Establishment of JSC

2. Subscription to the capital:

-Invite people to join the company through

publication of the prospectus.
-This prospectus must be approved by the Capital
Market General Authority.
-Must be published in two wide daily newspapers
at least one of them is in Arabic.
-The subscribers will deposit their money in a
bank named by the minister of economy.
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• Contributions:

1. Monetary: cash contributions.

2. Contribution in kind: 3 conditions must be satisfied to be
accepted:
-The statute must include all information connected to it.
-A committee headed by a chief of justice must verify
that its value is reasonably assessed.
-This assessment must be approved by the numerical
majority of subscribers holding at least 2/3 of the cash
shares excluding the owners of the in kind contribution.
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• Partners:

1. Founders:
-Not less than 3.
-They came up with the idea of establishing the
JSC and they sign the preliminary contract.

2. Subscribers:
-Not less than 3.
-They only sign the company’s statute.
 Stocks that may be issued by JSC:
1)Shares:
• A share represents a shareholder's contribution in a company.
• A share is either given for a sum of money, or it may be given for a
movable.
• A share has to have a definite nominal value.
• A share is indivisible.
• There are two types of shares:
1.Nominal share : bears the name of its holder and its ownership is
transferred by entering such transfer in the books of the company.
2.Bearer share: does not bear the name of its holder, but it belongs to
whosoever has it.
Coupons each bearing the number of the share as well as its serial
number are attached to the bearer share, and the bearer presents these
coupons to the company to receive the annual profit for that share.
 Continued
2)Founders shares:
-No founders' shares may be issued except in return for an assignment of a commitment granted by the
government or an assignment of a moral right as provided for in Article 34 of the above- mentioned
law like a patent or a trade name or other similar moral rights.
-However ownership of such a share is transferable and it may be exchanged in the stock exchange. In
which case its value would be calculated on the basis of the annual percentage of profit that the share
receives.
-Therefore, such Founders Shares may not be given in return for cash or a
contribution in kind.
-The holders of Founders' Shares may not in any way interfere in the management of the company. Should
they be allowed to attend the General Assembly but can’t vote.
-Cancellation of a Founders Shares:
Article 34 of the above mentioned Law provides for the possibility of the cancellation of a Founders
share in return for an equitable compensation. This article further provides that The General Assembly
may after the lapse of one third of the term of the company or the lapse of a maximum of ten fiscal
years form the date of granting such shares , Such cancellation shall only be affected in return for an
equitable compensation that shall be determined by a committee headed by a Chief Justice from any
judiciary authority.
Moreover, the annual profit allocated for these shares must not exceed 10% of the net profit of the
company after setting aside the reserves provided for by the law and at least 5% as profit for the capital
of the company.
 Continued
3) Bonds:
-A company wishing to increase its capital may turn to borrowing by issuing bonds.
-However bonds may not be issued except upon the approval of The General Assembly and
in general after the full capital of the company has been paid up. The value of these bonds
must not exceed the net value of the assets of the company as determined by the auditor in
accordance with the last budget approved by the General Assembly.
-Bonds are exchangeable through the commercial channels just as shares are. But the
exchange of bonds differs according to their type. If they are nominal then transfer of
ownership may not be affected except after registration of such transfer in the books of the
company, and if they were to bearer then they would be exchanged through the normal
channels.
-Rights of a bondholder:
-A bondholder may not interfere in the management of the company He may neither
attend its General Assembly nor vote in it.
-His only right is the restitution of the value of a bond: A bondholder is a creditor.
Therefore he may claim the value of the loan at the end of its term. All a company's funds
and assets guarantee this right of restitution. Therefore in the case of liquidation of a
company the shareholders may not take any of its assets before the bondholders receive
their dues in full, or else the latter would have the right to claim their dues from them.
 Continued
4)Preferential shares:
• These are shares:
1. that either grant their owners priority in receiving a
certain percentage of the profit.
2. or that grant them priority in sharing the assets of the
company upon its liquidation.
3. or that grant their owners more votes in the
deliberations of The General Assembly.
• The approval of the extraordinary GA by ¾ super
majority of the shares is a must for the JSC may to issue
preferential shares.
 Continued
5)Dividend shares:
-No company is entitled to issue dividend shares unless its statute
provides for the redemption of the shares before the end of the term
of the company in cases where the activities of a company are limited
to a concession for the exploitation of a natural resource or of a public
utility for a set term or for any other sort of exploitation of
consumable asset.
-These dividend shares which have been redeemed grant their owner
the right to continue to be a shareholder in the company, to attend its
General Assemblies, to vote in them and to get a share of the profits.
-But ordinary shareholders receive a certain portion of the profit before
granting anything to the dividend shareholders. Moreover a dividend
shareholder may not get any part of the assets of the company upon
its liquidation except after the ordinary shareholders have redeemed
the nominal.
 Continued
The most important rights of a shareholder :
-is that of getting a share of the annual profit of the company .
-and his right to a share in its assets upon its liquidation.
-furthermore the liability of the shareholder is limited to the value of the shares
that he has bought or subscribed to.
-he has the right to Assign his Shares.
-he has the right to attend the General Assemblies, to vote in them and to
question the Board of Directors:
this right is two folds: The right to attend, and the right to vote, which do not
necessarily require his attendance. For Article 59 of Law No 159 for 1981
provides that a shareholder may attend the meeting in person or he may give
a power of attorney to another shareholder to represent him. For a power of
attorney to be valid it has to be in writing and to be given to a fellow
shareholder.
-during the General Assembly every shareholder has the right to discuss the
report of the Board of Directors, the budget and the profit and loss account.