to adopt the model of the venture capital company, especially
considering that the Jordanian Companies Law includes other types of companies,
such as limited liability companies or private shareholding companies, which
can serve as investment vehicles.
It may be prudent to reconsider the
provisions of the Companies Law, particularly those that are not effectively
utilized in practice, in order to avoid legislative inflation. This disease has
negative impacts on the efficiency and quality of legislation and can create
practical impediments during the application of the law.
Treating this disease should be a priority
over increasing inflation, as it would enhance the quality of legislation and
make it more attractive for investments.
Firas Malhas is a licensed Jordanian lawyer,
with a Master’s degree in International Commercial Law from the University of
Birmingham in the UK, firas.malhas@gmail.com.
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