Limited liability companies in Jordan: another story for piercing the corporate veil

Published date26 August 2021
Date26 August 2021
Subject MatterAccounting & finance,Financial risk/company failure,Financial crime
AuthorKamal Jamal Alawamleh,Abeer Hassan Al-Qaisi,Fathi Tawfiq Alfaouri
Limited liability companies in
Jordan: another story for
piercing the corporate veil
Kamal Jamal Alawamleh,Abeer Hassan Al-Qaisi and
Fathi Tawfiq Alfaouri
Faculty of Law, University of Petra, Amman, Jordan
Purpose In different recent judgments, the Jordanian Court of Cassation, among many other Jordanian
Courts, has foundthat a limited liabilitycompanys shareholder may be held liable in additionto the company
itself as to claims related to the companys debits and different obligations. While the aforementioned
approach does constitute a departure from the well-established former approach that the same Court has
followed for a long period, the Court have unsurprisingly brought up different interpretations to the
insufcientprovisions that the Jordanian CompaniesLaw no. 22 of the year 1997 does contain pertainingthis
specic area of law. Accordingly, this paper aims to attempt to point out and critically examine the
aforementioned Courtsdecisions and law provisions to demonstrate the extent to which limited liability
companies in Jordan aretruly limited in liability and whether such Courts have piercedthe corporate veil for
Design/methodology/approach To examine the extent to which limited liabilitycompanies in Jordan
are truly limited in liability, this work uses the most relevant secondary data available in this relationas the main
method to complete such examination and this shall include different interrelated law provisions, case law and
jurisprudence. Through critically analyzing and comparing such data, this work will identify the problems
connected to this specic area of law and accordinglyproposes different recommendations and conclusions.
Findings This work submits that the aforementioned Courts and Legislatorhave not dealt with such a
matter in an adequateand comprehensive manner and that they should have addressedthis area of law in a
different and more specic way. Furthermore, this work argues that while the reasons behind the Courts
decisions shall be respected, the distinct characteristics that brought up limited liability companies into
practiceshall be also respected and left intact.
Originality/value Taking into consideration the recent different approach followed by the Jordanian
Courts to this specic area of law, andas far as the author is aware, it would not be surprising to say that
there is no comprehensiveand updated scholarly work which has either examinedsuch an issue or addressed
its implicationsfrom technical and legal standpoints. Thispaper receives its originality and value frombeing
the rst workthat examines and addresses such importantmatter.
Keywords Jordanian companies law, Limited liability companies, Piercing the veil, Shareholder liability
Paper type Research paper
1. Introduction
Limited liability companies are consideredone of the most important pillars of the economy
in the current time (Yamulki, 2006).Such importance is not new as it has accompanied these
companies and since its emergence long time ago (Algailoubi, 2011;Shafeeg, 1957;Carney,
1999). This has led some of the jurisprudence to describe these companies as the dominant
party on the economic side in many countries to the extent that its power can only be
surpassed by the powerof the state itself (Alqudah, 1998).
In view of such a role that these companiesplay, the Jordanian legislator has intervened
to regulate it, its establishment and all of its activities. In doing so, the legislator wanted to
companies in
Journalof Financial Crime
Vol.29 No. 4, 2022
pp. 1341-1355
© Emerald Publishing Limited
DOI 10.1108/JFC-07-2021-0166
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