Converting a joint stock compa...

How often have you felt that administrative complexities and legal obligations burden your company? Don't let these challenges hinder your success! Converting your joint stock company to a limited liability company is not just an organizational step, but a strategic decision that can change the game's rules in your favor. In this article, I will provide you with a practical and clear roadmap to learn how to convert a joint stock company to a limited liability company with ease and smoothness and explain the benefits and challenges that await you. Don't miss the opportunity to reformulate your company's future more simply and effectively, keep reading with me.

When do we resort to converting a joint stock company to a limited liability company?

Resorting to convert a joint stock company to a limited liability company is the best strategic option in several cases based on the company's needs and circumstances. The most prominent reasons that push companies to make this transformation are:

1- The desire to reduce the legal responsibilities and financial obligations that fall on the partners.

2- Flexibility in management without the need for the assistance of a complex board of directors or a detailed organizational structure, as the partners can manage the company themselves.

3- Reducing operating costs such as share issuance or trading fees, board of directors meetings, and general assemblies.

4- Reducing the number of partners and shareholders, as the limited liability company is characterized by a smaller number of partners and investors compared to the joint stock company.

5- The structure of limited liability companies is suitable for family businesses and small projects.

6- The lack of flexibility in decision-making is one of the most important reasons that led to converting a joint stock company into a limited liability company due to the ease of making decisions in a flexible and faster manner.

7- The company may need to change its structure to face changes and challenges in the markets.

8- The company needs to focus on profit more than expansion and growth and the structure of the limited liability company is very suitable for achieving this goal.

9- The occurrence of a partial restructuring or liquidation of the company with the desire to continue working under a simpler and more effective model.

What is the difference between a joint stock company and a limited liability company?

There are many differences between the two companies, which we explain below:

Joint stock companies

A company established between a group of partners of no less than 5 individuals and there is no maximum limit for it, and it has a specific minimum capital that cannot be established for less than this amount, and it can trade its shares or offer them for public subscription, and it is not required that the owner is the one who manages the company, as the company is managed by an elected board of directors.

Limited liability companies

A company is established by one or more persons, and its number may reach 50 shareholders, there is no minimum capital that can be established with any amount it owns, and it may not be offered for public subscription, and it is managed by its owners.

Steps to convert a joint stock company to a limited liability company

To convert a joint stock company to a limited liability company, some procedures must be followed carefully as shown:

1- Log in to your account on the ministry's website.

2- Choose a new request.

3- Some instructions will be displayed, read them carefully and focus, then click Continue.

4- Fill in the required data accurately.

5- Then attach the company's authorization file approved and authenticated by the competent authorities in PDF format.

6- Then download the required partners' decision forms.

7- Fill out the form data and modify the decision, then click Continue.

8- Choose the type of company you want to transfer to and the type of transfer decision.

9- Add the updated and valid commercial registration number.

10- Some conditions will appear, read them carefully, then choose Save and Continue.

11- Add the company file.

12- Click on Send Request.

13- After studying and approving the request, a payment invoice will be issued.

14- Pay the invoice and then document the request with the administration employee.

15- After sending the fees, the commercial register will be issued.

To ensure that the steps are implemented correctly and comply with the regulations and provisions, seek the help of "Emtmam" Company, which specializes in providing all services related to companies from the establishment, transfer of ownership, and transfer. Also, contact us.

Conditions for converting a joint stock company into a limited liability company

To convert a joint stock company into a limited liability company, the following must be met:

1- The commercial register must be current.

2- There must be no pending requests on the same register.

Documents required to convert a joint stock company to a limited liability company

There are some documents required to complete the conversion process, such as:

1- Attach a certified and authenticated copy of the shareholders' register from the Chamber of Commerce.

2- The company's articles of association.

3- The partners' decision to convert to this company.

Rights of partners in limited liability companies

Partners in limited liability companies enjoy many rights, the most prominent of which are:

1- Ensure their effective participation in the management of companies.

2- Preserve their shares of the company's profits and receive them in the same proportions that they contributed to the company's capital.

3- Participate in making all decisions and procedures related to the company and express their views freely.

Disadvantages of converting a joint stock company to a limited liability company

This process faces some disadvantages that are very important to take into account, and the most important of these disadvantages are:

1- Reducing the opportunities for obtaining public financing due to the inability of the limited liability company to issue any bonds or public subscriptions.

2- The inability to freely trade shares.

3- There is a maximum number of contributing partners in this company.

4-Some restrictions prevent it from practicing some commercial activities.

5- Loss of flexibility in expanding and growing quickly.

The most important frequently asked questions about converting a joint stock company into a limited liability company.

1- Can a limited liability company attract investments after the conversion?

Yes, but in limited ways compared to joint stock companies, because limited liability companies cannot resort to public subscription or issue any tradable shares.

2- Will the conversion process affect customers and existing contracts?

Usually, the conversion process does not affect existing contracts and customers, because it continues as an existing legal entity. However, the parties concerned must be notified of the conversion news according to the terms agreed upon in the contracts.

3- What are the fees associated with the conversion process?

The fees vary between new registration fees, fees for amending the articles of association, and legal documentation costs.