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Unit 11: Tax Planning for Liquidation

the highest priority debt will be repaid first and creditors with the most subordinated debt Notes
may not be repaid at all.
(iv) Distribution of Remaining Assets: If there are any assets remaining after repaying creditors
the final step in a complete liquidation is to distribute any remaining financial assets to

the companies’ owners or shareholders. In some cases a company goes out of business

because a key member has died or retired and not because of poor financial health meaning

that there may be significant assets remaining to be distributed. Typically shareholders
are repaid in proportion to their level of ownership unless there is some agreement to the
contrary.
11.1.2 When is it Appropriate to Seek Liquidation of a Company?

Liquidation of a company should be pursued where other case working actions including
enforcement have not been successful or are unlikely to be successful given the circumstances of
the case in securing the debt and where:
(i) The tax debt is increasing and not under control; or
(ii) The company has ceased trading and the tax debt is therefore no longer increasing but
there is information available that there are assets remaining in the company which cannot
otherwise be secured and which allowing for the liquidators costs will result in some
payment by the liquidator towards the tax debts.
11.1.3 Procedure for Liquidation

The Companies Law provides for liquidation procedures for the various types of companies
including General Partnerships Limited Liability, Companies Private Shareholding Companies
and Public Limited Companies. The Law also states that the Liquidation Procedures for Public
Limited Companies shall be detailed in a regulation issued pursuant to the provisions of the
Companies Law no such regulation has been issued to date.
(i) General Partnership: The Liquidator is appointed by the partners in the event of voluntary
liquidation and by the court in the case of involuntary forced liquidation. Proceedings
commence by publishing the liquidation decision in the local papers and preparing a
list of the companies’ assets and identifying its rights and obligations via third parties.
The liquidator may not dispose of such rights or assets except with the permission of the
partners or the Court as the case may be The Company shall maintain its legal entity until
the liquidation procedures are complete.

(ii) Public and Private Limited Company: The Company shall be liquidated upon fi nal
decisions of the Court by the appointed liquidator and the Company maintains its legal
entity until liquidation procedures are complete but its operations shall be suspended.
The party that declared the liquidation must notify the Jordan Securities Commission
the Company Controller the Securities Depository Centre and the Stock Exchange the
Controller shall publish the decision in the Official Gazette and local news papers. If the

liquidation proceedings are not completed with within one year the Liquidator shall notify
the Controller and in all cases proceedings shall not exceed three years.

Did u know? In the event of voluntary liquidation the General Assembly of the Company
appoints the liquidator.
(iii) Branches of Foreign Companies: The Companies Law stipulates that the branches of foreign
companies operating in Jordan shall be subject to the same liquidation procedures under
the Law.

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