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Commercial Companies in Lebanon

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Commercial Companies in Lebanon COMMERCIAL COMPANIES IN LEBANON Chamber of Commerce Industry and Agriculture of Beirut and Mount Lebanon 06 00 LIMITED LIABILITY CONTENT 01 COMPANY (LLC) LETTER FROM THE CHAIRMAN 07 PARTNERSHIP LIMITED 02 BY SHARES JOINT LIABILITY COMPANY 08 HOLDING COMPANIES 03 LIMITED PARTNERSHIP 09 OFFSHORE 04 COMPANIES UNDECLARED PARTNERSHIP 10 THIRD-FOREIGN 05 COMPANIES JOINT STOCK COMPANY Chamber of Commerce Industry and Agriculture of Beirut and Mount Lebanon 01 LETTER FROM THE CHAIRMAN 2 Chamber of Commerce, Industry Evolution at the policy-making level continues and Agriculture of Beirut and to build on the competitiveness of the The Mount Lebanon is pleased to put investment environment. The public-private at the disposal of the business community the partnership approach certainly generates present set of analytical guidelines pertaining abundant opportunities in building and operating to the acts of incorporation under Lebanese infrastructure projects. company laws. We deem this comparative description of various forms of incorporation to Unscathed by the global financial crisis, the be a primer on the country’s business setup. banking sector in Lebanon further adds to the attractiveness of the country as a host to True to its mission of supporting the private foreign investment. A fast-growing deposit base economy, the Chamber hereby undertakes to combined with a high liquidity ratio render local assist prospective foreign investors all through financing comparatively more accessible to the establishment process. foreign investors. The defining advantages of Lebanon’s investment We remain confident that improvement in the environment derive from its free enterprise system country’s investment climate will be sustained distinguished by a high degree of openness to at the behest of liberal policy-makers as well as foreign trade and the absence of restrictions Chambers of Commerce and other business on capital movement. Such system naturally support organizations. safeguards private ownership of all form of assets, and subjects local and foreign investors to the same code of laws and regulations. Hence, foreign investors retain full control over Mohamed Nizar Choucair, their business and private assets, unhindered Chairman by the constraint of an imposed local partner or restrictions on business and investment decisions. 3 Chamber of Commerce Industry and Agriculture of Beirut and Mount Lebanon 02 JOINT LIABILITY COMPANY 4 OVERVIEW A JOINT LIABILITY COMPANY IS A TYPE OF CORPORATION OR PARTNERSHIP INVOLVING TWO OR MORE INDIVIDUALS WITH THE LEGAL CAPACITY TO UNDERTAKE COMMERCIAL TRANSACTIONS FOR PROFIT. ALL PARTNERS INVEST THEIR MONEY, WORK, AND SKILLS, OR ANY PART THEREOF, IN THE COMPANY, AND SHARE PROFITS AND LOSSES ACCORDING TO PERCENTAGES AGREED UPON. PARTNERS ARE JOINTLY AND SEVERALLY LIABLE AND THEIR LIABILITY IS UNLIMITED. THE TYPE OF ENTITY OF A PARTNER IN A JOINT LIABILITY COMPANY IS OF PRIMARY IMPORTANCE. 5 1- FEATURES E- Partners in a joint liability company are not 4- MANAGEMENT OF A JOINT LIABILITY COMPANY A joint liability company has the following features: allowed to give up their shares without prior consent All partners are legally responsible for operations of A- Partners are personally liable for the company’s of all partners. Partners are able though to give up the company unless such operations are entrusted in the debts. Their liability is unlimited. Creditors may their shares to other partners. company contract or in a subsequent document to one or attempt to claim the whole debt from any of the more partners or to one or more persons from outside partners personally. Partners are severally liable F- The company contract is always written. the company. for the company’s debts. Partners who settle the Managers of the company may not manage a similar company’s debts may recover payment from the 2- ESTABLISHMENT OF A JOINT LIABILITY COMPANY project unless with a special authorization from the company. They may also claim from other partners A company partnership agreement is drafted as an partners, renewable on a yearly basis. A manager may the amount of debt they are responsible for. official or ordinary document and may not be used not conclude a special agreement with the company in against others unless written. which he or she may have a special interest. B- A main feature of joint liability companies is the Partners in a joint liability company are personally and sharing of profits and losses. 