The Governance Instructions for Shareholding Companies for the year 2024, pursuant to paragraph (A) of Article (151) of the Companies Law No. (22) of 1997 and its amendments has been issued. These Instructions, published in the Official Gazette on June 2, 2024, came into immediate effect and apply to public shareholding companies and private shareholding companies with a subscribed capital exceeding five hundred thousand (500,000) Jordanian Dinars.

Key highlights of the Instructions include the requirement for companies with more than one owner to appoint at least one independent member to the Board of Directors if the Board consists of seven or fewer members. If the Board exceeds seven members, at least three independent members are required. Companies must disclose any challenges in meeting this requirement to the Companies General Controller, providing a clear explanation for non-compliance.

Furthermore, existing Boards of Directors elected before these Instructions were enforced will continue to serve until the end of their current term or until a new Board is elected. The Instructions also specify conditions under which a Board member's independence may be revoked, including conflicts of interest, family relationships with company executives, and prior employment with the company.

A notable aspect of the new governance rules is the emphasis on gender representation, requiring that women hold at least 20% of the Board seats, with a minimum of one seat. If a company is unable to meet this requirement, it must report the reasons for non-compliance to the Companies General Controller.

The Instructions aim to enhance transparency and governance practices through several key measures:

1. The Board must establish internal policies for financial and administrative management, internal controls, risk management, and professional conduct within four months of its election. The Board must also prepare an annual report on compliance with these Instructions.
2. Companies are required to form permanent committees, including an audit committee and a nominations and remuneration committee, both of which must include at least one independent member.
3. Companies must adopt a clear policy on disclosure and transparency, reporting any amendments to the Companies Control Department.
4. The company must ensure its external auditor has not served for more than four consecutive years and encourage shareholder participation in general assembly meetings, providing relevant documents and facilitating transparent voting procedures.

In addition to these provisions, companies must establish electronic means to invite shareholders to meetings and set up a company website in line with best practices.

These Governance Instructions represent a significant step forward in strengthening corporate governance in Jordan, ensuring greater transparency, accountability, and inclusivity in company management. We encourage all companies to review these new requirements and take the necessary steps to ensure full compliance.