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Guides :: Business entities

A- Commercial register
B- National social security
C- Labour sector
D- Non Profit Organizations

A- Commercial Register

The Commercial Register is a public database listing the names and addresses
of companies. The register contains identification data and other important
information on the registered ones.

For the following types of business associations, an entry in the Commercial
Register is obligatory:

1- Sole proprietorship
2- Joint liability partnership (SNC)
3- Limited commercial partnership (SCS)
4- Limited liability company (SARL)
5- Join stock company (SAL)
6- Holding
7- Offshore
8- Co-partnership
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1-Sole proprietor partnership

A sole proprietorship (the owner has no partners) also known as a sole trader, is a type of business entity which is owned and run by one individual and where there is no legal distinction between the owner and the business.  All profit and losses accrue to the owner (subject to taxation).

All assets of the business are owned by the proprietor, and all debts of the business are their debts and they must pay them by their personal resources. This means that the owner has unlimited liabilities. 

A sole proprietor may do business with a trade name other than his or her legal name. 

- Taxes are subject to a progressive schedule taxation on net profit. 
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2-Joint liability company (societe au nom collectif -SNC)

Partnerships are associations of two or more people.

All partners are personally liable against the company's debts and obligations.

No required initial minimum capital.

Taxes: subject to a progressive schedule taxation on every pre-stated share.
of the profit
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3-Limited commercial partnership (societe en commandité simple-SCS

Partnerships are associations of two or more people.

Two types of partners, one own and manage the business (commandité), the other is a financial contributor and do not participate in the management (commanditaire).

these are liable for all its obligations.

The company name must include the name of the some or all the partners and is usually followed by the words "and co".

No required initial minimum capital.

Taxes: are subject to a progressive schedule taxation on every pre-stated share of the profit.
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4-Limited liability company (SARL)

A limited company is founded between three to twenty members.

It cannot issue shares, debentures or bonds, nor can it invite the public to subscribe for ownership in the company.

The trade name is usually anonymous, but it must be followed by the initials SARL and may include the names of the partners.

The legal incapacity or bankruptcy of a member does not entail dissolution of the company.

Shares in a limited liability company are not negotiable and cannot be transferred to third parties without the prior approval of the members representing at least 75% of the capital.

Minimum capital of 5 millions Lebanese Pounds (the equivalent of 3333 USD) and must be fully paid up and must appear on the letterhead or any other printed documentation of the limited liability company.

The liability of each partner is limited to the value of shares held.

The legal reserve of such a company must be equal to 50% of the capital.

The capital must be fully deposited in a bank under the company's name.

Management may be entrusted to one or more partners, and a manager cannot conclude on the company's behalf and deal in which he has a direct or indirect interest, unless prior authorization is granted.

Limited liability companies may not pursue the objects of banking, financial operation and insurance.

The company must be formed with the mutual consent of the members embodied in a memorandum of association.

A limited liability must appoint an auditor.

Taxes: subject to proportional fixes taxed (15% on net profit) and dividends are subject to 10% on distribution.
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5-Joint stock company (SAL)

A joint stock company is an association of funds contributed to by three or more persons.

Minimum capital of 30 millions Lebanese Pounds (the equivalent of 20000 USD) with one-fourth paid up at the time of registration and can consist of cash or  in kind.

Ownership of shares in the company entitles the shareholder to membership in the company, a right to participate in management and right to vote.

The shares are negotiable or transferable.

The liability of each shareholders is limited to the value of the shares held.

The board of directors must set aside 10% of net profit to create a legal reserve fund until such time as this reserve fund becomes equivalent to one-third of the capital of the company.

A joint stock company must appoint an auditor, as well as complementary (designed by the commercial court).
- Lebanese law does not limit foreign interest in joint stock companies.

The only indirect limitation is that the board of directors must have at least three Lebanese members of the maximum twelve allowed. Another limitation is confined to joint stock companies whose object is the acquisition of and trading in real estate in Lebanon, in this case 50% of the capital must be help by Lebanese nationals.

Taxes: subject to proportional fixed taxes (15% on net profit) as well as the dividends are subject to 10% on distribution
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6- Holding :

- The Holding company is incorporated under the form of a joint-stock company and is subject to the same legal system governing joint-stock companies as provided by the commercial Law.

- The object of the Holding company is restrictively defined as following :

* Owning shares or interest in existing Lebanese or foreign joint-stock companies or limited liability companies, or participating in the formation of same.

* Managing companies in which it holds shares or interest.

* Lending to companies in which it holds shares, and guaranteeing such companies toward third parties.
For this purpose the Holding company shall be entitled to borrow from banks and to issue bonds, provided that the total value of such bonds does not exceed, at any time, five times the capital of the Holding company plus the reserves, as shown in the last approved balance sheet.

* The Holding company is not permitted to lend to companies operating in Lebanon, should its shares in the borrowing company be less than 20%. 

* Owning movable and immovables patents of inventions, discoveries, concessions and registered trademarks and other protected rights, and leasing same to enterprises situated in Lebanon or elsewhere.

* Owning movables provided that they are allocated to the needs of its business only, and in compliance with the provisions of the law governing the acquisition by non-Lebanese nationals of real estate rights in Lebanon.

- The company’s capital may be set in a foreign currency.

- The holding accounts may be kept and the balance sheet drawn up in the same currency as the capital.

The holding company is also exempted from the obligation of appointing a complementary auditor.

- Holding companies are exempted from the obligation to have two Lebanese board members in their board of directors.

- The chairman of the board of directors is not required to hold a work permit, should he be a foreign residing outside Lebanon.

- The company is not subject of the obligation of appointing a lawyer, unless its capital exceeds 50 million Lebanese Pound or its total annual balance sheets exceed the equivalent of 500.000 US Dollar.