3- PUBLICATION OF A JOINT LIABILITY COMPANY severally liable for the company’s debts. A joint liability company contract is published by way The partner appointed manager in the partnership C- Partners in a joint liability company are of affidavit of publication filed with the court of first contract may not be removed unless for serious considered to be merchants by virtue of law. instance within the jurisdiction of which the company reasons. The removal decision shall be reached Therefore, partners are those who naturally enjoy falls, and filing of a summary of the company’s unanimously by all partners or by a majority of them the legal capacity to perform business. As a statements with the commercial register in the area of according to the bylaws of the company. result, bankruptcy of the firm means automatically the company’s address, within one month from the set A company may resort to the legal system to remove bankruptcy of the partners who then loose the up of the company. a manager. capacity to perform business due to liquidation of the Failing to file the constituting document of a joint In the event that the manager is a partner appointed by company. liability company with the court or to register it in the an independent document, he or she may be removed commercial register, leads to the cancellation of the by the majority needed for the appointment. D- The company operates under a trade name made company. The manager has the duty to register and in A manager’s prerogatives are usually defined in up of the partners’ names respectively. In the event case he/she fails to proceed, any partner can do so. the partnership agreement or in an independent that all names are not mentioned, the trade name Any amendment to the partnership agreement must be contract. In case these prerogatives are not defined, or the mentioned names will be followed by “and his published as well. they shall be absolute. associates” or “and associates”. 6 A company shall comply with the undertakings of its effective between partners only after the end of descendant (s) of the deceased partner are silent manager during his or her mandate. the financial year of the company. In the event that partners. the duration of the company is definite, a partner In the event that the company consists of two 5- DISSOLUTION OF A JOINT LIABILITY COMPANY may not withdraw before the end of the duration as persons and one of them dies not leaving behind a A joint liability company is ended by any of the following: determined in the contract. spouse or a descendant, it will legally cease to exist. A- End of duration as set in contract B- In the event of one of the partners being The dissolution of the company is published in the B- End of its purpose declared as incompetent or absent by virtue of a same way as its establishment. legal decision C- Loss of company capital 6- LIQUIDATION OF A JOINT LIABILITY COMPANY C- In the event of bankruptcy of one of the The liquidation of a joint liability company includes D- Partners agreeing to end the company partners by virtue of a legal decision; In all cases the collection and settlement of the company’s and in the event of the bankruptcy of one of debts, and the conversion of its goods to money to Furthermore, the court may always declare a company the partners, their incompetence, withdrawal, or be distributed among the partners based on their as ended based on the request of a partner or more. It absence, the rest of the partners may unanimously contributions to the partnership. may also disqualify partners not fulfilling their obligations decide the continuation of their partnership towards the company. without the partner declared incompetent. Such a If the articles of the company do not appoint a decision must be registered with the secretariat of liquidator and the partners do not agree on one, it will REASONS JUSTIFYING THE DISSOLUTION OF A JOINT the commercial register. be up to the court in which jurisdiction the company falls LIABILITY COMPANY: to appoint one. During liquidation period, the company A- In the event of a decision by one of the partners D- In the event of the death of a partner with shall continue keeping its legal entity and the liquidator to withdraw from the company, if it had been set no spouse or descendants to whom rights may shall take the place of the manager. By keeping its legal up for an indefinite period of time, providing the be transferred, the company may continue with entity, the company will also keep its trade name adding withdrawal does not harm the legitimate interests of the living partners. In the event of the death of to it “in liquidation process”. The end of the liquidation of the company. Such withdrawal must be completed a partner with a spouse or a descendant, the a company means the end of its legal entity. at least three months prior to the end of the financial company continues with one of those and becomes year of the company. Such withdrawal shall become a limited partnership where the spouse and the 7 Chamber of Commerce Industry and Agriculture of Beirut and Mount Lebanon 03 LIMITED PARTNERSHIP 8 OVERVIEW A LIMITED PARTNERSHIP IS A FORM OF PARTNERSHIP SIMILARLY TO A JOINT LIABILITY COMPANY.
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