Holding Company (Société Holding)
The holding company is a special type of joint stock companies having a limited object and benefiting from special tax and other provisions. The object of the holding company is strictly limited to the following:
- Buying and subscribing to shares in Lebanese or foreign joint stock or limited liability companies,
- Managing the said companies,
- Lending money to companies in which it holds a minimum of 20% shares and or guaranteeing such companies towards third parties. The holding company may for such purpose borrow from banks and issue bonds, provided that the total value of issued bonds does not exceed five times its capital and the reserves,
- Holding and leasing patents, concessions and trademarks, and
- Acquiring moveable or real estate assets that are necessary for the holding’s operations.
The holding company has the same characteristics as described under paragraph “F” above describing joint stock companies, with the following exceptions:
The Holding Company is exempted from the obligation to have Lebanese citizens or corporations on its board of directors, noting that the non-Lebanese Chairman of a holding company is exempt from the work permit requirement.
The minimum capital requirement is the same as for joint stock companies but it can be denominated in foreign currency. The company’s name must always be followed by the expression “Holding sal”.
The holding enjoys tax advantages: it is exempt from revenue tax on its profits and the distribution of dividends to the shareholders is exempt from the dividend distribution tax or tax on capitals. However, the holding company remains subject to other tax provisions including notably a flat tax (that varies depending on the company’s capital and reserves) capped at /5 000 000/ LBP annually.
Similar to joint stock companies, the holding must appoint an auditor as well as a lawyer with yearly retainer fees. The holding Company is exempted from the obligation of appointment an additional auditor.
Step-by-Step Process for Business Registration
This section describes the simplified process of registering a Holding Company. In general, the simplified process involves three stages:
Stage 1: Getting forms from Libanpost and checking the desired name availability.
Stage 2: Preparing all required forms and documents.
Stage 3: Submitting the filled forms and documents and the required fees to Libanpost.
Once these stages are completed, the applicant(s) will receive from Libanpost by mail the Certificate of Incorporation (Registration) and Tax ID within five to seven business days. The applicant is then ready to do business and the bank will liberate the fund (capital) blocked by the founders (where applicable) upon request.
Following is a description of the registration process:
Stage 1: Getting the required forms from Libanpost and checking the name availability.
Once the applicant has elected to register a Holding Company (HOLDING), the applicant will visit any Libanpost office in order to:
- Verify the company’s name availability through the database available at Libanpost.
- Obtain the required forms, namely:
(i) The HOLDING by-laws
(Form JHO 2-1)
(ii) The request for a bank certificate confirming the opening of a bank account and subscription to the company’s capital
(Form JHO 1-1)
(iii) The HOLDING constitutive general assembly
(Form JHO 3-1)
(iv) The HOLDING first board meeting
(Form JHO 4-1)
(v) The request for registration of the HOLDING
(Form PLP 2-1)
(vi) The HOLDING Commercial Circular
(Form PLP 3-1)
(vii) The HOLDING Certificate of Incorporation
(Form PLP 4-1)
- Obtain a list of the fees and expenses that need to be paid (Appendix II).
Stage 2: Preparing and Completing all required forms and documents.
Once the above forms are obtained, they must be completed as follows:
1- The HOLDING founders (at least three) must complete and sign the HOLDING by-laws (Form JHO 2-1) before a notary public. The founders may fill and sign Form JHO 2-1 “as is” or they may wish to add to it other clauses.
2- The HOLDING founders will then open a bank account in the name of the “HOLDING under constitution”. The founders will deposit in such account all amounts paid for the capital subscription. The founders will submit to the bank a request in the form of (Form JHO 1-1), requesting the bank to issue a certificate evidencing the opening of the bank account and subscription of each partner to the corresponding number of shares. The bank will usually require a copy of the notarized by-laws for the opening of such account and the issuance of the required bank certificate.
3- The shareholders will then hold a constitutive meeting during which they will fill and sign the minutes attached as (Form JHO 3-1). The minutes include the election of the first board of directors and appointment of the principal auditor.
4- The board members shall hold a board meeting and fill the board minutes (Form JHO 4-1) in which the HOLDING Chairman General Manager is elected.
5- The Commercial Circular (Form PLP 3-1) will then be completed and signed by the HOLDING’s authorized signatories (usually the Chairman General Manager and any other person delegated by the board), in as many copies as the applicants require.
6- The Certificate of Incorporation will be completed (Form PLP 4-1).
7- The applicant will then fill in the request for registration (Form PLP 2-1)
Stage 3: Submitting the filled forms and documents and the required fees to Libanpost.
Once all the above forms are completed, the applicant will submit the entire file to Libanpost and pay all required fees and expenses. Copies of legal identification (ID) of all parties and or shareholders should also be submitted.
Completion Stage:
Within approximately 5 business days of submission of the entire file to Libanpost the applicant will receive:
- A “Certificate of Incorporation” evidencing the Company registration,
- A Tax Identification Number (TIN)
- Any other required documents
The company is now ready to do business. The bank will liberate the funds (capital) blocked by the founders upon presentation to the bank of the liberation of funds’ request (Form PLP 5-1) with the relevant documents.