QUESTIONS & ANSWERS
Can I make multiple investments for my startup company?
Yes, you can. You will increase your possibilities for success.
How should the capital of a Lebanese joint stock company be paid?
The capital of a joint stock company should be paid as follows:
• At least a quarter of the value of each share should be paid upon subscription. The balance of shares should be settled on the dates set by the board of directors.
• Amounts paid by shareholders should be deposited at any recognized bank in a special account opened in the name of the company followed by the expression “under establishment” with a list of the names of the subscribers and the amount paid by each
How can I protect my idea, in Lebanon?
In order to protect your idea, you can ask your investors to sign a non-disclosure agreement ("NDA") that commits them to confidentiality.
From an intellectual property (IP) perspective, you should know that IP doesn’t protect the mere idea per se but the expression of the idea. In other words, your idea should be tangible:
• Copyright: You need to fix the ideas onto a defined medium for copyright to apply
• Trademark: You should register your trademark for your logo to be protected (you can do it by yourself by accessing: www.economy.gov.lb)
• Patent: You should describe and register your invention or invented process for patent to apply
In practice, always remember that your idea may be stolen but the way you implement it is key and can never be copied.
I would like to form a social enterprise. What is the best form of business to use under Lebanese laws?
There is no legal rule allowing the registration of a company under the name of social enterprise in Lebanon. All social enterprises are registered until now as NGOs or limited liability companies (SARL or SAL).
How is a trademark application processed?
The application is examined as to abidance by public order or morals. The mark should not also be representing national or foreign decorations. Once accepted, the mark is published in the official gazette. The registration of the mark becomes in effect on publication.
What are guarantee shares?
Each board member should hold a minimum number of shares mentioned in the articles of association (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.
How is a term sheet structured?
A term sheet is divided into sections:
• The first section contains basic “Offering Terms:” identity of the investor(s), amount offered, price per share, pre-and-post-money valuation, and capitalization.
• Other sections include the key terms in the corporate charter, the investors’ rights agreement, the right of first refusal, and voting agreement.
If I haven't filed my trademark, how can I prove my precedence usage of it?
A written evidence is highly and imperatively recommended to claim your precedence to use a trademark.
Is a Lebanese commercial representative automatically entitled to compensation upon termination of the commercial representation agreement?
The commercial representative is entitled to indemnity/compensation for wrongful termination of the agreement, even where the termination is a result of the natural expiry of the agreement. Furthermore, if the commercial representative can prove in front of a court of law that her actions were essential to the success of the promoted brand or to the rising number of clients, the court can rule in her favor and grant her compensations.
Can the chief executive officer (CEO) act as the general manager of the joint stock company?
Yes. The board of directors elects the chief executive officer-general manager of the company and determines her prerogatives. The board of directors may also appoint a general manager who will perform her functions under the supervision and personal responsibility of the chief executive officer.
What is included in the limited liability company's articles of incorporation?
The articles of incorporation of a limited liability company (SARL) mainly contain the following:
• Corporate name
• Object of the company
• Address of the head office
• Capital amount of no less than LBP 5,000,000
• Term of the company
• Required quorum and majority for the decisions in partners’ ordinary and extraordinary as-semblies
• Appointment and powers of the general manager
• Signatory powers
• Name of the partners
• Number and value of the shares
• Contribution of each partner in the capital of the company
For how long is my patent protected?
Patents are protected for 20 years from the date of payment of the first official filing receipt.
How can I transfer my shares in a Lebanese joint stock company?
In principle, the transfer of shares in a joint stock company to third parties is free from any restrictions, unless the company’s bylaws provide for restrictions such as preemptive rights to existing shareholders. Such transfer takes approximately two to three business days and is not subject to a tax on the capital gains, except when the seller of the shares is a company.
What is common stock?
Common stock is the stock that does not have priority over any other equity security with respect to payments of dividends or the distribution of assets upon liquidation.
Where should I file a patent application?
You should file a patent application with the Head of the Intellectual Property Protection Authority at the Ministry of Economy and Trade.
What is the minimum number of shareholders in a joint stock company?
The number of shareholders in a joint stock company cannot be less than three.