COMMERCIAL IN LEBANON Chamber of Commerce and Agriculture of Beirut and Mount Lebanon 06 00 CONTENT 01 (LLC) LETTER FROM THE CHAIRMAN 07 LIMITED 02 BY SHARES JOINT LIABILITY COMPANY 08 HOLDING COMPANIES 03 09 OFFSHORE 04 COMPANIES UNDECLARED PARTNERSHIP 10 THIRD-FOREIGN 05 COMPANIES JOINT STOCK COMPANY 2 THE CHAIRMAN LETTER FROM 01 Chamber ofCommerceIndustryandAgricultureBeirutMountLebanon restrictions on businessandinvestmentdecisions. by theconstraintofanimposed localpartneror their businessandprivateassets, unhindered Hence, foreigninvestorsretain fullcontrolover to thesamecodeoflawsand regulations. assets, andsubjectslocal foreigninvestors safeguards privateownershipofallform on capitalmovement.Suchsystemnaturally foreign tradeandtheabsenceofrestrictions distinguished byahighdegreeofopennessto environment derivefromitsfreeenterprisesystem The definingadvantagesofLebanon’s investment the establishmentprocess. assist prospectiveforeigninvestorsallthrough economy, theChamberherebyundertakesto True toitsmissionofsupportingtheprivate be aprimeronthecountry’s businesssetup. description ofvariousformsincorporationto company laws.We deemthiscomparative to theactsofincorporationunderLebanese present setofanalyticalguidelinespertaining at thedisposalofbusinesscommunity The

Mount Lebanonispleasedtoput and AgricultureofBeirut Chamber ofCommerce,Industry support . Chambers ofCommerceandotherbusiness at thebehestofliberalpolicy-makersaswell country’s investmentclimatewill be sustained We remainconfidentthatimprovementinthe foreign investors. financing comparativelymoreaccessibleto combined withahighliquidityratiorenderlocal foreign investment.Afast-growingdepositbase the attractivenessofcountryasahostto banking sectorinLebanonfurtheraddsto Unscathed bytheglobalfinancialcrisis, infrastructure projects. abundant opportunitiesinbuildingandoperating partnership approachcertainlygenerates investment environment.Thepublic-private to buildonthecompetitivenessof Evolution atthepolicy-makinglevelcontinues Mohamed NizarChoucair, Chairman

3 4 COMPANY JOINT LIABILITY 02 Chamber ofCommerceIndustryandAgricultureBeirutMountLebanon THE TYPEOFENTITYAPARTNER INAJOINTLIABILITYCOMPANY ISOFPRIMARYIMPORTANCE. PARTNERS AREJOINTLY ANDSEVERALLY LIABLEANDTHEIRLIABILITYISUNLIMITED. COMPANY, AND SHAREPROFITSLOSSESACCORDINGTOPERCENTAGES AGREEDUPON. . ALLPARTNERS INVESTTHEIRMONEY, WORK,ANDSKILLS,ORANYPART THEREOF, IN THE MORE INDIVIDUALSWITHTHELEGALCAPACITY TOUNDERTAKE COMMERCIALTRANSACTIONS FOR A JOINTLIABILITYCOMPANY ISATYPEOFCORPORATION ORPARTNERSHIP INVOLVING TWOOR OVERVIEW

5 6 A jointliabilitycompanyhasthefollowingfeatures: 1- FEATURES associates” or“and associates”. or thementionednameswillbe followedby“andhis that allnamesarenotmentioned, thetradename up ofthepartners’namesrespectively. Inthe event D- company. capacity toperformbusinessdueliquidationofthe ofthepartnerswhothenloose result, bankruptcyofthefirmmeansautomatically the legalcapacitytoperformbusiness.Asa Therefore, partnersarethosewhonaturallyenjoy considered tobemerchantsbyvirtueoflaw. C- sharing ofprofitsandlosses. B- the amountofdebttheyareresponsiblefor. company. Theymayalsoclaimfromotherpartners company’s debts mayrecoverpaymentfromthe for thecompany’s debts.Partnerswhosettlethe partners personally. Partnersareseverallyliable attempt toclaimthewholedebtfromanyof debts. Theirliabilityisunlimited.Creditorsmay A- Partnersarepersonallyliableforthecompany’s Partnersinajointliabilitycompanyare Amainfeatureofjointliabilitycompaniesisthe Thecompanyoperatesunder a tradenamemade published aswell. Any amendmenttothepartnership agreementmustbe case he/shefailstoproceed,any partnercandoso. company. Themanagerhasthedutytoregister andin commercial register, leadstothecancellation ofthe liability companywiththecourt ortoregisteritinthe Failing tofiletheconstituting document ofajoint up ofthecompany. the company’s address,withinonemonthfromtheset statements withthecommercialregisterinareaof falls, andfilingofasummarythecompany’s instance withinthejurisdictionofwhichcompany of affidavitpublicationfiledwiththecourtfirst A jointliabilitycompanycontractispublishedbyway 3- against othersunlesswritten. official orordinarydocumentandmaynotbeused A companypartnershipagreementisdraftedasan 2- ESTABLISHMENT OF A JOINT LIABILITY COMPANY LIABILITY AJOINT OF ESTABLISHMENT PUBLICATION OF A JOINT LIABILITY COMPANY LIABILITY AJOINT OF PUBLICATION F- their sharestootherpartners. of allpartners.Partnersareablethoughtogiveup allowed togiveuptheirshareswithoutpriorconsent E- Thecompanycontractisalwayswritten. Partnersinajointliabilitycompanyarenot they shallbeabsolute. . Incasetheseprerogatives arenotdefined, the partnershipagreementor inanindependent A manager’s prerogativesareusuallydefined in by themajorityneededfor appointment. an independentdocument,he or shemayberemoved In theeventthatmanagerisapartnerappointedby a manager. A companymayresorttothelegalsystemremove according tothebylawsofcompany. unanimously byallpartnersoramajorityofthem reasons. Theremovaldecisionshallbereached contract maynotberemovedunlessforserious The partnerappointedmanagerinthepartnership severally liableforthecompany’s debts. Partners inajointliabilitycompanyarepersonallyand which heorshemayhaveaspecialinterest. not concludeaspecialagreementwiththecompanyin partners, renewableonayearlybasis.Amanagermay project unlesswithaspecialauthorizationfromthe Managers ofthecompanymaynotmanageasimilar the company. more partners or toonemorepersonsfromoutside company contractorinasubsequentdocumenttoone company unlesssuchoperationsareentrustedinthe the All partnersarelegallyresponsibleforoperationsof 4- OF A JOINT LIABILITY COMPANY COMPANY LIABILITY AJOINT OF MANAGEMENT LIABILITY COMPANY: AJOINT OF DISSOLUTION THE JUSTIFYING REASONS towards thecompany. may alsodisqualifypartnersnotfulfillingtheirobligations as endedbasedontherequestofapartnerormore.It Furthermore, thecourtmayalwaysdeclareacompany A jointliabilitycompanyisendedbyanyofthefollowing: 5- manager duringhisorhermandate. A companyshallcomplywiththeundertakingsofits DISSOLUTION OF A JOINT LIABILITY COMPANY LIABILITY AJOINT OF DISSOLUTION year ofthecompany. Suchwithdrawal shallbecome at leastthreemonthspriortothe endofthefinancial the company. Suchwithdrawalmustbecompleted withdrawal doesnotharmthelegitimate interestsof up foranindefiniteperiodoftime, providingthe to withdrawfromthecompany, ifithadbeen set A- D- C- B- A- Intheeventofadecisionbyone ofthepartners Endofdurationassetincontract Lossofcompanycapital Endofitspurpose Partnersagreeingtoendthecompany determined inthecontract. may notwithdrawbeforetheendofdurationas the durationofcompanyisdefinite,apartner the financialyearofcompany. Intheeventthat effective betweenpartnersonlyaftertheendof a limitedpartnership wherethespouseand company continueswithoneof thoseandbecomes a partnerwithspouseordescendant, the the livingpartners.Inevent ofthedeath be transferred,thecompanymay continuewith no spouseordescendantsto whom rightsmay D- the commercialregister. decision mustberegisteredwiththesecretariatof without thepartnerdeclaredincompetent.Sucha decide thecontinuationoftheirpartnership absence, therestofpartnersmayunanimously the partners,theirincompetence,withdrawal,or and intheeventofbankruptcyone partners byvirtueofalegaldecision;Inallcases C- legal decision declared asincompetentorabsentbyvirtueofa B- Intheeventofonepartnersbeing Intheeventofbankruptcyone Intheeventofdeatha partnerwith a companymeanstheendofits legalentity. to it“inliquidationprocess”.The endoftheliquidation entity, thecompanywillalsokeepitstrade name adding shall taketheplaceofmanager. Bykeeping itslegal shall continuekeepingitslegal entityandtheliquidator to appointone.Duringliquidationperiod,thecompany be uptothecourtinwhichjurisdictioncompanyfalls liquidator andthepartnersdonotagreeonone,itwill of thecompanydonotappointa articles the If contributions tothepartnership. be distributedamongthepartnersbasedontheir debts, andtheconversionofitsgoodstomoney the collectionandsettlementofcompany’s The liquidationofajointliabilitycompanyincludes COMPANY LIABILITY AJOINT OF LIQUIDATION 6- same wayasitsestablishment. The dissolutionofthecompanyispublishedin spouse oradescendant,itwilllegallyceasetoexist. persons andoneofthemdiesnotleavingbehinda In theeventthatcompanyconsists of two partners. descendant (s)ofthedeceasedpartneraresilent

