LAYING THE FOUNDATIONS

Lebanon 2014 | EXECUTIVE GUIDE | REVIEW: SETTING UP A BUSINESS IN LEBANON

The Investment Development Authority of Lebanon (IDAL) takes us through the steps of how to hit the ground running in the local business world.

The first step in beginning the process of setting up your business in Lebanon is to officially register the entity. Foreign investors and Lebanese nationals can equally establish businesses all over the country with no restrictions. There are six types of business structures that an investor can choose from.

SETTING UP A JOINT STOCK COMPANY

(JSC) OR SAL

Step 1: Completion of Preliminary Legal Tasks

• Hold a Constitutive General Assembly to elect a Board of Directors.

• Assemble the newly appointed Board of Directors to elect the company's Chairman, appoint a Principal Auditor and a Legal Advisor.

• Complete the Commercial Circular, and have it signed by the Chairman, and any other person delegated by the Board.

• Fill in the Application Form for the company's registration.

• Pay the Public Notary's fees of: 0.1% of the company's capital, a lump sum of LBP8,500 per page, and a fixed sum of LBP90,000.

Step 2: Payment of Share Capital

• Open a bank account in a Lebanese bank under the name “SAL Under Constitution."

• A copy of the By-Laws will be required, in addition to minutes of the Constitutive and first Board Meetings, and legal identification of the founders. Deposit the capital of the company (LBP30 million at least or $20,000) in the chosen bank.

• Obtain a certificate from the bank, evidencing the opening of the bank account and the subscription of each founder's shares.

Step 3: Registration at the Trade Register

• Submit all the following documents at the Trade Register and in the Court of Commerce located in the same district (or Muhafaza) as the company's head office:

- The application forms of the company's registration,

- The company's By-Laws,

- Minutes of the Constitutive General Assembly,

- Minutes of the first Board Meeting,

- The Commercial Circular,

- The certificate of bank deposit,

- Copies of legal identification for all partners/shareholders,

- Deed of property/rent registered at the municipality, or occupancy deed for the company's headquarters,

- Ask the Court of Commerce to appoint a complimentary auditor for the company,

- Pay for the stamp duty, the sum of around LBP250,000, and registration fees, and

- Pay the Magistrate Mutual Fund fee, which is 50% of the stamp duty.

Step 4: Registration at the Bar Association

• Submit a document confirming the appointment of a legal advisor at the Bar Association.

• Pay the Bar Association fee, which consists of 0.1% of the company's capital and a fixed sum of LBP100,000.

Step 5: Payment of Duties at the Ministry of Finance

• Pay the stamp duty at the Lebanese Ministry of Finance, consisting of a lump sum of LBP1 million and 0.3% of capital.

• Receive certified copies of the Certificate of Incorporation, Articles of Association, Commercial Circular, and the minutes.

• A tax identification number will be attributed to the company.

Step 6: Release of Capital

• Submit the following documents to the bank in order to release the capital that has been blocked during the registration phase:

- Minutes of the Constitutive General Assembly,

- Minutes of the first Board Meeting,

- A certified copy of the Certificate of Incorporation,

- A certified copy of the By-Laws, and

- A certified copy of the Commercial Circular.

SETTING UP A LIMITED LIABILITY COMPANY OR S.A.R.L

Step 1: Completion of Preliminary Legal Tasks

• Prepare the company's By-Laws, or Articles of Association; have them signed by the founders before a public notary in any district or directly before the Head Clerk of the Trade Register.

• Appoint one manager or more, a legal advisor, and an auditor (if applicable).

• Complete the Commercial Circular, and have it signed by the manager(s).

• Fill in the application form for the company's registration.

• Pay the public notary's fee for the Articles of Association only. The fees consist of 0.1% of the company's capital, a lump sum of LBP8,500 per page, and a fixed sum of LBP90,000.

Step 2: Payment of Capital

• Open a bank account with a Lebanese bank under the name “LLC Under Constitution". A copy of the By-Laws will be required, in addition to the minutes of the Constitutive meeting, and a legal identification of the partners.

• Deposit the capital of the company (LBP5 million at least or $3,333) in the chosen bank.

• Submit a document confirming the appointment of a legal advisor, at the Bar Association.

• Obtain a certificate from the bank, evidencing the opening of the bank account and the subscription of each founder's shares.