 Tax : Holding companies are exempted from income tax. Paying fixed tax, with a maximum of 5 million Lebanese Pounds, calculated on the total capital (plus the reserves) ans subjet to a ----------- schedule starting 6%. 
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7- OffShore :

The offshore company shall be incorporated in the form of a joint-stock company and shall abide by the provisions governing a joint-stock company.

The object of the offshore was expanded in 2008, which also determined and increased the number of tax exemptions benefiting said companies, its shareholders and employees.

Offshore companies are authorized to carry out exclusively the following activities :

1. Negotiating and signing contracts and agreements concerning operations and transactions conducted abroad in relation to assets located abroad or in the Free Zones.

2. Managing from Lebanon companies and institutions with offshore activities, exporting professional, administrative and regulatory services as well as all kinds of information services and IT programs to companies located abroad and upon the latter’s request.

3. Carrying out tripartite or multipartite foreign trade transaction abroad. For this purpose, offshore companies may negotiate and sign contracts, ship goods and issue invoices with regards to activities and transactions performed abroad or via the Lebanese Free Zones. This includes the use of the facilities available in the Lebanese Free Zones for the storage of the imported goods intended for export.

4. Carrying out maritime transport activities.

5. Acquiring shares, interests, bonds and participations in foreign non-resident institutions and companies, and granting loans to non-resident foreign institutions of which the offshore company holds more than 20% of the capital.
6. Acquiring or benefiting from the rights reverting to agencies for products and goods, and representing foreign companies in foreign markets;

7. Opening branches and representation offices abroad;

8. Building operating, managing and acquiring all kinds of economic projects, except for the prohibitions of insurance activities, banks, financial institutions.

9. Opening credit and taking out loans for financing the abovementioned activities and transactions from banks and financial institutions residing abroad or in Lebanon.

10. Renting offices in Lebanon and acquiring the real estate properties necessary for the activities thereof, subject to the provisions of the law governing the acquisition by foreigners of real estate rights in Lebanon. 

The company’s capital may be set in a foreign currency.

It’s accounts and balance sheets may be kept in the same currency as of the capital.

The offshore company is exempted from the obligation of appointing a complementary auditor. 

The legislator exempted the offshore company from the obligation of appointing two Lebanese nationals within its board of directors.

The chairman of the board, the company’s authorized signatory are exempted from the requirement of obtaining a work permit if they are non-resident foreigners; 

The company is not subject to the obligation of appointing a lawyer, unless exceeds 50 millions Lebanese pounds or its total annual balance exceeds the equivalent of 500000 US Dollars.

Tax : The offshore company is exempted from the income tax on revenues, and is subject to a lump sum tax of 1 million Lebanese pounds. (The equivalent of 667 US Dollars) The company is  subject to this tax as of  the first financial year, whatever its duration. 
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8- Co-partnership

A co-partnership is know only to the parties concerned and, because it is secret, cannot be registered. 

An association agreement sets down the partners rights and obligations, as well as their participation in profits and losses.

Each party is responsible for his own liabilities. 

Despite their secrecy, the agreements inherent in a co-partnership are enforceable by law in cases of dispute.
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 B - National Social Security “CNSS”

Firms recruiting employees must register with National Social Security.

To help achieve targets, we assist these firms and tailor their needs to the requirement of both management and staff, and to ensure issues are dealt with promptly and efficiently.

In this concern we develop a range of services :

- Assistance with “CNSS” registration.
- Quarterly or monthly contribution.
- Clearance.
- Quick response and up-to-date consult 
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C- Labour Sector

Regulations set down in public law protect employees against illness, injury and being overworked, etc…

Private – Law employment contracts should be the first point of reference which contain conditions relating to payroll, holiday, notice, daily working hours.

Foreigners wishing to work require a Permit.

That is how PMB meets both Laws and assist employer and employee in :

- Ministry of Labour registration service
- Work permit for foreigners
- Labour Law consultancy. 
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D- Non Profit Organization (NPO/NGO)

* NPOs

A non profit organization (abbreviated as NPO, also known as a not-for-profit organization ) is an organization that does not distribute its surplus funds to owners or shareholders, but instead uses them to help pursue its goals. 

NPOs include charities (i.e. charitable organizations). Trade unions and public arts organizations. 

In considered a separate type of organization and not counted as NPOs. They are exempt from income taxation. 

* NGOs

The Lebanese Non-Governmental Organization Forum (LNF) was established in July 1991 to coordinate the activities of Lebanese NGOs concerned primarily with relief and development (social, health and educational) issues. The decision to establish the Forum was taken in 1998. 

The NGO Forum has been selected, by ministerial decree, to fill one of the five seats reserved for most representative NGOs, in the Economic and Social Council, which was established to allow participation of the different social and economic sectors in the formulation of the state policy. 

The NGO Forum in also member of the International Council of Voluntary Agencies (ICVA – Geneva), CIVICUS, CIVICUS Arab Network, the Arab NGO Network (Cairo), and the Euro-Mediterranean Human Rights Network (Copenhagen). 

* Objectives

The NGOs Forum primary objective is to promote specific programs which will help consolidate social cohesion and integration in Lebanon.

In order to achieve this, the Forum has adopted the following guidelines :

- it focuses on humanitarian social work, more specifically providing assistance to the needy in emergency situations. Its efforts also involve helping humanitarian associations. 

- It works at upholding the rights of the underprivileged and vulnerable groups. 

- It coordinates, when required, the humanitarian and social efforts of Lebanese NGOs, and acts as a clearing house for information necessary to enhance their operations. 

- It collaborates regularly with state institutions, at times complementing their activities. 

- It cooperates with UN agencies as well as with foreign humanitarian and voluntary organizations, and other associations.
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