7 8 PARTNERSHIP LIMITED 03 Chamber ofCommerceIndustryandAgricultureBeirutMountLebanon partners’ activities: control on behalf of limited partners, the following limited Are notconsideredasinterference inmanagement for theentiredebtsofpartnership. be limitedtotheoutcomeofactivitiescarriedout,or to theextentofnaturesuchacts.Suchliabilitywill with theothergeneralpartners,foractscarriedout, having unlimitedpersonal,jointandseveralliability, along occurs, thelimitedpartnerbecomesageneral whether directlyorindirectly. Whensuchparticipation Limited partnerscannotparticipateinthemanagement merchants. . Limitedpartnerscannothavethestatusof activities areallowedtobegeneralpartnersinlimited law. Thusonlypartnersabletocarryoncommercial All generalpartnersareconsideredmerchantsby appear, they become liabletowardsthirdparties. In theeventthatlimitedpartnersallowfortheirnamesto partners” maybeadded. the caseofonegeneralpartneronly, theexpression“and only ofallorpartthenamesgeneralpartners.In A limitedpartnershipexistsunderatradenameconsisting 1- EXTENT OFTHEIRREGISTEREDINVESTMENT, ANDDONOTACQUIRETHESTATUS OF MERCHANTS. THE PARTNERSHIP; ANDTHELIMITEDPARTNERS, WHOOFFERTHEMONEY, AREONLY LIABLETOTHE HAVE MANAGEMENTCONTROLANDHAVE UNLIMITED ANDSEVERALLIABILITIESFORTHEDEBTSOF A LIMITEDPARTNERSHIP HASTWOCLASSESOFPARTNERS: THEGENERALPARTNERS WHOALONE A LIMITEDPARTNERSHIP ISAFORMOFPARTNERSHIP SIMILARLY TOAJOINTLIABILITYCOMPANY. OVERVIEW FEATURES OF A LIMITED PARTNERSHIP ALIMITED OF FEATURES outside thescope ofhis/herprerogatives c- b- a- Allowingthemanagertoundertake activities Controllingthemanager’s activities Advisingthemanager the contract. the commercialregistry, aswellanyamendment to of firstinstanceregistrar, andregistersthe contractwith a copyofthepartnershipcontract withtherelevantcourt As forajointliabilitycompany, alimitedpartnership files 3- their registeredinvestment. bankruptcy, inthattheyareonlyliabletotheextentof and thebankruptcyoffirmdoesnotmeantheir Limited partnersdonothavethestatusofmerchants well. the bankruptcyoflattermeanstheiras personally liableonthedebtsincurredbyfirm,and their namesappearinthecompany’s title.Theyare General partnershavethestatusofmerchantsand A limitedpartnershiphasandgeneralpartners. far asformation,publication,andliquidation. apply toallwhatisrelevantalimitedpartnership,as Theoretically, theregulationsofajointliabilitycompany silent partners. signed byallpartnersdefiningdividendsandgeneral same rulesasinajointliabilitycompany:writtendeed The formationofalimitedpartnershipissubjecttothe 2- FORMATION OF A LIMITED PARTNERSHIP ALIMITED OF FORMATION PUBLICATION OF A LIMITED PARTNERSHIP ALIMITED OF PUBLICATION the firm. incapacity ofanydoesnotlead tothedissolutionof of morethanonegeneralpartner, thedeath orthe incapacity, leadstotheliquidationoffirm. Incase of anonlygeneralpartneror his/her bankruptcyor rules applicabletoajointliabilitycompany. Thedeath Ending alimitedpartnershipissubjecttothesame 5- firm infrontofothers. positions inthefirmnotrequiringrepresentationof considered asinterference.Limitedpartnersmayhave Monitoring theactivitiesofgeneralpartnersisnot carried out,orfortheentiredebtsofpartnership. liability willbelimitedtotheoutcomeofactivities general partnersforthedebtsofpartnership.Such management becomesotherwisejointlyliablewiththe proxy. Thelimited partnerhavinginterferedinthe in themanagementofpartnership,evenifby separate report.Limitedpartnersmaynotinterfere an agreementisreachedinthecontractora limited partnership.Incaseofmorethanonepartner, The generalpartnershavemanagementcontrolina 4- DISSOLUTION OF A JOINT LIABILITY COMPANY LIABILITY AJOINT OF DISSOLUTION MANAGEMENT OF A LIMITED PARTNERSHIP ALIMITED OF MANAGEMENT

9 10 PARTNERSHIP UNDECLARED 04 Chamber ofCommerceIndustryandAgricultureBeirutMountLebanon commercial articles. commercial articles. ways ofevidenceaccepted inthe contract canbeproved throughall losses. Anundeclared partnership and dutiessharingofprofits by partnerssetstheirmutualrights to know. Thecontractsignedfreely and itisnotintendedforthirdparties is limitedtothecontractingparties from otherpartnershipsinthatitsentity An undeclaredpartnershipisdifferent THE COMPANY CONTRACT. AND LOSSESRESULTING FROM AGREE ONSHARINGPROFITS VIRTUE OFWHICHPARTIES PARTNERSHIP CONTRACTBY INVOLVING INDIVIDUALSINA IS ATYPEOFCORPORATION AN UNDECLAREDPARTNERSHIP OVERVIEW and anyotherpartywithregards toanymatter. therefore concludedbetweenan undeclaredpartnership behalf ofthemselvesandvice-versa. Nocontractsmaybe Partners inanundeclaredpartnership dealwithotherson others, andvice-versa. and thereforemaynottakelegalactionsagainst Undeclared partnershipsdonothavealegalentity of theareawherepartnerbeingsuedresides. defined, legalproceedingsmaytakeplaceinthecourt other companies.Intheeventthatmainofficeisnot Undeclared partnershipsdonothavealegalentitylike commercial registry. others, andtherefore,notsubjecttoregistrationinthe companies. Bydefinition,theyarenotknownfor publication processapplicabletoothercommercial Undeclared partnershipsarenotsubjecttothe such asincompetence,death,andbankruptcy… worth ofthepartnersandendsforrelevantreasons An undeclaredpartnershipisbasedonthepersonal 1- FEATURES OF AN UNDECLARED PARTNERSHIP UNDECLARED AN OF FEATURES for theirmanagement tothecompany. entered intoacontract.Managers willbeaccountable a legalbondexceptwiththepartner withwhomthey a contractwiththemanageror apartnerwillnothave but intheinterestofcompany. Thosewho enterinto each partnerwilldealwithothers onhis/herownbehalf the eventthatpartnersdo not appointamanager, deal withotherswithoutstatingthepartners’names.In individual whowillmanagethecompany. Amanagerwill Partners agreeamongthemselvestoappointan PARTNERSHIP UNDECLARED AN OF MANAGEMENT 2- bankruptcy rules. to obligationsincurredbythemerchantsandneither commercial. Anundeclaredpartnershipisnotsubject as acommercialcompany, evenifitspurposeis undeclared partnershipisnotnecessarilyconsidered While mentionedintheCommercialLaw, an thus becomesliable. purpose, itwillbeconsideredasarealcompanyand itself toothersandoperatesindependentlyfromits In theeventthatanundeclaredpartnershipdeclares

11 12 COMPANY JOINT STOCK 05 Chamber ofCommerceIndustryandAgricultureBeirutMountLebanon members of BeirutStockExchange andmusttherefore payayearly subscription. laws andpractices, andshareholdersdonothavethestatus ofmerchants.Jointstockcompanies areinevitably A jointstockcompany isalwaysacommercialcorporation regardlessofitspurpose.Itissubject tocommercial ’ liabilityinajointstockcompany onlyextendstothefacevalueoftheirshareholding. shares andarefreetotransfertheirownership interestatanytime.Contrarytoapartnership,thelimitof companies. Thecapitalofajointstock companyisdividedintosharesandshareholdersownoneormore Contrary toapartnership,jointstock companyhasacapitalandisconsideredasmodelfor other andwhomaynotactnorspeak on behalfofthecompany. joint stockcompanyisdifferent fromapartnership.Itinvolvesshareholderswhomay notnecessarilyknoweach company. Thecompany’s commoncapital ismadeupofthemonetaryandinkindofferings ofthepartners.A A jointstockcompanyisafinancialpartnershipinvolvingthreeormoreindividuals owningsharesofstockinthe ALL OFTHEPARTNERS ARESOMETIMESLISTED. ANONYMOUS COMPANY MEANINGACOMPANY WITHNOADDRESS,WHERETHENAMESOFONEOR SYMBOLIZING INFRENCH“SOCIETEANONYMELIBANAISE”ANDINDICATE THEPRESENCEOFAN THE LETTERS“S.A.L”FOLLOWINGTRADENAMEOFAJOINTSTOCK COMPANY ARETHEINITIALS OVERVIEW

