Limited Liability Company (Société à Responsabilité Limitée « sarl »)
The limited liability company is governed by Decree-Law No 35 of August 5, 1967 and is commonly referred to in Lebanon as “sarl” (this is the French equivalent of “LLC”). An sarl is founded by at least three partners and maximum 20 partners. As indicated by its name, the company’s partners have a limited liability, limited to the amount of their contribution to the company. Moreover, partners are not considered to be merchants and hence are not subject to the provisions applicable to merchants including the provisions of the Lebanese Code of Commerce.
An sarl is required to have a minimum capital of five million Lebanese Pounds (approximately /3333/USD), noting that contributions may be in-kind or in-cash. Shares of limited liability companies (referred to as “parts”), are not freely tradable. Therefore, whilst transfer of shares amongst partners is in principle free, however, transfer of shares to non-partners requires the prior approval of partners representing three quarters of the company’s share capital. An sarl may not issue “negotiable instruments” such as shares or bonds and may not call for public subscription to its share capital.
The company’s partners convene in general assemblies. However, the sarl doesn’t have a “board of directors” and the management is entrusted to one or more “managers” who may or may not be partners. The company’s denomination must always be followed by the abbreviation “sarl” or "ش.م.م." clearly indicating the limitation of the partners’ liability as well as the legal status of the company.
In general, there are no restrictions on foreign participation in limited liability companies except for certain regulated sectors that have specific requirements on the percentage shareholding to be held by Lebanese nationals. The company must necessarily appoint a lawyer with yearly retainer fees as set by the syndicate of lawyer.
Step-by-Step Process for Business Registration
This section describes the simplified process of registering a Limited Liability Company (Société à Responsabilité Limitée « sarl »). 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 Limited Liability Company (LLC) 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 LLC by-laws
(Form LLC 1-1)
(ii) The request for a bank certificate confirming the opening of a bank account and subscription to the company’s capital
(Form PLP 1-1)
(iii) The LLC constitutive general assembly
(Form LLC 2-1)
(iv) The request for registration of the LLC
(Form PLP 2-1)
(v) The LLC Commercial Circular
(Form PLP 3-1)
(vi) The LLC 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 LLC founders (at least three) must sign the LLC by-laws before a notary public. A sample text of by-laws is annexed as Form LLC 1-1 that the founders may fill and sign “as is”; or they may wish to add to it other clauses.
2- The LLC founders will then open a bank account in the name of the “LLC 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 PLP 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 partners will then hold a constitutive meeting during which they will fill and sign the minutes attached as Form LLC 2-1. The minutes include the appointment of a lawyer and must hence be signed by the said lawyer.
4- The Commercial Circular Form PLP 3-1 will then be completed and signed by the LLC’s authorized signatories, in as many copies as the applicants require.
5- The Certificate of Incorporation will be completed (Form PLP 4-1).
6- 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 Partnership registration,
- A Tax Identification Number (TIN)
- Any other required documents
The applicant 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