Legal Advice For Founders Starting Up In Lebanon
Our friends at Tohme Law Firm have compiled information that every founder looking to start his or her company in Lebanon should be aware of. From company structures and contracts to tax obligations and intellectual prorperty, read all about it below!
All the passion and all the reward lies on the other side of doing the work – Joshua Fields Millburn
1.Your business structure
Define your company’s legal structure from the beginning and cover your entire legal base, be it with incorporation, foundational agreements, or preparation for financing rounds and intellectual property protection.
This comparative table shows you the different types of commercial companies in Lebanon.
|Unlimited Partnership||Limited Liability Company (SARL)||Joint Stock Company (SAL)||Holding Company incorporated in the form of a joint stock company||Offshore Company incorporated in the form of a joint stock company|
|Type of Company||Association of Persons||Association of Funds||Association of Funds||Association of Funds||Association of Funds|
|Minimum Number of Partners or Shareholders||2 Partners||Between 3-20 Partners||3 Shareholders||3 Shareholders||3 Shareholders|
|Minimum Capital||No Minimum Capital||5 000 000 LBP||30 000 000 LBP||30 000 000 LBP||30 000 000 LBP|
Holding companies are Joint Stock Companies with a limited legal object mainly owning shares in other companies, managing and giving loans to other companies in which it owns shares, patents, trademarks and properties dedicated to its activity.
Offshore companies are Joint Stock Companies that can only have activities outside the Lebanese territory. They also have a limited object related to commercial operations, managing companies, owning stocks and shares in foreign companies and giving them limited loans, building, investing and managing economic projects and owning or leasing offices in Lebanon for the purposes of its activity.
- The registration process is an easy process and the estimated time to complete the registration shouldn’t exceed 10 to 15 days as of signature of all relevant documents.
- Make sure you are aware of all annual expenses (legal fees, main and additional auditor’s fees, etc...) that your company has to pay before taking your decision.
Contracts/Agreements are absolutely an essential requirement for any dealing involving your startup/company such as but not limited to contracts with your employees (employment agreement), your service providers (consultancy or services agreement), your investors and partners (shareholders agreement).
- A well-drafted contract can save you a lot of trouble in the future! Make sure that your contracts are the reflection of your functional and business requirements, and that they are approved by your legal expert!
3.Your tax obligations
You want to avoid any trouble with the tax authorities in Lebanon, so make sure you know in advance what and how much tax you’ll be obligated to pay, within your structure.
- For limited liabilities and joint stock companies (SARL, SAL) and branches: 15%. It is classically accompanied by a tax of 10% on distribution of dividends (if distribution occurs);
- For offshore and holding companies: Lump sum annual of 1.000.000 LBP;
- For sole proprietorship. Partnership: from 4% to 21%.
Tax on capital gains:
- The tax is in general 10% save some particular exceptions.
- Tax inspectors take violations of the tax code seriously, and violators are pursued with vigor. Refer to your lawyer/tax advisor to explore tax law provisions.
4.Your intellectual property (IP) protection
Your IP can be protected under rights such as:
- Patents for inventions and plant varieties, a sui generis protection for layout designs of integrated circuits and for undisclosed information.
- Trademarks of Commercial, Industrial, Literary, Artistic and Musical Property in Lebanon.
- Copyrights available to literary and artistic works and computer software, video films, and all kind of audio-visual works.
- Industrial design (ornamental or aesthetic aspect of an article).
- Intellectual property describes “creations of the mind” that can be legally owned. Verify the existing protection for your IP and make sure you obtain a protection adapted to your situation.
About Tohme Law Firm:
Tohme Law Firm (“The Firm”) is a top-tier boutique law firm in Beirut, Lebanon, providing a broad range of advice and high quality legal services tailored to both businesses and individuals.
The Firm was founded by Youssef Georges Tohme in 1979 and grew in size and scope over the years. The Firm comprises today of a team of specialised lawyers with more than 90 years of combined experience in legal practice and conﬂict resolution.
The Firm has built its reputation as an expert in corporate and commercial related legal services. The Firm also specializes in construction and property development, dispute resolution as well as criminal and tax law.
More about Tohme Law Firm here.