13 14 and inkindofferings. amount, profitsdistribution,number ofboardmembers, purpose, duration,capital,value ofshares,prepaid the founders,nameofcompany, itshead office, must bearthenames,signatures, andaddressesofall newspaper, andinaneconomicpaper. Suchanotice the officialgazette,inadailylocal generalcirculation the company, theyfirsthavetopublishthenoticein the possibilityofsubscriptiontoacquiresharesin When foundersdecidetoannouncethepublic 3- needed anymore. public. Asaresult,thegovernmentpermitwasnot registering thearticlesofassociationwithnotary were abletostarttheformationprocedurebyfilingand Only after1977,thefoundersofajointstockcompany a governmentpermitissuedbydecree. A jointstockcompanyusedtobeformedbyvirtueof members oftheboardandtheirprerogatives. bearer), securities,profitsdistributionandmanagement, number ofshares,valueandtypeshares(nominalor company name,purpose,duration,mainoffice,capital, these articleswhichwillbecomethechartofcompany: involving theshareholders.Suchitemsmustbeincludedin special itemsstipulatedintheCommercialLawand association ofajointstockcompanywhichmustinclude The subscribingshareholdersmustdraftthearticlesof 2- not contributetoajointstockcompany. , ortowritecheckswithinsufficientfunds,may or embezzlement,tocauseprejudicetheState’s for havingcommittedortriedtocommitfelony, orfraud, indicted inLebanonorabroadsincelessthantenyears reinstated sincetenyearsatleast,orwhohasbeen An individualwhoisdeclaredbankruptandhasnotbeen may notbelessthanthree. The numberofshareholdersinajointstockcompany FOUNDERS) (OR SHAREHOLDERS 1-SUBSCRIBING OF ARTICLES PUBLICATION IN THE NEWSPAPERS IN THE PUBLICATION subscribers and theamountpaidbyeach.These “under establishment”withalist ofthenames in thenameofcompanyfollowed bythephrase any recognizedbankinaspecial accountopened Amounts paidbyshareholders will bedepositedat those activitiesaresubjecttospecial regulations. activities. Jointstockcompanies dealingwithanyof if thepurposeofcompanyisinsuranceorbanking The minimumcapitalandpartialpaymentmaynotapply The entirecapitalmustbesubscribed. set bytheboardofdirectors. The balanceforeachsharewillbesettledonthedates value ofeachsharemustbepaiduponsubscription. Lebanese poundspershare.Atleastonequarterofthe shares ofequalvaluenolessthanonethousand than thirtymillionLebanesepounds.Itisdividedinto The capitalofajointstockcompanymaynotbeless 7- majority ofshareholdersarenotLebanese. Lebanon isconsideredipsojureLebaneseevenifthe A jointstockcompanyformedanddulyregisteredin 6- Lebanese territories. All jointstockcompaniesmusthaveaheadofficeonthe 5- must returntosubscriberstheprepaidamounts. In theeventthatcompanyisnotformed,founders quarter ofthevalueshares. committed to,meaningthepaymentofatleast must bemade.Subscribersimplementwhatthey but thisdoesnotmeanthatpaymentforthefullvalue subscribe to.Allcompanysharesmustbesubscribedto the quarterofpricesharestheywantto from thecompanycapital.Subscriberspayatleast subscriber commitstobuyinganumberofshares through awrittendeedwherebyanindividualcalled Subscription toajointstockcompanycapitalisdone 4- SUBSCRIPTION TO A JOINT STOCK COMPANY CAPITAL COMPANY STOCK AJOINT TO SUBSCRIPTION CAPITAL OF THE COMPANY: INCREASE-DECREASE COMPANY: THE OF CAPITAL NATIONALITY OF THE COMPANY THE OF NATIONALITY COMPANY STOCK AJOINT OF OFFICE HEAD Owning sharesgivesshareholdersthefollowingrights: and canbecirculated. property. Theyrepresentpartofthecompanycapital and voteequalityinmeetings.Sharesaremovable by share,equalliabilityforthecompany’s debts, equal valueshares.Thissignifiesrightsoffered The capitalofajointstockcompanyisdividedinto 8- Lebanese shareholders. shareholders andmaynotbetransferredbutto public interestmustbenominalsharesforLebanese The thirdofthecapitaljointstockcompaniesserving within threemonthsofthepublicationdate. the officialgazettetoenableotherseventuallyobject rights ofothers.Suchadecisionmustbepublishedin meeting, providingthedecisiondoesnotharm of thecapitalcompanyinanextraordinarygeneral Shareholders alsohavetherighttodecidedecrease of thesamenominalvaluepershareasoldshares. an extraordinarygeneralmeetingbyissuingnewshares shareholders mayincreasethecapitalofcompanyin Once theentirecapitalofcompanyispaid, expert dulyappointedbythecourt. The inkindcontributionsaresubjecttoappraisalbyan and registeredinthecommercialregister. amounts maybewithdrawnafterthecompanyisformed SHARES that: rules applyingtomonetaryshares withtheexception the companycapital.Theyare subject tothesame 7- into circulation 6- 5- increased 4- 3- company 2- 1- In kind shares represent the in kind contributions s in Inkindsharesrepresentthein contributionssin Therighttodividends Thepriorityinsubscriptionwhencapitalis Therighttovoteingeneralmeetings Therighttotakepartinthemanagementof Therighttositontheboard Therighttorelinquishshares andtoputthem a- Inkindsharesmust becorrectlyappraised CASES: FOLLOWING IN THE NOMINAL REMAIN SHARES the fullvaluehasbeenpaid. shares cannotbeconvertedtobearerunless the companyhavenotstatedotherwise.Butnominal or frombearertonominal,aslongthearticlesof Shares maybeconvertedfromnominaltobearer Shares aredividedintotwocategories: management and depositedwiththecompany toguaranteethe b- a- to theorderof,andbearer; • shares offered byshareholders; shareholders andrepresentinginkindormonetary • Acategorybasedonthetypeofshares:nominal, Acategorybasedonthenatureofcontributionsby Iftheirnominalvaluehasnotbeen paidinfull Iftheyaresharesownedbythe boardmembers capital arehanded. before theirrepresentingsharesinthecompany owner ofthesharevis-à-viscompany the lastnamewillbeconsideredasrightful includingtheconditionoforder; of thecompanyandcarryname which donotgetregisteredinthestockbook c- owner vis-à-visthecompany for thebearerofshareconsideredtobe name oftheshareholderbutaserialnumber b- will belistedontheshareitself shareholder wherethenameof book ofthecompanyundername a- the company. before twoyearsstartingthedateofformation c- entirely settledattheformationofcompany. b- Sharesemittedtotheorderofashareholder Thesesharesmaynotbeputincirculation Nominalsharesregisteredinthestock Sharestobearerwhichdonotincludethe Thevalueoftheinkindsharesmustbe number ofshares ownedorrepresented. Each shareholderhasanumber ofvotesequaltothe the agenda. Shareholders donotdiscuss itemsnotlistedon shareholders. secretary whodoesnotnecessarily havetobefromthe in eachshareholders’meeting. Theyalsoelecta Shareholders electanumpireamongstthemselves shareholders’ meeting. The chiefexecutiveofficer chairsthe the numberoftheirshares. number ofvotesgiventoeachshareholderaccording their addresses,numberofsharesownedbyeach,and present orrepresentedshareholderswithamentionof A listmustbesetupincludingnamesofpersonally shareholders eventheabsentandobjecting. majority neededforeachmeeting,arebindingall Decisions takenbyvirtueofquorumandthe representing allshareholderswhetherpresentorabsent. A generalmeetingdulyformedisconsideredtobe 8- Shareholders’meetings each generalmeeting,equaltwovotes. owner foratleasttwoyearsbeforetheconvocationof have beenentirelypaidandnominalforone A shareequalsonevote,butthepaid-upshareswhich SHARES VOTING MULTIPLE company orduringitslife. only. Theymay becreatedattheformationof their ownerspreferentialrightsovermaterialbenefits of anextraordinarygeneralmeeting.Suchsharesgive preferential sharescanbecreatedbyvirtueofadecision of associationthecompanydonotlistotherwise, share thesamebenefits.Inallcaseswherearticles All shareholdersinacompanyenjoythesamerightsand PREFERENTIAL SHARES c- articles ofassociation Lebanese byvirtueofthelaworcompany’s d- Iftheyrepresentinkindcontributions Iftheyaresharesthatmustbeownedby contributions in thecasetheyexist. expert tocheckintothegenuineness oftheinkind in theareaofcompany’s mainofficeto appointan The foundingmeetingasksthe presidentofthecourt their representatives. sheet signedbyshareholders personally orthrough A proof that the quorum was reached is the attendance Founding shareholderselectamongthemselves: represented shareholders. by themajorityoftwothirdsvotespresentor Decisions inthefoundinggeneralmeetingaretaken of theshareholdersownersinkindshares. the shareholdersownersofcashshares,regardless according tothesubscribedsharesorownedby As farasinkindshares,thequorumiscalculated capital ofthecompanyneedstoberepresented. third meetingcanbeheldwherebyonlytheof half thecompanycapital.Incasethereisnoquorum,a legal ifthenumberofitsshareholdersrepresentsatleast results. Discussionsinthesecondmeetingareconsidered the agendaofpreviousmeetingislistedaswellits over twotimeswithoneweekinterval.Inthesecondcall, gazette, inaneconomicnewspaper, andinalocaldaily, may beheldbyvirtueofanoticepublishedintheofficial the meetingfailsforlackofaquorum,new represents atleastthethirdofcompanycapital.If considered legalunlessthenumberofitsshareholders The discussionsofthefoundinggeneralmeetingarenot the foundersmustsendtoallshareholders. The requestmustincludetheagendaofmeetingthat the capitalsubscription. The founderscallforaformationmeetingattheendof MEETING FORMATION MEETINGS OF TYPES the shareholders 3- observed procedure forfoundingthecompanyhasbeenduly 2- 1- asecretaryforthemeetingnotnecessarilyfrom umpiresfromtheshareholderstoensurethat apresidenttochairthemeetings

