Joint Stock Company ( Société Anonyme Libanaise « sal »)
The Lebanese joint stock company is defined in article 77 of the Lebanese Code of Commerce as a company constituted amongst shareholders who are only liable to the extent of their contribution and who subscribe to tradable instruments referred to as “shares”. Lebanese joint stock companies necessarily have the Lebanese nationality and must necessarily have Headquarters in Lebanon.
The minimum number of shareholders is three and the minimum initial capital is /30 000 000/ LBP (approximately /20 000/ USD). The initial capital can be in cash and/or in-kind contributions. The in-kind contributions must be fully delivered at the time of incorporation but full payment of the cash capital is not required at the time of constitution. Indeed, the law permits that only one fourth of the cash capital is paid upon the company’s constitution.
The company may be open to the public for subscription and may issue financial tradable instruments or bonds.
The shareholders meet in a “general assembly” and elect a board of directors. The number of board members must be between three to twelve. All board members must own a minimum number of shares in the company (is determined in the company’s by-laws) and the majority of board members must be Lebanese nationals. The board elects a Chairman who represents the company and carries out the board’s decisions. By virtue of the law, the Chairman is also necessarily the company’s General Manager.
There are no restrictions on foreign participation in joint stock companies except for certain restricted sectors that have specific requirement on the percentage shareholding to be held by Lebanese nationals (For example joint stock companies whose objective is to manage a public sector, or joint stock companies engaging in media, commercial representation, real estate and other specially regulated industries). Also, as mentioned above, the majority of the joint stock company’s board must be Lebanese nationals.
At least one auditor must be appointed by the company for a one year term, noting that an additional auditor is appointed by the judge presiding over the commercial registry within two months from the company’s incorporation. The company must necessarily appoint a lawyer with yearly retainer fees. The company’s name must always be followed by the abbreviation “sal”.
Step-by-Step Process for Business Registration
F. This section describes the simplified process of registering a Joint Stock Company ( Société Anonyme Libanaise « sal »)
. 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 Joint Stock Company (JSC), 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 JSC 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 JSC constitutive general assembly
(Form JHO 3-1)
(iv) The JSC first board meeting
(Form JHO 4-1)
(v) The request for registration of the JSC
(Form PLP 2-1)
(vi) The JSC Commercial Circular
(Form PLP 3-1)
(vii) The JSC 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 JSC founders (at least three) must complete and sign the JSC by-laws (Form JHO 2-1) before a notary public. The founders may fill and sign it “as is” or they may wish to add to it other clauses.
2- The JSC founders will then open a bank account in the name of the “JSC 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 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 JSC Chairman General Manager is elected.
5- The Commercial Circular (Form PLP 3-1) will then be completed and signed by the JSC’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 partners 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.