Amman Financial Market (AFM) was established by special decree in 1976
as public institution acting commercial deeds in its relation with other
parties and is subject to the Commercial Law provisions unless these are
in contradiction with the Market’s Law.
The Government’s commitment towards several structural, regulatory,
and legislative reforms has led to the issuing of new laws and regulations
that improve the investment climate and attract foreign investment. Among
the new laws which affect the investment climate positively are the following:
1. The Companies Law.
2. The Financial Securities Law.
According to the Financial Securities Law, there are three bodies formed
instead of AFM. These are as follows:
1. Amman Stock Exchange (ASE)
2. The Securities Deposit Center (SDC).
3. The Jordan Securities Commission (JSC).
The commission functions are as follows:
- Control and supervision of over the ASE and the JDC.
- Regulate the process of dealing in securities.
- Regulate Disclosure of information concerning securities, issuers,
dealings of insiders, major holders, and investors.
- Regulate short sale of Securities.
- Regulate public tenders to purchase shares in public shareholding
companies.
- Regulate activities and operations of the followings:
1. Financial Services Companies.
2. Shareholding Companies.
3. Investment Companies.
4. Mutual Fund.
5. Certified Financial Professionals.
ASE is one of the most developed and fastest growing market in
the Middle East and North Africa region (MENA). It deals with two markets:
(i) Primary and (ii) Secondary. The secondary market is divided into four
parts:
1. Regular.
2. Parallel.
3. Bonds.
4. Transactions off the trading floor.
ASE consists of four main sectors: banking, insurance, services, and
industries. At the end of July 2001, the number of listed companies was 162, market capitalization was very close to US$ 5.4 billion.
(See ASE Monthly
Statistics)
A ceiling for prices is applied as a percentage of the opening prices
up or down of 5%.
ASE is open to non-Jordanian investors and they can own up to 100% of
any listed company except those companies that have to do with (i) Construction
contracting sector (ii) Commercial and commercial services sector (iii)
Mining sector. Companies in these 3 sectors can be owned up to 50%
by foreign investors. Capital gains and interest earned are exempted
from tax, but there is a 10% tax on cash dividends. For the year ended
1999,the non-Jordanian investors ownership ratio were around 43.2% of the
total market value.