15 16 extraordinary general meetingmustrepresent at least The numberofshareholdersconstituting the temper withthirdparties’rights. increase thecommitmentsof shareholdersor but nottochangethenationality ofthecompany, all aspectsofthearticlesassociation ofthecompany, Extraordinary generalmeetings havetherighttoamend MEETINGS GENERAL EXTRAORDINARY issues thatariseduringthemeeting. on theagenda.Areexcludedunexpectedandurgent The meetingmaynotdiscussotherthantheitemslisted majority ofthepresentorrepresentedshareholders. Decisions inthegeneralmeetingsaretakenbyasimple appoint controlcommissioners. elect newboardmembersincaseofvacancies,andto company’s accounts,distributeprofitsifapplicable,to form theendoffinancialyear, toauthenticatethe The generalmeetingisheldannuallywithinsixmonths needed, andanattendancesheetissetup. office. Apresident,asecretary, andacontrollerare The generalmeetingisheldatthecompany’s head stipulated bythecompany’s articlesofassociation. regardless ofthesharesrepresented,incaseotherwise discussions inthesecondmeetingareconsideredlegal of thecapital.Incasethataquorumisnotreached, attended byshareholdersrepresentingatleastthethird and hasbeenpersonallyorthroughrepresentation directors’ report,andthecontrolcommissioner as inventory, budget, profitandlossaccount,boardof shareholders havebeeninformedofdocumentssuch A generalmeetingisnotlegallyheldunlessthe MEETINGS GENERAL company byregisteringitwiththecourtregister. the boardmembershaveobligationtopublish for foundingthecompanyhasbeendulycompleted, founding meetinghasmadesurethattheprocedure first boardofdirectors,toappointanauditor. Whenthe into thestructuralactivitiesoffounders,toelect The foundingmeetingholdstheprerogativetocheck is reached,themeetingwillcallforanotheronebased two thirdsofthecompanycapital.Ifnosuchquorum into circulation. They willremainassuchlong asthe These shareswillremainnominal andmaynotbeput management ofthecompany. are depositedinthecompanyfund toensureagood as stipulatedinthearticlesofassociation. Theseshares shareholders whoownaminimum ofnominalshares, during theannualgeneralmeeting amongstthe The membersoftheboarddirectorsareelected Lebanese nationality. The majorityoftheboardmembersmustbe articles ofassociation. according towhattheshareholdershavedecidedin three membersandamaximumoftwelvemembers, The boardofdirectorsisconstitutedatleast COMPANY 9- of theheadofficecompany. company isregisteredwiththenotarypublicinarea The amendmentofthearticlesassociationa the originalarticlesofassociation. The amendmentismadepublicthesamewayaswith the articlesofassociation. shareholders, regardlessofthedesiredamendmentto by amajorityoftwothirdsthepresentorrepresented Decisions inextraordinarygeneralmeetingsaretaken represent atleastthreequartersofthecompanycapital. company objectorshape,thelegalquorummustalways In thecaseofdecisionsregardingachangein the thirdofcapitalisrepresented. be calledfor. The thirdmeetingwillbelegalifatleast capital. Incasethereisnoquorum,athirdmeetingcan of theshareholdersrepresentsatleasthalfcompany the secondmeetingareconsideredlegalifnumber the previousmeetinganditsresults.Thediscussionsin notices. Inthenoticewillbementionedagendaof newspaper, twice withinaweekofthefirstandsecond newspaper, and inalocaldailygeneralcirculation on anoticeintheofficialgazette,aneconomic OF A JOINT STOCK STOCK AJOINT OF DIRECTORS OF BOARD following inthe commercial register: The firsttaskoftheboard directors istoregisterthe AT FORMATION PUBLICATION PUBLICATION 10- acquisitions fromsuchcrimes. write checkswithinsufficient funds, ortohidethe prejudice totheState’s finances,tointentionally commit felony, orfraud,embezzlement,tocause less thantenyearsforhavingcommittedortriedto have beenconvictedinLebanonorabroadsince been reinstatedsinceatleasttenyears,orifthey they havedeclaredbankruptcybeforeandnot No onecanbememberoftheboarddirectorsif . supervision andpersonalresponsibilityofthechief manager whowillperformhis/herfunctionsunderthe The boardofdirectorsmayappointageneral and determineshis/herprerogatives. chief executiveofficer-general manager ofthecompany In itsfirstmeeting,theboardofdirectorselects written authorization. meeting butbyanothermemberandvirtueofa A boardmembermaynotberepresentedatthe authorization duringtheannualshareholders’meeting. of anysimilarcompanyunlesstheygetanannual The membersoftheboarddonotassumemanagement board memberstofillthevacancies. call theshareholdersforageneralmeetingtoelectnew the remainingmembersofboarddirectorsmust less thanthreebetweentwoannualfounders’meetings, If thenumberofboardmembersgoestohalfor they cannotbeappointedformorethanthreeyears. of directorselectedbytheshareholdersareconcerned, association isfiveyears.Wheremembersoftheboard of theboarddirectorsappointedinarticles The maximumdurationofthetermmembers of theirfunctions. budget attheendoffinancialyearstartdate and untilacquitteduponapprovalofthecompany’s members oftheboardareperformingtheirfunctions, more everyyear duringtheirannualmeeting. Control Shareholders appointonecontrol commissioneror 11- of theboardandcontrolcommissioners. Such apublicationwillincludethe namesofthemembers by theannualshareholders’meeting oftheaccounts. accounts andbudgetwithintwomonthsfromtheapproval A jointstockcompanypublishesyearlythecompany’s PUBLICATION ANNUAL follows: A companyissubjecttocontinuouspublicationas PUBLICATION CONTINUOUS subscription period. and unblocksthecapitalthatwasblockedduring bank isthusinformedofthefoundingcompany minutes andtheoriginalarticlesofassociation.The deposited willgetcertifiedcopiesoftheaforementioned The bankwherethesubscriptionmoneyhasbeen

was electedandhis/herprerogativesdetermined which thechiefexecutiveofficer-general manager 2- CONTROL COMMISSIONERS CONTROL must bepublished. 4- commercial register. part ofit,andthenumbercompanyin (société anonymelibanaise),itscapital,thefreed show thenameofcompany, followedby“S.A.L.” 3- of associationformthecommercialregister. 2- the companyoffices. 1- considered dulyformed. After publicationiscompletelydone,acompany authenticated beforeanotarypublic 3- the attendancesheet 1- Minutesofthefirstboarddirectorsduring Anymodificationofthearticlesassociation Allpapersandletterheadsofthecompanymust Anyonemayobtainacertifiedcopyofthearticles Thearticlesofassociationarehungonaboardin Theoriginalarticlesofassociationduly Minutesofthecompany’s foundingmeetingand The CommerceCourtwillappointanadditional commissioners maybeelectedyearafteryear. Bonds areusually issuedaccordingtoaserial facilitate paymentofinterests. to theircirculationandcoupons areusuallyattachedto These bondsaresubjecttosome ruleswhenitcomes rules applytosuchadebtifitis notasecuredtype. a burdenonthecompany’s capitalandproperties. Loan proving thatajointstockcompany hasadebt.Itcreates Abond(inajointstockcompany)iscertificate 13- A- 12- may callforsuchmeetings. meetings whentheyaredue,thecontrolcommissioners If theboardofdirectorsdoesnotcallforgeneral the court. from appointinganadditionalcontrolcommissionerby 1973, exemptedbanksandotherfinancialinstitutions The lawpassedbydecree6102datedOctober5, report andbalancesheet. commissioner appointedbythecourtmustapprove and thebalancesheetsignedbythem.Thecontrol meeting areportonthestatusofcompany Control commissionerswillpresenttotheannual control commissioner.

FUND RESERVES shareholders’ meetingdecidesasdividends. distributes fromthenetprofitwhatannual from thegrossincome,boardofdirectors After deductionofexpensesandfundsreserves 3- needs ofthecompany. may formotherfundsreservesaccordingtothe In additiontothelegalreserve,boardofdirectors 2- until suchanamountequalsthethirdofcapital. company’s net profittoformalegalfundreserve The boardofdirectorsmustkeep10percentthe 1- FUND RESERVES AND AND RESERVES FUND BONDS ISSUED BY JOINT STOCK COMPANIES STOCK JOINT BY ISSUED BONDS Distributionofdividends: Specialreserve: Legalreserve: The companyisdissolved: rules applicabletopartnerships. Endingajointstockcompanyissubjecttothesame 14- priority overothers. that theholderofsuchbondsdoesnotenjoyany number withamentionthattheyareequal,meaning this subjectbeforetheCommerceCourt. In anycase,everyshareholderisentitledtoevoke or toadoptanyothernecessarymeasures. company, thedecreaseofcapitalcompany meeting inordertodecidethedissolutionof shareholders toholdanextraordinarygeneral paid. Inthiscase,theboardofdirectorscalls company capitalprovidedthattheisfully C. of presentorrepresentedshareholders. shall bemadebythemajorityoftwothirdsvotes company needstoberepresented,andthedecision whereby atleastthethirdofcapital shareholders atanextraordinarygeneralmeeting, to achieveit.Intheeventofadecisionmadeby for whichitwasestablished,orifisimpossible B. association. A. DISSOLUTION OF A JOINT STOCK COMPANY COMPANY STOCK AJOINT OF DISSOLUTION Bytheendofitsdurationassetinarticles Intheeventoflossthreequarter Aftertheexecutionofanticipatedproject

