Written by Attorney Aseel Abu Nasser
Pursuant to Circular No. (7) issued by the Palestinian Ministry of National Economy, whereby the Ministry of National Economy determined the legal period available for companies to rectify their status and make the necessary amendments to their articles of association and internal bylaws in accordance with the provisions of the new Palestinian Companies Law — the Companies Registrar decided to grant companies until the first of July to rectify their status. It is therefore necessary to work on amending the articles of association and internal bylaws of companies, each according to its nature, in conformity with the provisions of the new law. This was reflected through the call to rectify the legal status of companies, as it became evident through the announcement and circular that rectifying companies’ status requires amending their articles of association and internal bylaws in accordance with the provisions of the new law in force.
Whereas Article (339) of Decree-Law No. (42) of 2021 Concerning Companies granted these companies a period of two years from the date the law entered into force on the first of April 2022, to make the necessary amendments to rectify their status.
As regards the benefits of rectification, it should be noted that amending articles of association and internal bylaws is beneficial primarily to the company itself. For example, the registration of a private shareholding company under the old law required a minimum of two shareholders; however, the new law allows for the number of shareholders to be as few as one. Consequently, rectification enables anyone wishing to register a private shareholding company to do so with a single person only. In addition, the new law contains governance provisions aimed at protecting small companies, and accordingly rectification allows these companies to protect themselves. Furthermore, rectification promotes transparency for company owners, along with other provisions in the new law that afford companies numerous advantages they will benefit from upon rectifying their status.
These facilitations introduced by the new law will contribute to the registration of many new companies, which in turn will positively impact the Palestinian economy through the creation of new job opportunities, the activation of Palestinian capital, and the regulation of the operations of existing companies.