Setting up Business in Libya

Foreign companies wishing to enter & operate in the Libyan market  should set up a local entity, this can be achieved through various method. Some are mentioned below.

Under Libyan law (which remain the same and would probably continue to be in force for a while) it is not permissible to do business in the country without a registered presence.

Below are some of the options:

       Joint Venture (JV): 

The joint venture company is a joint stock company (JSC) with a minimum of 35% Libyan ownership. The minimum share capital of a JSC is one million Libyan Dinars (LYD), at least 30% of which must be paid in on incorporation into a joint account in a Libyan bank, with the remainder to be paid within five years. This vehicle is commonly used for foreign-Libyan joint ventures. Legal and financial advices are essential before heading this route. This option can offer a number of advantages bidding for jobs in country as foreign and Libya operators have a preference for awarding to high-quality local companies where possible

Branch Office:

The registration of a branch office of a foreign company does not require a Libyan partner (or sponsor). However, the foreign company must demonstrate that is has particular experience in its planned area of activity. In addition, the activities which may be performed through a branch are confined to those mentioned in a list published by the Ministry of the Economy & Trade (Not all activities allowed). On registration, the parent company is obliged to deposit a minimum of 150.000 LYD with a Libyan local bank. A branch office has the advantage that the foreign company is not dependent on a Libyan partner. Opening a branch office is a complex process that can take months or more.

Investment Enterprise:

Under Investment Law No. 9 of 2010, investors can establish investment enterprises for activities in all the main industry sectors, with the exception of oil and gas exploration and production. The investment project may be wholly owned by the foreign investor, provided that the amount of the funds invested exceeds five million LYD. The minimum investment is reduced to two million LYD if a Libyan partner holds at least 50% in the investment. An investment enterprise benefits from certain exemptions from taxes and customs duties for the first 5 years. Net profits and dividends are freely transferable and the investor may own real property in Libya. An investment enterprise is particularly suited to a foreign investor wishing to undertake a capital intensive project in the country.

·           Commercial Agency:

Commercial agency and distribution are mainly governed by the Commercial Code which has abrogated the Commercial Agency Law No. 6 of 2004. The Executive Regulations of the Commercial Agency Law No. 136 of 2004 provide an extensive list of goods and services for which a local commercial agent (Only Libyan nationals or privately owned companies) is required (notable exceptions are foodstuffs and construction materials). However, the importation for private use or for the purpose of a specific project does not require a local commercial agent or distributor.

It should be noted that further restrictions, such as limits on foreign shareholdings, are contained in specific regulations, such as those covering oilfield services, banking and insurance.

Structuring business activities in Libya requires finding and choosing a suitable business partner and careful legal planning and, in view of restrictions of foreign ownership, corporate government arrangements are often complex.

To enquire or wish to speak to us about it, please feel free to do so at Email: Info@soclibya.com, Tel: +44 2089878450 or M: +44 7774013043