17 18 COMPANY (LLC) LIMITED LIABILITY 06 Chamber ofCommerceIndustryandAgricultureBeirutMountLebanon ADMINISTRATORS, STOCKSARECALLEDSHARES,ANDCOMPANIES DONOTISSUECERTIFICATES. VIRTUE OFLEGISLATIVE DECREENO.35OF5AUGUST1967INWHICHPARTNERS ARECALLED THE LEBANESELEGISLATOR INTRODUCEDTHISTYPE OFCOMPANIES TOLEBANON BY A LIMITEDLIABILITYCOMPANY COMBINESPARTNERSHIPS ANDJOINTSTOCKCOMPANIES. OVERVIEW

19 20 each partner,their paymentinfull,anddepositing the addition tothespecificationof thenumberofshares and alltheconditionsagreedupon bythepartners,in include thenameofdirector oradministrators, shares submittedbyeachpartner. Theymayalso name, object,headoffice,capital, inkindandcash The ArticlesofIncorporationinclude: thecompany’s by allthepartners. contract of which the Articles of are signed A limitedliabilitycompanyisestablishedbasedona 2- A limitedliabilitycompanyissimilartojoint-stockcompanies: one ormorepartners. liability company’snamemaynotincludetheof the sharesofpartnersmaynotbecirculated.Alimited friendship ties.Publicsubscriptionisprohibited,and number ofpartnerswhoareoftenboundbyfamilyor Indeed, alimitedliabilitycompanyonlyhas is basedtoalargeextentonpersonalconsiderations. A limitedliabilitycompanyresemblespartnershipsasit 1- CHARACTERISTICS OF A LIMITED LIABILITY COMPANY CHARACTERISTICS OFALIMITEDLIABILITYCOMPANY ESTABLISHMENT OFALIMITEDLIABILITYCOMPANY of uptofiftypercentthecompany’scapital. net profitseachyearinordertoconstituteareserve f. regardless ofitsobject. e. and bankruptcydonotrequirethecompany’sdissolution. d. responsibilities arelimitedtohisofferingoffunds. c. otherwise thecompanymustbedissolved. liability companyoralimitedpartnershipcompany, the companymustbetransformedintoajoint- capital fallsbelowfivemillionLebanesepounds, Lebanese poundsdistributedinequalshares.Ifthe b. payment againstthevalueofanyshare. in kind,andservicesmaynotbeconsideredas company arethosewhoofferfundsincashor a. The administratorsmustdeducttenpercentofthe A partner is not considered to be a trader, and his A partnerisnotconsideredtobeatrader,andhis The announcement of the partner’s legal incapacity The announcementofthepartner’slegalincapacity The partnerswhoestablishthelimitedliability A limitedliabilitycompanyiscommercialinform, The minimumamountforthecapitalisfivemillion the inkindsharescompanystatutes. paid amountinabank,aswellthespecificationof The “limitedliability company”expression,the capital PUBLICATION: 4- CONSTANT specified inthecompany’sarticles ofassociation. office. Thevalueofanyin-kind contributionsmustbe court ofthesamejurisdictionas thecompany’shead estimation byanexpertappointed bythecommercial In-kind contributionswillonlybeacceptedaftertheir month ofthecompany’sestablishment. jurisdiction asthecompany’sheadoffice,withinone of associationatthecommercialregistersame office; aswellregisteringasummaryofsaidarticles instance ofthesamejurisdictionascompany’shead association attheclerk’sofficeofcourtfirst depositing acopyofthecompany’sarticles the samepublicationrulesasjoint-stockcompanies: publicized. Alimitedliabilitycompanyissubjectto Following thisoperation,thecompanymustbe amounts aredepositedinabank. partners, andtheirvalueisfullypaidup,the finalized afterthesharesaredistributedamong The company’sestablishmentisconsideredtobe 3- incorporation atthecommercialregister. Registration ismadebydepositingthearticlesof the commercialregisterarecompleted. establishment, i.e.aftertheregistrationproceduresat in custodyatthebank,pendingcompany’sfinal being established”.Thecapitalamountmustbeheld carrying thecompany’snamefollowedby“currently bank, inthecompany’sname,aprivateaccount The capitalmustbedepositedinfullatanaccredited director isonlyappointedafterobtainingaworkpermit. All thepartnersmaybeofforeignnationality,buta Partners maybelegalentities. freight, orbankingandfinance. related toinsurance,,supplies,organizedair The objectofalimitedliabilitycompanymaynotbe PUBLICATION OFTHECOMPANY accounts, directors’ activities,profitdistribution, The yearlypartners’assembly approves thebudget, principle fortheapprovalof accounts. scheduled meeting.Theyearly assemblyisconvenedin the partnerswithagenda,one monthbeforethe in newspapersorinvitationssent byregisteredmailto The assemblyshallbeconvened throughpublication related totheactivitiesofthreepreviousyears. ask toconsultatanytimeregistersanddocuments Each partnershallreviewthesedocuments,andmay with theauditor’sreport,ifany. inventory, theprofitandlossstatement,budget report onthecompany’sactivitiesduringyear, at leasttwentydaysbeforetheassembly,directors’ The directorshalldepositatthecompany’sheadoffice, capital atleast. and aquarterofthenumberpartners,orhalf group ofpartnersthatrepresentaquarterthecapital else theinvitationshallbesentthroughapartneror assembly, theauditors,ifany,musttakethismeasure, If thedirectorordirectorsneglecttoconvene The directorshallconvenethepartnerstomeeting. appointing directors,orauditors. especially forurgentmatterssuchasdismissingor partners maybeconvenedtoanordinaryassembly, within sixmonthsofclosingtheyear’saccounts.The The partners’generalassemblyisconvenedyearly, are issuedaccordingtothemajorityofvotes. The partnersshallmeetinanassemblywhosedecisions 5- association mustbepublished. Also, anyamendmentmadetothecompany’sarticlesof and anydocumentsissuedbythecompany. name onallpaperwork,advertisements,newsletters, register mustbeclearlymentionednexttothecompany amount, andtheregistrationnumberatcommercial THE ASSEMBLYOFPARTNERS not havetheattributeofatrader. The managingpartnerofalimitedliabilitycompanydoes 7- MANAGINGLIMITEDLIABILITYCOMPANIES: of thebudgetandtasksdirectors. the exceptionofdecisionspertainingtoapproval taking theopinionofpartnersseparatelyinwriting,with decisions intheformofwrittenconsultations,i.e.by It cansometimesbeagreedthatthepartnersmayissue 6- CONSULTATIONSINWRITING by thepartners. unless atleastthreefourthsofthecapitalisrepresented company’s articlesofassociationmaynotbeamended unless thepartnersunanimouslydecideit.The partner maynotbeforcedtoincreasehisobligations The partner’snationalitymaynotbechanged,andthe capital represented. majority ofthevotes,regardlessproportion the secondtime,anddecisionsareissuedwith otherwise, thepartnersareconvenedorconsultedfor company’s articlesofassociationdonotstipulate shares. Ifthismajorityisnotachieved,andthe to thesimplemajorityofpresentorrepresented Decisions intheordinaryassemblyaretakenaccording capital isrepresented. The assemblyisonlydeemedlegaliffiftypercentofthe are beyondtheirauthority. issuing authorizationstothedirectorsfortasksthat appointment anddismissalofdirectorsauditors, must beregistered inthecommercialregister. The appointmentofthedirectors andtheirprerogatives partners’ assembly. or byvirtueofaseparatedecision takenbythe either byvirtueofthearticles ofincorporation one ofthepartnersmustbeappointed asdirector, may beentrustedtooneormore directors,and a. The managementofalimitedliabilitycompany two previousyears. provided thepartnersapproved theaccountsof representing atleastthreefourths ofthecapital, a decisiontakenbythemajority ofthepartners a shareholdingcompany,ittakes placethrough for transformingthelimitedliabilitycompanyinto a decisiontakenunanimouslybythepartners.As , orapartnershiplimitedbyshares,through into ajoint-liabilitycompany,limitedpartnership A limitedliabilitycompanymaybetransformed 9- TRANSFORMINGTHECOMPANY listed ontheexperts’roster. Auditors shallbeselectedfromamongthepersons following cases: The appointmentofauditorsisobligatoryinthe of partners. may bedismissedbyadecisionissuedthemajority Auditors areappointedforthreefinancialyears,and appointment ofoneormoreauditors. The auditorsmusttakeadecisionbymajorityforthe 8- THEAUDITORS of incorporationorbyvirtueaseparate Whether heisappointedbyvirtueofthearticles request theappointmentofanauditor - Lebanese pounds - - do sobythepartners. or indirectly,unlessheisexplicitlyauthorizedto the companythatwouldprofithimeitherdirectly b. of incorporation. notwithstanding anyopposingtextinthearticles a decisiontakenbythepartners’assembly decision, thedirectorshallbedismissedby If oneormorepartnersowningafifthofthecapital If thecapitalofcompanyreachesthirtymillion If therearemorethantwentypartners The directormaynotmakeanyagreementwith following reasons: Alimitedliabilitycompanymaybedissolvedforthe 10- DISSOLUTIONOFTHECOMPANY replaced byhis/herlegalrepresentative. partners orhis/herlossofcapacity,buthe/sheis not expirefollowingthebankruptcyofone her heirs.Likewise,alimitedliabilitycompanydoes the sharesofdeceasedaretransferredtohis/ following thedeathofonepartners,butrather e. remaining partners. the partners,aslongtherearethreeormore is notdissolvedfollowingthebankruptcyofone to joint-stockcompanies,alimitedliabilitycompany unanimous decisiontakenbythepartners.Contrary d. pounds. its capitalbecomeslessthanfivemillionLebanese are lessthanthreeormorethirtypartners, of partnershiporjointstockcompanieswhenthere c. or theeliminationofitsobject; established, ortheimpossibilityofitsachievement, b. of incorporation; a. The companyisnottransformedintoanotherform The endofitstermasstipulatedinthearticles A limitedliabilitycompanydoesnotexpire The companymaybedissolvedatanytimebya The endoftheanticipatedprojectforwhichitwas

