Incorporation of Foreign Companies’ Branches and Joint Ventures Companies in Libya
As Libya’s socio-economically stabilizes, many business opportunities are beginning to appear in Libya, which has incentivized foreign companies to start or return to their operations in Libya. In order for foreign companies to successfully and smoothly operate in the Libyan Jurisdiction especially due to bureaucratic procedures, they must have a good understanding of the laws governing the procedures as well as methods in which foreign companies can be established and incorporated in Libya. This article will outline the two main paths a foreign company can choose to start specific business activities in Libya Branches and Joint Ventures.
1) Creating A Foreign Company Branch
Pursuant to Article 9 of the Libyan Ministry of Economy Decree 207/2012, A foreign company may:
• set up a branch in Libya under the full authority and control of the parent company.
• Register this branch for a period of 3-5 years after which it will need to be renewed. The registration fees are of 250,000 LYD as a minimum and it increases dependent on the branch validity period.
• As per Article 2, the branch must be registered only for a specific field of work or business activity. A separate branch has to be registered in order to operate in another economic sector. Libyan Law provides for the specific sectors in which foreign branches can operate within and branches can only select one.
2) Creating A Joint Venture Company
Pursuant to Articles 1 – 3 of Libyan Ministry of Economy Decree 207/2012:
• A foreign company may enter a joint venture with either a private or public Libyan company.
• The shares of the foreign company are usually limited to 49%, however they may go up to 60% with approval from the Minister of Economy. Approval decisions are dependent on multiple considerations, particularly, factors such as Artistic and technical requirements, location and nature of the contracted parties.
• As opposed to branches, the registration for joint ventures allows for participation in a wider range of business activities and economic sectors; thus, the company is not restricted to one field of work. Meanwhile, the fees are higher standing at a minimum of 1,000,000 LYD requirement to set up.
The required documents to register for incorporation of joint venture companies are as follows:
• Decision of the board of directors of both the national and foreign companies of their intention to enter the JV.
• Copy of an MoU/Articles of Association/Contract
• A statement issued from a Libyan bank confirming the full payment for the shares of the JV.
• A statement from either company confirming the evaluation of the capital.
How can Tumi Law Firm help?
We assist in consulting and performing due diligence for our clients in their evaluation of their opportunities in Libya to ensure the mitigation of risks and compliance with enforced Libyan Law. Our Firm also stands in the frontline to negotiate the best possible outcomes. Our dedicated Consultations Department keeps our various clients updated with the evolving legal and economic environment of Libya and have immense experience in overcoming a wide range of turbulences for our clients within this complex and ever-changing environment.
Libyan bureaucratic procedures can grow to become burdensome and extremely difficult, particularly when it comes to registrations, JVs with public companies, and liquidations. To this end, as a full-service law firm with 35 years of experience and an on-ground presence have registered on behalf of our clients and assisted them with all procedures throughout their operations in Libya including registration renewals, and then liquidated for our clients once all their operations were complete.
AUTHOR: Yazeed Amish / Zakaria Khalid
Copyright Tumi Law FirmDisclaimer: Every effort has been made to ensure the accuracy of this publication at the time it was written. It is not intended to provide legal advice or suggest a guaranteed outcome as individual situations will differ, and the law may have changed since publication. Readers considering legal action should consult with an experienced lawyer to understand current laws and how they may affect a case. For specific technical or legal advice on the information provided and related topics, please contact the author.