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When an M&A Deal Becomes Personal: Director Liability in Jordan
3 min 6 sec
Written by
h.abuhassan@tamimi.com 
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Every M&A transaction is, at its core, a board-level event. The decision to sell, to acquire, to merge, or to restructure belongs to the directors. So does the legal risk that follows when that decision is poorly made, inadequately documented, or driven by considerations that have nothing to do with the company’s and shareholder’s interests.
In Jordan, where the statutory framework governing directors has been reinforced in recent years, the personal exposure of board members in a transactional context is a live and growing concern. This article focuses on two of the most consequential areas of director liability in Jordanian M&A: negligence and fiduciary duty.
The legal architecture
Directors’ duties in Jordan are based on statute. There is no common-law fiduciary tradition of the kind found in English or Commonwealth jurisdictions. The primary statutory source is the Companies Law No. 22 of 1997 (as amended) (the Companies Law). This imposes on directors of public and private shareholding companies a suite of core obligations:
- to act honestly and loyally in the company’s interests;
- to exercise care and diligence;
- to act within delegated powers; and
- to avoid self-dealing and competing activity.
These baseline duties are reinforced by the Jordan Securities Commission’s Listed Companies Governance Instructions 2017 (the Listed Governance Instructions) and, significantly, its Corporate Governance Instructions for Shareholding Companies 2024 (the Corporate Governance Instructions). The latter came into force in June 2024 and elevated the governance standards expected of qualifying companies. For regulated entities such as banks and financial institutions, the Banks Law No. 28 of 2000 imposes a yet more demanding and prescriptive framework.
Each of these instruments has direct relevance to directors overseeing or participating in a transaction, and the personal consequences of falling short have never been more clearly defined.
Negligence and the standard of care
The duty of care in Jordan is measured against an objective standard: the conduct expected of a prudent person in the same position and circumstances. This objective floor is, however, subject to a subjective ceiling. A director who possesses specialist knowledge, professional expertise, or particular experience will be held to a standard commensurate with those attributes.
Jordan does not currently codify a formal business judgment rule of the kind that shields directors in other jurisdictions. However, directors may still satisfy the prudent person standard by demonstrating that they followed a structured, informed, and good-faith decision-making process.
In the M&A context, this creates a framework that rewards rigour and penalises passivity. A director who relies on a fairness opinion or an independent valuation does not automatically satisfy the duty of care simply by having commissioned the work. The Jordanian framework assumes that the director will genuinely apply their own judgment to the advice received, satisfy themselves that the adviser was appropriately qualified and independent, and ensure that the information provided to that adviser was complete and accurate. A board that approves a transaction by endorsing an adviser’s recommendation without substantive deliberation risks a finding that the requisite care was not exercised.
The standard of board minutes is therefore more than an administrative concern. The Companies Law provides that a director who voted against a resolution and had their objection recorded in the minutes may be absolved of joint and several liability arising from that resolution. This is a direct statutory incentive for minority dissent to be properly memorialised.
More broadly, minutes that record the key factors, risks, and countervailing considerations weighed by the board provide a significantly stronger basis for defending a subsequent challenge than minutes that record only the resolution itself. In a transactional context, where individual board decisions carry real financial consequences for identifiable parties, the quality of deliberation and its documentation can be the difference between personal liability and a clean exit from proceedings.
Written by
Rigorous board deliberation, independent judgment, and comprehensive documentation are not procedural formalities. They are a director's strongest defence against personal liability.
Fiduciary duty: Good faith and the best interests obligation
The duty of good faith is a pervasive principle of Jordanian law that applies to directors through multiple instruments. The Companies Law requires the authorised manager:
- to act for the company’s benefit with honesty and loyalty;
- to safeguard its rights and interests;
- to provide accurate accounts and sufficient information; and
- to refrain from any act calculated to harm the company or to benefit the manager personally at the company’s expense.
The Jordan Securities Commission’s Listed Governance Instructions require the board to act with integrity and transparency in a manner that achieves the company’s interests, objectives, and purposes. The Corporate Governance Instructions go further, requiring the board to adopt policies governing internal control, risk management, related-party transactions, conflicts of interest, and external auditor independence, all of which must be operational before a transaction is contemplated rather than assembled in its wake.
The concept of best interests in Jordanian law is understood primarily by reference to the company as a going concern, the aggregate interests of its shareholders, the preservation of its assets, the continuity of its business, and compliance with applicable laws and regulations. This is not a vague aspiration; it is an actionable standard against which a director’s transactional conduct will be assessed if a challenge follows.
A director who steers a transaction towards an outcome that serves a particular shareholder group, or their own interests, at the expense of the company as a whole, operates in direct breach of this obligation, with civil liability consequences that are personal and not dischargeable by a general assembly resolution granting a discharge.
One critical implication for M&A transactions is the shift in focus that occurs as a company’s financial position deteriorates. In ordinary circumstances, directors’ duties are owed primarily to the company and, through it, to its shareholders collectively. As a company approaches insolvency, however, the weight of obligation shifts materially towards creditors.
Decisions that prejudice the company’s ability to satisfy its debts may ground personal liability under both the Companies Law and the Insolvency Law No. 21 of 2021. Directors of companies in financial difficulty who are simultaneously managing a transaction process must navigate this shift with care, and with explicit legal advice at each stage.
Conclusion
The legal framework governing directors in Jordan has never been more consequential for parties involved in M&A. The Corporate Governance Instructions have raised the baseline of expected conduct. The Civil Law and the Companies Law together provide enforceable routes to personal liability that extend well beyond the transaction itself.
For boards overseeing a deal, whether as seller, buyer, target, or special committee, the message is consistent: the quality and integrity of the board process is itself a form of legal protection. Rigorous documentation of deliberations, genuine application of independent judgment, and demonstrable alignment with the company’s best interests are not procedural formalities. Under Jordanian law, they are the primary lines of defence.
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