Types of Companies

These are companies operating under a specific business name and formed between two or more persons. They include general partnerships, limited partnerships, civil companies, and joint ventures.

General partnerships: A general partnership operates under a business name and is formed between two or more persons who are personally and jointly liable for the company’s debts.

Each partner is considered to be carrying on trade under the company’s name and acquires the legal status of a trader. Each partner is responsible for declaring income tax on his share of the company’s profits and losses, whether or not these profits are distributed, and must declare them in his personal tax return.

Limited partnerships: These companies operate under a business name and include two categories of partners: general or managing partners, who are entitled to carry out the company’s business and are personally and jointly liable for its debts; and limited partners, who contribute capital and are liable only up to the amount of their contribution.

Each partner in a limited partnership is responsible for declaring income tax on his share of the company’s profits and losses, whether or not distributed, within his personal tax return.

In general partnerships and limited partnerships, each legally competent partner is taxed personally on his share of profits and losses. Where a partner lacks legal capacity and the partnership results from the application of the relevant provisions of the Commercial Code, the partner’s share is declared in the company’s tax return.

If a partner owns an individual establishment or carries out several activities, he must consolidate his tax liability at the address of his main place of business and include in his unified declaration all his revenues and profits from the various sources.

Civil companies: These are companies whose principal activity is civil in nature and which are governed by civil law. They are registered in a special register at the clerk’s office of the competent civil court.

A partner in a civil company is jointly liable with his personal assets for the company’s debts. For income tax purposes, the partner is subject to the regime applicable to partners in partnerships where the activity of the civil company is subject to income tax.

Joint venture: A joint venture is a hidden company that has no apparent existence before third parties and no legal personality. Its business is carried out by one or more partners. A joint venture may be formed for one project or several projects. Its profits are distributed among its members, and each member declares his share in his annual personal tax return.

These are commercial companies formed between three or more persons who bear losses only up to the amount of their contributions. Their interests are represented by transferable securities and they are registered in the Commercial Register. They include limited liability companies, Lebanese joint-stock companies, foreign companies, holding companies, offshore companies, and partnerships limited by shares.

Lebanese Joint-Stock Company

• A joint-stock company is a commercial company without a trade name, formed between three or more persons who subscribe to transferable shares and are liable for the company’s debts only up to the amount of their contributions.
• It is subject to the Commercial Code and to the provisions applicable to joint-stock companies, whatever its object. All joint-stock companies established in Lebanon must have their head office in Lebanese territory and are deemed Lebanese companies, notwithstanding any contrary provision.
• One third of the board members must be Lebanese, and in certain cases the majority of shareholders must be Lebanese.
• The capital of a joint-stock company may not be less than thirty million Lebanese pounds. The capital must be fully subscribed and the legally required minimum amount must be paid.
• The name of the company must appear on all printed and written documents, together with an indication that it is a joint-stock company and a statement of its capital.
• Auditors, general assemblies, accounts and balance sheets are subject to the applicable legal provisions.

Limited Liability Company

• This company is formed between three or more persons, provided that the number of partners does not exceed twenty, except in the case of transfer of shares by inheritance. If the number of partners exceeds thirty, the company must be converted into a joint-stock company.
• The company may not have as its object insurance, savings, air transport, banking operations, or investment of funds for the account of third parties.
• The name of the company must include the name of one or more partners or a special business name, and must include the expression “Limited Liability Company” together with the amount of its capital.
• The capital of a limited liability company may not be less than LBP 5,000,000 and must be divided into equal shares.
• The partners must appoint one or more auditors, and such appointment is mandatory in the cases specified by law.

Partnership Limited by Shares

A partnership limited by shares operates under a business name and includes two categories of partners: general partners who have the right to manage the company and are personally and jointly liable for its debts, and limited partners who are liable only up to the amount of their contribution.

The company’s name must include the name of one or more general partners. If the name of a limited partner is included in the company name, that partner becomes liable as a general partner toward third parties acting in good faith.

The capital of a partnership limited by shares is divided into shares, and the limited partner is subject to the legal regime applicable to shareholders in joint-stock companies.

Partnerships limited by shares are subject to the Commercial Code when their object is commercial.

Holding Company

The object of a holding company is to invest funds in the ownership of shares and interests in other companies and to manage affiliated companies.

The object of a holding company must be limited to the following:

• Owning shares or interests in joint-stock or limited liability companies, Lebanese or foreign, whether existing or newly established.
• Managing companies in which it owns shares or interests.
• Lending to companies in which it owns shares or interests and guaranteeing them toward third parties.
• Owning patents, inventions, concessions, trademarks and other reserved rights, and leasing them to institutions located in Lebanon or abroad.
• Owning movable or immovable assets, provided that such assets are allocated solely to the needs of its business, subject to the provisions governing the acquisition of real estate rights in Lebanon by non-Lebanese persons.

Prohibited Activities and Operations

• A holding company may not grant loans to companies operating in Lebanon if its share in their capital is less than 20%.
• A holding company may not directly own more than 40% in more than two companies operating in the same industrial, commercial or non-commercial activity in Lebanon.