A new decree has been issued by the Libyan Minister of Economy (No
(103) 2012) setting out the purposes, conditions and percentages for foreign
individuals or companies to set up business in Libya.
The decree is entitled ‘The participation of foreigners in partnership
companies and opening of branches and representative offices for foreign
companies in Libya’.
The decree allows for both foreign individuals and companies to partner with
Libyan individuals and Libyan companies according to their activities
registered and based in abroad. But not forming Holding Companies.
The partnership companies can either be:-
Shareholding (musahama)
companies according to degree (No (23) 2010)
Or
Limited (mahduda) companies.
For the shareholding companies, the capital must be a minimum of one
million LYD of which 30% (300,000 LYD) must be deposited
at a Libyan bank at the stage of establishment.
There are five compulsory requirements such registration documents,
licences, evidence of depositing the agreed share etc.
The limited companies can be set by individuals and a minimum capital of
50,000 LYD is required.
There are six compulsory requirements such as proof of identity, he/she
has no criminal past, no bankruptcy history, evidence of depositing the agreed
share etc.
The main purposes of forming the partnerships are to
achieve followings:-
·
Transfer and localise the
know-how and technology.
·
Annual technical and
vocational training programmes for Libyans.
·
Annual development programmes
for local labour to replace non-Libyans.
·
The use of equipment,
machinery, raw materials and production inputs available in the local market
The maximum shareholding allowed for non-Libyans is 65%, but
in exceptional circumstances the Ministry of Economy can raise the limit to a
maximum of 80%. Libyan partners will be
represented according to their shares.
There are 12 areas of activity where foreign partnerships
are prohibited from operating in Libya as follows:
1.
retail and wholesaling
2.
importation
3.
catering
4.
agencies/distributorships
5.
auditing and legal firms
6.
Land transporting
7.
Inspection activities on all
good supplied or imported only with the permission from the Ministry.
8.
Marine handling, shipping and
air cargo activities.
9.
Packaging activities.
10.
Stones and rockets crashing.
11.
Civil construction for
contracts for less than 30 million LYD.
12.
Any other restricted
activities only allowed for Libyans
This decree excludes companies which already have legally set up
branches in Libya at the time of the passing of this decree and which are
contracted to implement projects – until the expiry of their contracts .These
companies must thereafter renew their documentation upon expiry.
Companies with no branches or partnership agreements can apply for
branch offices for market research etc, without the right to sign contracts.
Branch offices can be opened for 2 years and are renewable for another 2 years
only once. Branch offices discovered to be transacting commercial activities
would be closed.
Article 18 of the decree stipulates that applicants to form
Libyan-foreign companies shall receive a reply regarding their application,
either way, within 30 working days.
Companies wishing to renew their presence in Libya should do so 3 months
before the expiry of their licence.
Finally the decree in its ultimate article No.(21), stipulates that
this decree is in force as of its date of publication (13 May 2012), and
that Libyan-foreign partnership companies must legalise their status within one
year of the passing of this decree.
Please click here to download the decree (Arabic version) http://www.docstoc.com/docs/120962773/D103
NOTE: All documents in forming the partnerships must be translated into
Arabic in LIBYA and must be stamped at Libyan embassies or counsels of the
country-based individuals or companies.
by Sami Zaptia (Libya Herald) and improved by Tarek Alwan (SOC Libya
Ltd).
