QUESTIONS & ANSWERS
Who can benefit from Circular 331?
Only SAL with registered shares (not a financial company or offshore company) may benefit from Circular 331. Banks may benefit from interest-free facilities granted for a maximum period of seven years. The bank should also invest part of the money obtained from the Central Bank in the beneficiary company and the largest part in treasury bills.
What events lead to the dissolution of my joint stock company?
The following events lead to the dissolution of your joint stock company:
• The end of the company’s duration in the article of association
• The execution of the anticipated project for which the company was established or if it be-comes impossible to achieve such project
• A decision of the shareholders at an extraordinary general meeting, whereby at least 1/3 of the capital of the company is represented and the decision is made by the majority of the votes of the shareholders present or represented
• The loss of 3/4 of the company capital (provided that the capital is fully paid) and an extraor-dinary general meeting decision to dissolve the company
As an investor, can I change my mind and cancel my investment?
Yes, you can.
Can a partnership limited by shares be dissolved by the withdrawal of one of the partners?
No, the company is not dissolved if one of the partners withdraws from it.
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
Can a limited liability company be dissolved by the death of one of the partners?
No, a limited liability company won't dissolve by the death of one partner. The parts of the deceased partners are automatically transferred to her heirs.
What is a venture capital (VC) firm?
A VC has five main characteristics:
• A VC is a financial intermediary, meaning that it takes the investors’ capital and invests it directly in portfolio companies
• A VC invests only in private companies
• A VC takes an active role in monitoring and helping the companies in its portfolio
• A VC’s primary goal is to maximize its financial return by exiting investments through a sale or an initial public offering (IPO)
• A VC invests to fund the internal growth of companies
Are partners liable if the joint liability company goes bankrupt?
Yes, they are. Partners in a joint liability company are considered to be merchants by virtue of law. Therefore, bankruptcy of the joint liability company means automatically bankruptcy of the partners who then lose the capacity to perform business due to liquidation of the company.
How can I submit a request for conciliation in case of dispute?
In case of dispute, you should apply a request for conciliation to the Secretariat General of the Arbitration at the Beirut Chamber of Commerce and Industry.
We are Trademark Agents. Can we possibly register a domain name and hold it on behalf of another firm, until the latter establishes its legal entity?
No, to apply for a .COM.LB domain the requester should provide his Lebanese Commercial Registration documents (i.e. the company requesting the domain should have an officially recognized operation in Lebanon).
How is a limited liability company taxed?
Limited liability companies are taxed at a flat rate of 15% on generated net profits. Furthermore, transfer of shares is subject to taxes including stamp duty and a 10% tax on the capital gains on parts that are being transferred.
How do venture capital firms (VCs) get paid?
In a nutshell, VCs are paid in two (2) ways:
• Carried interest: commission on gains they produce for the fund (which is usually 20%); and
• Management fees: annual percentage fee to run the business, while they and their investors await a future good payday from investment gains (most commonly a fund charges 2% annual management fees on committed capital for 10 years)
How can I subscribe to the shares of a joint stock company?
Subscription to a joint stock company capital is done through a written deed: an individual commits to buying a number of shares from the company's capital. The entire capital of a joint stock company should be subscribed to, but this does not mean that payment for the full value should be made. Subscribers should pay at least the quarter of the price of the shares they want to subscribe to.
Does Lebanon use the international trademark classification?
Yes, Lebanon uses the international trademark classification.
What are guarantee shares?
Each board member should hold a minimum number of shares mentioned in the articles of as-sociation (i.e. the guarantee shares) to guarantee their board memberships. Such shares are deposited in the company’s fund to ensure a good management of the company and should remain nominal and may not be put into circulation.
Guarantee shares should remain blocked as long as the members of the board are performing their functions, and until acquitted upon approval of the company’s budget at the end of the financial year of the start date of their functions.
Should the managers of a partnership limited by shares hold any guarantee shares?
No. The law did not impose a limit of shares that should be owned by a manager as a guarantee for her position.