Step 3: Registration at the Trade Register

• Submit all the following documents at the Trade Register, in the Court of Commerce located in the same district (or Caza) as the company's head office:

- The application forms for the company's registration,

- The company's By-Laws,

- Minutes of the Constitutive General Assembly of partners,

- The Commercial Circular,

- The certificate of bank deposit,

- Copies of legal identification for all partners/shareholders,

- Deed of property/rent registered at the municipality, or occupancy,

- Deed for the company's headquarters,

• Ask the Court of Commerce to appoint a complimentary auditor for the company,

• Pay for the stamp duty, the sum of around LBP150,000, and registration fees, and

• Pay the Magistrate Mutual Fund fee, which is 50% of the stamp duty.

Step 4: Registration at the Bar Association

• Submit a document confirming the appointment of a legal advisor at the Bar Association.

• Pay the Bar Association fees, which consists of 0.1% of the company's capital and a fixed sum of LBP100,000.

Step 5: Payment of Duties at the Ministry of Finance

• Pay the stamp duty at the Lebanese Ministry of Finance consisting of a lump sum of LBP750,000 and 0.3% of capital.

• Receive certified copies of the Certificate of Incorporation, Articles of Association, Commercial Circular, and the minutes.

• A tax identification number will be attributed to the company.

Step 6: Release of Capital

• Submit the following documents to the bank in order to release the capital that has been blocked during the registration phase:

- A certified copy of the By-Laws,

- Minutes of the Constitutive General Assembly,

- A certified copy of the Certificate of Incorporation, and

- A certified copy of the Commercial Circular.

SETTING UP A BRANCH/REPRESENTATIVE OFFICE OF A FOREIGN COMPANY

Step 1: Certification at the Foreign Trade Register

• The following documents must be certified by the Trade Register and/or its equivalent (Public Notary) at the place of incorporation of the foreign company:

- Certificate of Incorporation in the foreign country,

- Copy of the By-Laws, or Articles of Association (if applicable),

- The Corporate Resolution of the company,

- Copy of the Manager's identification or passport, and

- Deed of property/rent registered at the municipality, or occupancy deed for the company's headquarters.

Step 2: Legalization & Translation

• The documents listed above must also be certified by the Lebanese embassy or consulate located in the country of the foreign company's incorporation.

• Submit all documents listed above for translation into Arabic by a sworn translator in the country of origin or in Lebanon.

Step 3: Registration at the Ministry of Economy & Trade

• Submit all translated documents listed above at the Ministry of Economy & Trade (MoET), in addition to the required registration form.

• Receive a copy of the notice of acknowledgement from the Ministry confirming the set-up of the foreign branch or office.

• Pay the translator's fees.

• Pay for the fiscal stamps, a sum of around LBP400,000.

• Pay the Registration fees of LBP1.8 million and other relevant fees.

Step 4: Registration at the Trade Register

• Submit all translated documents listed above at the Trade Register, in the Court of Commerce located in the same district (or Caza) as the foreign company's branch or office, in addition to:

- The copy of the Notice of Acknowledgement from MoET, and

- The required Registration Form.

• Pay for the fiscal stamps, a sum of around LBP400,000, and registration fees,

• Pay the Magistrate Mutual Fund fees of LBP900,000.

Step 5: Final Steps

• Receive a Certificate of Incorporation evidencing the formation of the Foreign office or Branch in Lebanon, in addition to certified copies of the By-Laws and Company Resolution.

• A Tax Identification Number will be attributed to the company.

SETTING UP AN OFFSHORE

COMPANY

Step 1: Completion of Preliminary Legal Tasks

• Prepare the company's By-Laws, or Articles of Association; have them signed by the founders before a Public Notary in whose district the company's head office is located.

• Hold a Constitutive General Assembly to elect a Board of Directors.

• Assemble the newly appointed Board of Directors to elect the company's Chairman, appoint a Principal Auditor and a Legal Advisor.

• Complete the Commercial Circular, and have it signed by the Chairman, and any other person delegated by the Board.

• Fill in the application form of the company's registration.

• Pay the public notary's fees of: 0.1% of the company's capital, a lump sum of LBP8,500 per page, and a fixed sum of LBP90,000.

Step 2: Payment of Share Capital

• Open a bank account in a Lebanese bank under the name “Offshore Under Constitution."

• A copy of the By-Laws will be required, in addition to minutes of the constitutive and first Board Meetings, and legal identification of the founders. Deposit the capital of the company (LBP30 million at least or $20,000) in the chosen bank.