21 22 LIMITED BYSHARES PARTNERSHIP 07 Chamber ofCommerceIndustryandAgricultureBeirutMountLebanon included inthecompany’s tradename. In caseofloss,theshareholdersareresponsible accordingtotheircontributionsonly, andtheirnames arenot partners”. Theaccreditedshareholders managethecompanyandareaccountableforallitsdebts. The company’s nameiscomposedoftheoneormoreaccreditedshareholders,followed by“and SHARES TOOTHERS. RESPONSIBLE INSOLIDARITYOFTHECOMPANY’S DEBTS,ANDTHEYMAY NOTWAIVER THEIR HOLD. ASFORACCREDITEDSHAREHOLDERS,THEYMANAGETHECOMPANY ANDAREPERSONALLY OWNED BYKNOWNSHAREHOLDERS,WHOARERESPONSIBLEACCORDING TOTHESHARESTHEY A PARTNERSHIP LIMITEDBYSHARESISACOMPANY WHOSECAPITAL ISDIVIDEDINTOSHARES OVERVIEW

23 24 limited byshares, andthereforethesemanagers company shall apply on the managers of a partnership members oftheBoardDirectors inashareholding All theobligationsimposedby thelawon votes duringtheshareholders assembly. of association,orthedismissal obtainsunanimous dismissed, unlessotherwisestipulatedbythearticles by theunanimousvotesofshareholdersmaynotbe appointed byvirtueofthearticlesassociationor guarantee forhis/herposition.Themanagersthatare of sharesthatmustbeownedbyamanageras general assembly. Thelawdidnotimposealimit appointed throughtheminutesofshareholders’ the company’s articlesofassociation,andmaybe The managerormanagersareusuallyappointedin ATRADER. OF ATTRIBUTE THE HAVE NOT DO SHAREHOLDERS of thevalue sharesatleastmustbepaid, and The capitalinfullmustbesubscribed to,andaquarter being aminimumofonethousand Lebanesepounds. pounds, dividedintoequalshares, thevalueofeach The capitalmustnotgobelow thirty millionLebanese FOUNDERS. THREE BEAT LEAST MUST THERE pertaining totheestablishmentofajoint-stockcompany. limited bysharesissubjectedtothesamelegalrules By virtueofthelaw, theestablishmentofapartnership 1- trade name. the company, andtheirnamesmaynotappearinits Shareholders maynotbeappointedasmanagersin result frommismanagement. share thesameresponsibilitiesandsanctionsthat ESTABLISHMENT OF THE COMPANY THE OF ESTABLISHMENT assembly, withtheapprovalofaccredited partners. lifetime, thisisdonebyadecision takeninthegeneral necessary toappointamanager duringthecompany’s the amendmentofarticles of association.Ifitis articles ofassociation,andmay onlybedismissedupon The managerormanagersare usuallyappointedinthe management ofthecompany. company, andtheotherpartnersmaynotinterferein Some oralloftheaccreditedpartnersshallmanage 2- the numberofpartnersmustnotbelessthantwo. Nonetheless, andaccordingtothegeneralregulations, law didnotspecifyaminimumnumberofpartners. the capital,theymustbeassessedbyexperts.The bank. Iftherearein-kindsharesintheconstitutionof the paidamountsmustbedepositedatanaccredited MANAGING THE COMPANY THE MANAGING same rulesasthose injoint-stockcompanies, i.e.there The generalassembliesofshareholders followthe 5- company, theyareonlyappointedforoneyear. for auditorsappointeduponthe establishmentofthe shall beappointedforanunspecified duration.As The articlesofassociationmaystipulatethatauditors partners. partners, butmaybeappointedfromamongtheother Auditors maynotbeappointedfromamongaccredited limited byshares,includingthecourt-appointedauditor. There mustbeatleastthreeauditorsinapartnership AUDITORS 4- same mannerasinjoint-stockcompanies. partnership limitedbysharesaretransferableinthe The sharesownedbyaccreditedpartnersina 3- GENERAL ASSEMBLIES GENERAL TRANSFER OF SHARES OF TRANSFER withdraws fromit,butratherfor thefollowingreasons: The companyisnotdissolvedif oneofthepartners 6- only becomeseffective uponthemanager’s approval. partners. However, thedecisiontodismissamanager virtue ofthelawundersupervisionaccredited dismissal ofthemanager, astheseaccountsareby approval ofthecompanyaccountsandbudgets rule doesnotapplyonthedecisionspertainingto accompanied bytheirimplicitorexplicitapproval;this becomes effective onaccredited partnersifitis The decisiontakeninshareholders’meetingsonly A generalassemblyiscomposedofshareholdingpartners. meetings, andbondholdermeetings. is aconstituentassembly, ordinaryandextraordinary DISSOLUTION AND LIQUIDATION OF COMPANY OF LIQUIDATION AND DISSOLUTION - The endofitsspecified term but ratherremainsstandingwith theotherpartners. and oneofthemdies,thecompany isnotdissolved one. Iftherearemorethanone accreditedpartner - accredited partner - accredited partners the endofitsterm,withpersonalapproval - it wasestablished - two categoriesofpartners - - - The deathoftheaccreditedpartnerifheissole The partners’willtodissolvethecompanybefore The impossibilityofcompletingtheprojectforwhich The disappearanceofitscapitaloronethe The eliminationoftheobjectcompany The endoftheprojectforwhichitwasestablished The lossofcapacityorbankruptcyan

25 26 COMPANIES HOLDING 08 Chamber ofCommerceIndustryandAgricultureBeirutMountLebanon IN PARTICULAR. THEYARESUBJECTEDTOTHESAMEPROVISIONS ASJOINTSTOCKCOMPANIES. HOLDING COMPANIES ARECONSIDEREDTOBEINVESTMENTCOMPANIES ANDJOINTSTOCKCOMPANIES COMPANY MENTIONEDINLEGISLATIVE DECREE45OF24JUNE1983. CORRECT DEFINITIONCANBEBASEDONFOREIGNLEGISLATION ANDTHEOBJECTOF THE LEBANESELAW DOESNOTINCLUDEANYDEFINITIONFORHOLDINGCOMPANIES. THE OVERVIEW

27 28 following: The objectofaholdingcompanyislimitedtothe 2- next tothecompany’s name. The expression“holdingcompany”mustbespecified element ofitslegalcharacter. have anamethatdifferentiates itandconstitutesan Like anyjoint-stockcompany, aholdingcompanymust 1-

NAME OF OF HOLDING NAME OBJECT OF HOLDING COMPANIES OF HOLDING OBJECT In ordertomake loanandguaranteeoperations, a company receivingtheguarantee. agreement betweentheholding companyandthe The guaranteeismadebyvirtue ofawritten than twentypercent. working inLebanonifitsshare intheircapitalisless A holdingcompanymaynotgive loanstocompanies guarantees againstthirdparties. partnership orshareholdingassets,andoffering them c. or shareholdingassets. b. sector inLebanonifthisconstitutesamonopoly. the sameindustrial,commercial,ornon-commercial forty percentinmorethantwocompaniesworking A holdingcompanymaynotdirectlyownmorethan in itsestablishment. company oralimitedliabilitycompany, orparticipating a. Giving loanstocompaniesinwhichitowns Owning sharesinanexistingLebanesejointstock Managing companiesinwhichitownspartnership as jointstockcompanies,withthe followingexceptions: stock company, andaresubjectedtothesameregulations Holding companiesareestablishedintheformofajoint 3- ESTABLISHING A HOLDING COMPANY AHOLDING ESTABLISHING amounts, accordingtothelastapprovedbudget. holding company’s capital,inadditiontothereserve issued atanytimedoesnotexceedfivetimesthe bonds, providedtheaggregatevalueofbonds holding companymaytakeabankloanandissue Lebanon, where legal books and documents are kept. Lebanon, where legalbooksanddocumentsare kept. b. prepared inthecurrencyspecified forthecapital. foreign currency, accountingandbudgetsmay be a. three thousandsquaremeters. own builtpropertywithasurfaceareanotexceeding legal entitiesfromobtainingapermitiftheywishto Lebanon stipulatestheexemptionofnon-Lebanese The lawonpropertyownershipofforeignersin in kindrights. acquisition bynon-Lebanesenationalsofrealestate provisions oftheLebaneselawpertainingto are onlydedicatedtoitsactivities,subjectthe e. them tocompaniesinsideLebanonandabroad. trademarks, andotherreservedrights,leasing d.

