Allowing Public Legal Persons to Es
Allowing Public Legal Persons to Establish Joint-Stock Companies
Towards the end of 2015, the President issued a new decree-law that allows public law juridical persons to establish joint-stock companies (the “Law”)[1]. The Law stipulates that the capital contribution of public law juridical persons in joint-stock companies shall be allowed by way of a Prime Minister’s decree upon the approval of the Cabinet of Ministers and in accordance with the regulations it prescribes.
In general, the term "public law juridical persons" includes the State, ministries, governorates, provincial bodies, institutions and public authorities. It also includes units of local administration and other administrative departments and bodies that belong to the State.
As a general rule, public law juridical persons cannot make any capital contribution towards the establishment of any company unless it is explicitly stipulated in either its articles of association or the law governing it. Thus, the significance of this Law stems from the fact that the establishment of joint-stock companies is automatically permitted now without the need to amend or modify the laws or articles of association.
It is also worth mentioning that the new Law allows public law juridical persons to establish companies on their own, without having to adhere to the minimum number of partners stipulated in the Companies Law, i.e. three shareholders in a joint-stock company and two partners in a limited liability company.
[1] Presidential Decree/Law No. 127/2015; Official Gazette, Issue 52 (bis h), 29 December 2015.
Towards the end of 2015, the President issued a new decree-law that allows public law juridical persons to establish joint-stock companies (the “Law”)[1]. The Law stipulates that the capital contribution of public law juridical persons in joint-stock companies shall be allowed by way of a Prime Minister’s decree upon the approval of the Cabinet of Ministers and in accordance with the regulations it prescribes.
In general, the term "public law juridical persons" includes the State, ministries, governorates, provincial bodies, institutions and public authorities. It also includes units of local administration and other administrative departments and bodies that belong to the State.
As a general rule, public law juridical persons cannot make any capital contribution towards the establishment of any company unless it is explicitly stipulated in either its articles of association or the law governing it. Thus, the significance of this Law stems from the fact that the establishment of joint-stock companies is automatically permitted now without the need to amend or modify the laws or articles of association.
It is also worth mentioning that the new Law allows public law juridical persons to establish companies on their own, without having to adhere to the minimum number of partners stipulated in the Companies Law, i.e. three shareholders in a joint-stock company and two partners in a limited liability company.
[1] Presidential Decree/Law No. 127/2015; Official Gazette, Issue 52 (bis h), 29 December 2015.