The Effectiveness of the Legal Regulation of Foreign Companies in Attracting Foreign Investment

A Comparative Analytical Study with the UAE and Saudi Legislations

Abstract

This study aims to analyze the legal framework governing foreign companies under Jordanian legislation and to assess its effectiveness in employing foreign companies as a legal vehicle for foreign investment. The study examines the legal status of both operating and non-operating foreign companies and evaluates the extent to which the existing regulatory framework achieves a balance between promoting foreign investment and ensuring regulatory oversight. The originality of this research lies in adopting a comparative analytical approach that moves beyond descriptive analysis of legal provisions to evaluate their practical efficiency in light of regional legislative experiences that have demonstrated tangible success in attracting foreign investment, particularly the UAE and Saudi models. The study applies an analytical methodology through examining the legal provisions regulating foreign companies under the Jordanian Companies Law and related legislation, alongside a comparative method aimed at identifying similarities and differences and assessing the effectiveness of the current framework. The findings indicate that the Jordanian legislator adopted the nature of business activity within the Kingdom as the primary criterion for distinguishing between operating and non-operating foreign companies, resulting in significant legal implications affecting rights, obligations, and incentives. The study further reveals that exemptions granted to non-operating foreign companies constitute an important legislative incentive enhancing investment attractiveness. However, legislative ambiguity concerning the scope of activities permitted for such companies, coupled with inconsistencies among related legislative frameworks, may negatively affect legal certainty. The study concludes with the need to refine legislative drafting, clarify permissible activities, and strengthen coordination between company, tax, and investment laws in order to enhance legal certainty and reinforce the role of foreign companies as a stable and effective instrument for foreign investment in Jordan.