• Obtain a certificate from the bank, evidencing the opening of the bank account and the subscription of each founder's shares.

Step 3: Registration at the Trade Register

• Submit all the following documents at the Trade Register, in the Court of Commerce located in the same district (or Muhafaza) as the company's head office:

- The Application Forms for the company's registration,

- The company's By-Laws,

- Minutes of the Constitutive General Assembly,

- Minutes of the first Board Meeting,

- The Commercial Circular,

- The certificate of bank deposit,

- Copies of legal identification for all partners/shareholders,

- Deed of property/rent registered at the municipality, or occupancy deed for the company's headquarters, and

- Ask the Court of Commerce to appoint a complimentary auditor for the company.

• Pay for the stamp duty, a sum of around LBP250,000, and registration fees.

• Pay the Magistrate Mutual Fund fee, which is 50% of the stamp duty.

Step 4: Registration at the Bar Association

• Submit a document confirming the appointment of a legal advisor at the Bar Association.

• Pay the Bar Association fee, which consists of 0.1% of the company's capital and a fixed sum of LBP100,000.

Step 5: Payment of Duties at the Ministry Of Finance

• Pay the stamp duty at the Lebanese Ministry of Finance, consisting of a lump sum of LBP1 million and 0.3% of capital.

• Receive certified copies of the Certificate of Incorporation, Articles of Association, Commercial Circular, and the minutes.

• A tax identification number will be attributed to the company.

Step 6: Release of Capital

• Submit the following documents to the bank in order to release the capital that has been blocked during the registration phase:

- Minutes of the Constitutive General Assembly,

- Minutes of the first Board Meeting,

- A certified copy of the Certificate of Incorporation,

- A certified copy of the By-Laws, and

- A certified copy of the Commercial Circular.

SETTING UP A HOLDING COMPANY

Step 1: Completion of Preliminary Legal Tasks

• Prepare the company's By-Laws, or Articles of Association; have them signed by the founders before a Public Notary in whose district the company's head office is located.

• Hold a Constitutive General Assembly to elect a Board of Directors.

• Assemble the newly appointed Board of Directors to elect the company's chairman, appoint a principal auditor and a legal advisor.

• Complete the Commercial Circular, and have it signed by the chairman, and any other person delegated by the board.

• Fill in the Application Form for the company's registration.

• Pay the Public Notary's fees of: 0.1% of the company's capital, a lump sum of LBP 8,500 per page, and a fixed sum of LBP90,000.

Step 2: Payment of Share Capital

• Open a bank account with a Lebanese bank under the name “Holding Under Constitution".

• A copy of the By-Laws will be required, in addition to minutes of the Constitutive and first Board Meetings, and legal identification of the founders. Deposit the capital of the company (LBP 30 million at least or $20,000) in the chosen bank.

• Obtain a certificate from the bank, evidencing the opening of the bank account and the subscription of each founder's shares.

Step 3: Registration at the Trade Register

• Submit all the following documents at the Court of Commerce located in the same district (or Muhafaza) as the company's head office:

- The Application Forms of the company's registration,

- The company's By-Laws,

- Minutes of the Constitutive General Assembly,

- Minutes of the first Board Meeting,

- The Commercial Circular,

- The certificate of bank deposit,

- Copies of legal identification of all partners/shareholders, and

- Deed of property/rent registered at the municipality, or occupancy deed for the company's headquarters.

• Ask the Court of Commerce to appoint a complimentary auditor for the company.

• Pay for Stamp Duty, a sum of around LBP250,000, and registration fees.

• Pay the Magistrate Mutual Fund fee, which is 50% of the stamp duty.

Step 4: Registration at the Bar Association

• Submit a document confirming the appointment of a legal advisor at the Bar Association.

• Pay the Bar Association fee, which consists of 0.1% of the company's capital and a fixed sum of LBP100,000.

Step 5: Payment of Duties at the Ministry Of Finance

• Pay the stamp duty at the Lebanese Ministry of Finance, consisting of a lump sum of LBP1 million and 0.3% of capital.

• Receive certified copies of the Certificate of Incorporation, Articles of Association, Commercial Circular, and the minutes.

Step 6: Release of Capital

• Submit the following documents to the bank in order to release the capital that has been blocked during the registration phase:

- Minutes of the Constitutive General Assembly,

- Minutes of the first Board Meeting,

- A certified copy of the Certificate of Incorporation,

- A certified copy of the By-Laws, and

- A certified copy of the Commercial Circular.