The capitalofthecompanymay bespecifiedina The company’s mainheadofficemustbelocated in Owning personalorrealproperty, providedthey Owning patents,discoveries,concessions, 4-

MANAGING A HOLDING COMPANY A HOLDING MANAGING person orlegalentitythatprovidedthelocation. in Lebanonwiththewrittenapprovalofnatural contract orpropertydeed,takeachosenlocation is registeredinsaidregister, itmustsubmititslease published byjointstockcompanies.Whenacompany all thedataandinformationlegallyrequiredtobe in Beirutforholdingcompanies,andwillinclude c. their BoardofDirectors. Also,theChairmanof the obligation ofhavingLebanese persons orentitieson legislator hasexemptedholding companiesfromthe guarantees thegoodorganization ofitsbusiness.The a. are due. a timelymanner. Thisisinadditiontothetaxesthat company thatdoesnotsubmititslegalstatementin pounds amonthshallbeimposedontheholding decree 45/83.ApenaltyoffiftythousandLebanese does notconflictwiththeprovisionsoflegislative of thecorporatelegalprovisionsinamannerthat due taxesattheincometaxdepartment,byvirtue prepare annualfinancialdata,submitstatements,pay e. holding companies. of directorsandauditorsinthecommercialregister budget andthenamesofmembersboard d. A registershallbekeptatthecourtoffirstinstance A holdingcompanyissubjected toasystemthat A holdingcompanymustkeepaccountingbooks, A holdingcompanymayonlypublishthefiscalyear be submittedeach yearonAprilfirst. addition tothetaxesthataredue. Thestatementmust submit itslegalstatementina timely manner. Thisisin shall beimposedontheholding companythatdoesnot A penaltyoffiftythousandLebanese poundsamonth provisions ofthelegislativedecree 45/83. legal provisionsinamannerthat doesnotconflictwiththe at theincometaxdepartment,byvirtueofcorporate annual financialdata,submitstatements,payduetaxes - COMPANIES HOLDING OF SYSTEM THE 5- Beirut StockExchangeandmustpayanannualsubscription. Holding companiesareconsidereddefactomembersofthe A holding company must keep books, prepare A holdingcompanymustkeepaccountingbooks,prepare months aftertheendoffiscalyear. convened inLebanon,withinamaximumtimeoffive annual ordinarygeneralassemblymustalwaysbe articles ofassociationstipulatethis.However, the may conveneoutsideLebanonifthecompany’s b. of holdingcompanies. of directorsandauditorsinthecommercialregister budget andthenamesofmembersboard d. is exemptedfromappointinganadditionalauditor. appointed foradurationofthreeyears,andthecompany Lebanese nationalitymustbeappointed.Hemay c. he/she isanon-Lebanesenationalresidingabroad. Board isexemptedfromobtainingaworkpermitif A main auditor residing in Lebanon and holding the A mainauditorresidinginLebanonandholdingthe The BoardofDirectorsandgeneralassemblies A holdingcompanymayonlypublishthefiscalyear activity statements. Apenaltyofhalfinonethousand due taxesinonesinglepayment uponthefilingoftheir - regardless ofitsduration. holding companystartingfrom thefirstfiscalyear, million Lebanesepounds.This taxappliesona provided thetotalannualtaxdoes notexceedfive for amountsthatexceed80millionLebanesepounds, million and80Lebanesepounds,to2% decreased to4%foramountsrangingbetween50 50 millionLebanesepounds.Thetaxaverageis the reservefunds,whenthistotaldoesnotexceed of 6%fromthetotalcapitalvalue,inadditionto - subjected totaxation. patents tocompanieslocatedinLebanonare - to taxation. administrative expensesandservicesaresubjected its affiliate companiesinLebanonexchangefor - income tax. shares inLebanesecompaniesissubjectedtothe transfer ofitsfixedassetsandcontributions - for aperiodlessthanthreeyears. income taxiftheseinterestsresultfromloansmade loans ofcompaniesinLebanonaresubjectedtothe - on itsprofits. -

By virtueofthelaw, holdingcompaniesmustpaytheir A holdingcompanyissubjectedtoanannualtax The improvementprofitoftheholdingcompany’s The interestsgainedbyholdingcompaniesonthe A holdingcompanyisexemptedfromtheincometax The revenuesobtainedthroughtheleaseof The amountsobtainedbyaholdingcompanyfrom provided thehigheramountislevied. company’s capital,inadditiontothereservefunds, the tax,ortoapenaltyofthreeperthousand violation tookplace,inadditiontoapenaltyof20% financial companiesaccordingtotheyearinwhich provisions oftheincometaxthatisimplementedon that violatethis,eitherbysubjectingthemtothe specified object.Penaltiesareimposedoncompanies practicing anyactivitiesthatarenotrelatedtotheir Holding companiesareprohibitedfromdirectly PENALTIES 7- joint stockcompany. A holdingcompanyexpiresforthesamereasonsasa COMPANY AHOLDING OF 6 EXPIRATION .on Chapter IIoftheincometaxlawpertainingto - per dayoflatesubmissionshallbeimplemented. Holding companiesaresubjecttotheprovisionsof

29 30 COMPANIES OFFSHORE 09 Chamber ofCommerceIndustryandAgricultureBeirutMountLebanon companies arepublished. register foroffshore companiesinBeirut,wheredataandinformationrequiredby thelawfromjointstock An offshore companyisacommercialthatregisteredatthe registerinaspecial practices itsactivityoutsidethecountry whereitislocated. we candeducefromthecompanydenomination itselfanditsobjectthatitisajoint-stockcompany which establishedoffshore companies,followed byamendedlaw17issuedon5September2008.However, No definitionofanoffshore companyexists intheLebaneselaw–i.e.legislativedecree46of24June1983, ACTIVITIES OUTSIDETHELEBANESETERRITORYORINFREETRADE ZONE. AN OFFSHORECOMPANY ISAJOINTSTOCKCOMPANY FOUNDEDINLEBANONANDPRACTICINGITS OVERVIEW

31 32 law asfollows: The objectofanoffshore companyisspecifiedbythe 2- registration numberatthecommercialregister. and otherdocuments,inadditiontothecapital company” onallpapers,advertisements,newsletters, accompanied bytheexpression“offshore” and“jointstock often hasacreativename.Itsnamemustalwaysbe Since itisajointstockcompany, anoffshore company 1-

NAME OF OFFSHORE COMPANIES OF OFFSHORE NAME OBJECT OF OFFSHORE COMPANIES OF OFFSHORE OBJECT imported goods with theaimofre-exportingthem. to thefreetradezonesinLebanon, forthestorageof invoices foractivitiesoutsideLebanon, orfromand can negotiate,signcontracts,ship goods,re-issue outside Lebanon.Forthispurpose, offshore companies c. Lebanon, basedontherequestofsuchcompanies. types ITservicesandprogramstocompaniesoutside administrative, andorganizationalservices,all Lebanese territory, andexportofprofessional, Lebanon whoseactivityislimitedtooutsidethe b. trade zones. fixed materialassets)locatedabroadorinthefree to funds(goodsandmerchandiseelementsof executed outsidetheLebaneseterritoryandrelated agreements aboutoperationsandtransactions a. Multiparty external trade operations taking place Multiparty externaltradeoperations takingplace Negotiation andsignatureofcontracts Management ofcompaniesandinstitutionsin banks andfinancial institutionsandthe that operations,thetransactions andactivitiesof Offshore companiesmaynotdealwithalltypesof company. activity otherthantheonespecified intheobjectof that theoffshore companymaynotexerciseany The company’s articlesofassociationmust stipulate 3- PROHIBITEDACTIVITIES estate inkindrights. of theacquisitionbynon-Lebanesenationalsreal necessary propertyforitsactivity, subjecttothelaw i. prohibited bythelaw. economic projects,withtheexceptionofthose h. abroad. g. foreign markets. representation ofgoodsandforeigncompanieson f. capital. the offshore companyownsmorethan20%oftheir and givingloanstothenon-residentcompaniesthat in non-residentforeigncompaniesandinstitutions, e. d. Leasing officesinLebanonandowningthe Owning and/orbenefitingfromrightsrelatedto Building, investing,managing,andowningall Owning stocks,bonds,shares,andcontributions Sea transportactivities. Opening branchesandrepresentationoffices characteristics: auditors, andgeneralassemblies, withthefollowing are managedthroughaBoard of Directors, Similarly tojointstockcompanies, offshore companies 5- thefollowing: regulations asjointstockcompanies,whiletakinginto Offshore companiesaresubjectedtothesame 4- subscription totreasurybonds. account revenuesandtheresultingfrom to residentinstitutions,withtheexceptionofitsbank revenues in Lebanon, or resulting from services provided from makinganyprofitsormovableimmovable activities otherthantheonesthatarespecified,and Offshore companiesarealsoprohibitedfromexercising are subjectedtothemonitoringofCentralBank.

