QUESTIONS & ANSWERS
Can the auditor of a partnership limited by shares be appointed from among accredited partners?
No. Auditors may not be appointed from among accredited partners, but may be appointed from among the other partners.
Is it mandatory to register a trademark in the Middle East and North Africa?
If you are seeking protection of your trademark in the Middle East and North Africa, you should register your trademark in each of said countries which actually provide protection on a first-to-file, rather than a first-to-use basis. Having a first-to-file system means trademark registration is absolutely necessary in order to obtain rights on a trademark. Unlike common law countries, the use of the trademark without registration does not necessarily establish protectable rights.
Does the copyright law protect moral rights?
Yes, the copyright holder has economic and moral rights.
How can I exploit my copyrights?
You can enter into a contract of exploitation of your copyrights subject to the following rules:
• Any contract for the exploitation or assignment of economic rights should be drawn up in writing, otherwise it is void
• It should set out in detail the rights covered by the contract and indicate the time and location
• The contract also requires that the author gets a percentage of the exploitation revenues and assignment proceeds
• If the contract does not set a time limit, it should be valid for 10 years only from the date of signature of the contract
What is the quorum needed to amend the joint stock company's object?
The legal quorum to amend the joint stock company's object should always represent at least 3/4 of the company's share capital.
Is the infringement of a copyright subject to criminal liability?
Yes, it is. Any person who, knowingly and with intent to make a profit, infringes or attempts to infringe copyright or related rights should be liable to imprisonment for a term varying from one month to three years and/or to a fine varying from LBP 5 million to LBP 50 million.
What are the main advantages of forming a joint stock company (SAL) instead of a limited liability company (SARL)?
The advantages of forming a SAL over a SARL reside in two main points:
• Transfer of shares: a SAL, unlike a SARL facilitates the transfer of shares among shareholders and third parties and therefore attracts investors; and
• Benefiting from Circular 331 as a tech startup: The Central Bank of Lebanon requires that startup companies be incorporated in the form of a Lebanese joint stock company (SAL).
There are many reasons why it is better to incorporate:
• To be trusted by counter-parties in all prospective transactions whether with suppliers or cli-ents
• To be protected in all the deals, because without a legal framework a person won’t be pro-tected if a supplier does not deliver the right product, or a client does not pay for products sold or services rendered
• To limit your liability because as a shareholder you are legally responsible for the debts of a company only to the extent of the nominal value of your shares
• To have a marketing framework: a brand name and an entity that can be marketed
• To pay less tax and benefit from tax exemptions given for corporations and merchants
If I transfer my copyright to another person, should I register such transfer?
No, it is not compulsory to register a transfer of copyright but rather recommendable.
What is post-money valuation?
Post-money valuation is analogous to the value of the company after the financing. It is calculated as follows:
Post-money valuation = price per share * fully diluted share count
What happens I don't raise the targeted funds for my startup?
If the minimum funding is not met then there are options for how to proceed based on the situation:
• Adaption of original business plan to function with less funding
• Extending the financing round
• Closing of the finance round with no funds transferred
What is the minimum capital of a Lebanese offshore company?
The capital of a Lebanese offshore company cannot be less than LBP 30,000,000 or its equivalent in foreign currency.
Can the limited liability company be managed by foreign managers?
Yes, it can. However, the foreign manager should obtain work and residency permits from the Ministry of Labor and the Directorate General of General Security.
What are the advantages of incorporating an offshore company?
The advantages of incorporating an offshore company are:
• Tax saving and tax exemptions
• Effortless business administration
• Full ownership for non-Lebanese
• Limited liability of relevant shareholders
• Non-Lebanese chairman or general manager does not require a work permit if residing out-side Lebanon
• Non-Lebanese employees are exempt from work permits provided that the total balance sheet of the company exceeds USD 6,667,000
How is a joint stock company taxed?
Joint Stock companies are taxed at a rate of 15% on generated net profits and 10% on distribution of dividends (Capital Gain Tax).
What are the various activities of the "Type 4 and 5" Industrial Corporations?
“Type 4 and 5” Industrial Corporations cover the following activities:
• Production of food including coffee, dairy products, vegetables, bread, etc…
• Production of carpets
• Production of clothing
• Production of leather
• Production of furniture
• Production of paper
• Production of metal
• Production of metallic products and instruments
• Production of computers and office supply
• Production of electric tools
• Production of jewelry
How much does it cost to incorporate a joint stock company?
The joint stock company incorporation fees amount to USD 2,000 approximately, in addition to the legal fees for processing incorporation which vary depending on the lawyer.