BUSINESS IN LEBANON

LEGAL STRUCTURE FOR CARRYING ON BUSINESS

Q- ARE THERE RESTRICTIONS ON FOREIGN OWNERSHIP IN LEBANON ?

A- No, Lebanon has a well developed legal system granting equal rights to Lebanese and non-Lebanese.

With only a few exceptions, foreigners are allowed to own 100% of a Lebanese company.

However, before engaging in any business activity, a foreigner must obtain a residency permit from the “Sureté Générale” and a work permit from the Ministry of Labor

Q- IS EXCLUSIVE REPRESENTATION ALLOWED IN LEBANON ?

A- Yes, provided the Agent submits to the Trade Directorate Office at the Ministry of Economy and Trade an application accompanied with :

a- dated Agreement listing the Products represented.

b- Copy of the Charter of the foreign company.

c- Certified document from the Trade Directorate Office confirming registration of agreement.

d- The Charter of the local company.

e- Commercial Circular if the applicant is a corporation.

f- Proxy document certified by a notary if the signatory is represented by an agent.

Q- WHAT ARE THE REQUIREMENTS TO FORM A COMPANY ?

A- Before engaging in any business activity, an individual whether foreigner or lebanese, must register with the Court of First Instance of the area where he plans to conduct his business. Foreigners must obtain a residency permit from the “Sureté Générale” and a work permit from the Ministry of Labor.

Q- WHAT TYPES OF COMPANIES OPERATE IN LEBANON ?

A- There are several types of Companies operating in Lebanon:

1- The Partnership Company, known as Société en Nom Collectif and defined as an association carrying on business under a collective name known as raison sociale.

This type of company is formed by two or more persons who are jointly liable for its debts and obligations.

2- The Limited Partnership Company, known as Société en Commandite Simple, is similar to the “Partnership Company” mentioned above, except that its members fall under two categories namely the General Partners (Commandités) and the Limited Partners (Commanditaires).

3- The Public Company, known as (Société Anonyme) defined as an association of a number of persons who subscribed for shares (Negotiable Securities) and who are not liable for their company’s debts beyond the amount they have contributed.

4- The Société en Commandite par Actions.

This type of Company combines the characteristics of the Société en Commandite Simple, and those of the Société Anonyme.

Here again, its members fall under two categories, namely the General Partners (Commandités), the and the Limited Partners (Commanditaires).

The status of the General Partners (Commandités) is very much the same as that of the partners in the Partnership Company (Société en Nom Collectif) namely, they are entitled to take part in the management of the business and they are liable individually and and without limitation for all the debts of their Corporation.

As to the Limited Partners (Commanditaires), their status is similar to that of the shareholders in a Anonyme, which means that their liability is limited to the amount they have contributed.

5- The Private Company, known as Société à Responsabilité Limitée, (SARL) is a form of company intended for the incorporation of small and middle-sized enterprises.

It is a small corporation that combines the characteristics of a Partnership Company (Société en Nom Collectif) and a Public Company, (Société Anonyme) in the sense that its shares a not transferable nor for public subscription, while its members are liable for the corporate debts only to the extent of their contribution.

6- The Holding Company is a form of business association that may be defined as a special type of Public Company, (Société Anonyme) which enjoys special tax advantages.

Its activities are limited to :

a- Acquire shares in foreign or local SAs and SARLs

b- Manage the Companies in which it owns shares

c- Grant loans to Companies in which it owns shares

d- Guarantee loans made to these Companies

e- Acquire intangible assets such as patents, trademarks and concessions.

f- Acquire movables and real estate for the exclusive use of the Holding Company.

7- The Offshore Company, also, is a special type of Public Company, (Société Anonyme).

However, it is granted a favourable tax treatment.

It can engage exclusively in the following activities :

a- Negotiate and sign agreements related to business to be carried out outside the Lebanese Territory for goods located outside Lebanon or in the Lebanese Free Zone.

b- Use available facilities of the Customs Free Zone to store goods intended to be re-exported.

c- Acquire real estate properties in Lebanon required for the purpose of transacting and carrying out the business.

d- Make and provide studies and consultations required by foreign establishments for execution abroad.

8- Société à Capital Variable is a Corporation whose capital may be modified.

In fact, the capital may be increased when the actual or new members make additional contributions and may be decreased when outgoing members withdraw the funds they have contributed.

9- Foreign Corporations The Legal Personality of Foreign corporations is recognized by Lebanese Law.

However, the Code de Commerce does not expressly admit it.

The registration formalities differ according to whether the Foreign Corporation intends to establish a Main Office of business in Lebanon or just a Branch.

Points of importance are:

a- Foreign Corporations that are qualified to operate in Lebanon enjoy the same powers as domestic corporations.

b- However, they may not exceed the powers they enjoy in their countries of origin.

c- Foreign Corporations as well as Lebanese corporations whose memberships include foreigners, are subject to certain disabilities for instance the acquisition of real estate in Lebanon.