MANAGING OFFSHORE COMPANIES OFFSHORE MANAGING ESTABLISHING AN OFFSHORE AN ESTABLISHING representatives donotneedaworkpermitifthey non-Lebanese, andtheChairman orhislegal - register ofoffshore companies. board ofdirectorsandauditorsinthecommercial year budgetandthenamesofmembers - least thirtymillionLebanesepounds. foreign currency, provideditremainsequivalenttoat - than theonesspecified. stipulate thatitmaynotexerciseanyactivityother - The membersoftheboarddirectors maybe An offshore companymayonly publishthefiscal An offshore companymaykeep itsbooksinthe The company’s articlesofassociationmust pay ,theirmaindifferences arethefollowing: anonymous companiesarerequired tokeepbooksand It shouldbenotedthatoffshore companiessimilarlyto Offshore companiesabidebyaspecialtaxsystem: 7- is exemptedfromappointinganadditionalauditor. appointed foradurationofthreeyears,andthecompany Lebanese nationalitymustbeappointed.Hemay A mainauditorresidinginLebanonandholdingthe subscription ofonehundredUSdollars. of theBeirutStockExchangeandmustpayanannual Offshore companiesareconsidered defactomembers designated inaforeigncurrency. An offshore company’s capitalandaccounts maybe 6- CAPITAL TAX SYSTEM SYSTEM TAX Chairman maymanageorbeamemberof. , i.e.thenumber of companiesthe the maximumlimitstipulatedbyArticle154in and membersoftheBoardareexemptedfrom are non-Lebaneseandresideabroad.TheChairman - Allcontractsand documentssignedinLebanon - Offshore companiesareexemptfromtaxonprofits. exceed fivehundredthousandUSdollars. Lebanese poundsoritsaggregateannualbudgets advisor unlessitscapitalexceedsfiftymillion - Lebanese pounds. company’s budget isnotlessthanonebillion obtaining aworkpermit,providedtheannual - The companydoesnothavetoappointalegal Foreign workersinLebanonareexemptedfrom 8- OFFSHORE COMPANIES ARE SUBJECT TO: TO: SUBJECT ARE COMPANIES OFFSHORE 8- wages iftheyare workingoverseas. workers areexemptfromtaxes onsalariesand c- law regardlessoftheduration theirownership. to thetaxstipulatedinarticle45 oftheincometax transferring thecompany’s fixedassetsare subject b- fiscal yearregardlessoftheirduration. and isappliedtoallcompaniesstartingtheirfirst directly paidtotheincometaxfinancialdepartment a- funds outsideLebanonareexemptfromtaxation. - Returnsandrevenuesresultingfrominvestingits are exemptfromtransfertaxesandanyrelatedfees. - Thesharesofthecompanyanditsshareholders hired abroad. salaries andwagespaidtoworkersemployees - Offshore companiesareexemptfromtaxon Lebanon foranyservicesprovidedoverseas. amounts paidtonaturalorlegalpersonsoutside - Offshore companiesareexemptfromtaxeson living abroad distributed dividendstonaturalorlegalpersons - Offshore companiesareexemptfromtaxon exempt fromtaxonmovablecapitalgains. - Profitsharesdistributedbythecompanyare stamp duties. and relatedtooverseasbusinessareexemptfrom Tax onsalaries andwages:Lebaneseforeign Fixed annualtax:ThisLBP1milliontaxis Tax onimprovementprofit:profitreceived from not complywithitsexclusiveobject. of thelatter. Itshallalsobedissolvedifitsactivity does dissolved forthesamereasons causingthedissolution An offshore companyisananonymousthat COMPANY OFFSHORE AN OF 10- DISSOLUTION 50% (fiftypercent)ofthetaxvalue. operating inLebanonadditiontoafineamounting to theincometaxappliedonfinancialpartnerships for theyearduringwhichviolationoccurred,subject decree No46,amendedbylaw19,itshallbecome, If thecompanyviolatesobjectstipulatedinlegislative PENALTIES 9- their businessandwithinthespecifieddelays. their duetaxesinonesinglepaymentwhendeclaring According tothelaw, offshore companiesshallsettle Lebanese residents. revenues occurredinLebanonorweredueto d- salaries andwages: Workers inLebanonaresubjecttothetaxon Some taxablecapitalrevenues:incasethese indemnity. thatshallbeconsideredasanon-taxable subject tothetaxafterdeducting30%oftheir - ForeignemployeesworkinginLebanonare properly subjecttothetax. - Lebanese employeesworkinginLebanonare

33 34 COMPANIES THIRD-FOREIGN 10 Chamber ofCommerceIndustryandAgricultureBeirutMountLebanon registration process. Foreign companiesoperatingin Lebanonabidebythe executed byanyoftheirbranches inLebanon. competent toruleinlawsuitsarising fromtransactions Lebanese fiscallaw. TheLebanesecourtsareconsidered are requiredtokeepbooks.They alsoabidebythe They shallberegisteredattheCommercialregisterand Lebanese lawrelatedtothepublicationofcompanies: Foreign companiesshallabidebytheprovisionsof the LebaneseGeneralRegulations. of itsnationalityexceptfortheprovisionsinoppositionto The foreigncompanyabidesbythelawsofcountry according tothelocationofitsheadoffice. the nationalityofcompanyshallbedetermined its countryoforiginisentitledtoenjoyallrights: The foreigncompanyacquiringamoralpersonalityin personality wasacquired. compliance withthelawsofthiscountrywherelegal of eachcompanyestablishedinaforeigncountry The Lebaneselawrecognizesthelegalpersonality SYSTEM: 1- PUBLICATION Economy andTrade: industrial andcommercialpropertyattheMinistryof branch islocated. Commercial Registerintheareawheretheiragencyor These companiesarerequiredtoberegisteredatthe company, itsheadoffice,andcapital. Trade. Thestatementshallincludethename ofthe Commercial PropertyattheMinistryofEconomyand activity, shall submitastatementtotheDepartmentof This formofcompany, previouslytostartingany SHARES 1- The followingspecialprovisionsareapplied: To besubmittedtotheofficeforprotection of JOINT STOCK COMPANIES AND PARTNERSHIPS LIMITED BY BY LIMITED PARTNERSHIPS AND COMPANIES STOCK JOINT incorporation and acopyofthisdeed. - Originaldeedofthecompany’s articlesof - Capitalofthecompany - Headofficeofthecompany - Nameofthecompany following shallbeincluded: - Astatementmadeintwocopies ofinwhichthe stock companiesandpartnershipslimitedbyshares: A- Requireddocumentsfortheregistrationofjoint person tosignonbehalfofthe company. shall becertifiedastruecopies bytheauthorized of thepreviousyear, providedthatthesedocuments documents whichweresetaccording tothebudget within thefirstthreemonths of itsfiscalyearthe company werefinancial,itshall submittotheoffice Moreover, incasethemainoperationsofaforeign other quality. of anyinstanceasaplaintiff ordefendantinany status, andrepresentthecompanybeforecourts related tothecompany’s businessmentionedinits who isentitledtoconcludeandsignanyagreement These companiesshallappointarepresentative office andtheLebaneseConsulate. be certifiedbythecompetentauthoritiesathead by theauthorizedpartyatcompany. Theyshallalso into Arabicandcertifiedastruecopiesoftheoriginals The above-mentioneddocumentsshallbetranslated company beforethirdpartiesandthecourts. representatives inLebanonordertorepresentthe - Decisionofappointingoneortwocompany

35 36 Those companies shallrequesttheregistration oftheir COMPANIES OF FORM OTHER 2- registered attheCommercialRegister. as wellanycapitaldecrease orincreaseshallbe Any amendmentmadetothestatus ofthecompany REGISTER COMMERCIAL THE TO - Extractofthestatuscompany. - Capitalofthecompany. company, manageitsaffaires andsignon itsbehalf. were associatesornon–torunthe - Namesoftheappointedpersons–whetherthey company hasestablishedagenciesorbranches. - Locations–inLebanonorabroad-wherethe - Objectofthecompany. - Formofthecompany. - Addressandtradenameofthecompany. and placeofbirthnationality. heir shareholderandpartner, inadditiontohisdate - Nameandfamilynameofeachpartner, exceptany following shallbeincluded: - Astatementmadeintwocopieswherethe regulations and theprovisionsofCode Money Foreign banksabidebytheabovementioned general BANKS: FOREIGN 3- including thefollowinginformation: incorporation andastatementmadeintwocopies is requiredtodepositanextractofthearticles The authorizedagentofthespecifiedforeigncompany which happenstobelocatedintheirarea. agencies andbranchesattheCommercialRegister behalf. run thecompany, manageitsaffaires andsignonits - Namesofpartnersorappointed thirdpartiesto - Capitalofthecompany. agencies andbranchesinLebanon. - Headofficeofthecompanyandlocationits - Objectofthecompany. - Formofthecompany. - Addressandtradenameofthecompany. to hisdateandplaceofbirthnationality. - Nameandfamilynameofeachpartner, inaddition bank whichamountdiffers accordingtothebranches. company tomakeacashdeposit inanacknowledged guarantee itscommitments,the lawalsorequeststhe reserve inLebanon:cashdeposits, treasurybonds.To Ministry ofEconomyandTrade andinvestitsfunds a legalrepresentative,andobtain alicensefromthe that appliesreciprocityoftreatment,andshallhave The companyshouldholdthenationalityofacountry fifty percentshallbeconstitutedofnominalshares. two hundredfiftymillionLebanesePounds,ofwhich with apaidcapitalofnolessthantwobillionand operate inLebanonshall:beajointstockcompany Any foreigninsurancecompanythatwouldliketo COMPANIES: INSURANCE FOREIGN 4- Central BankofLebanon. Lebanon togetapreviousauthorizationfromthe would liketoestablishoneoftheirbranchesin Money andCreditimposedonforeignbanksthat in theformofanonymoussocieties.TheCode profession inLebanontotheinstitutionsestablished and Creditwhichlimitedthepracticeofbanking