1. Grace Fattal Senior Associate Abousleiman & Partners Law Offices

2.  Commercial activities may be exercised in Lebanon: 1. At an individual level 2. At a shared level 3. Through agencies representing foreign companies

3.  Request  ID  Address  Commercial Circular  Fees: approx LBP 1,250,000

4.  Registration as a merchant is a prerequisite  Request  Address  Social Security Discharge  Fees: approx LBP 1,350,000

5. 1. Limited Liability Company (SARL)  Minimum Capital: LBP 5 M  Minimum Partners: 3  They can all be foreigners  Manager: Appointed in bylaws or by partners  Liability of partners: Limited to participation

6.  Transfer of Parts: - Free among partners only - Transfer to third party is subject to company’s preemptive right, failing which that of the partners - Approved by partners representing at least three- quarters of the company’s capital - Social Security Discharge for each transfer of parts - Notarized – 3 per mil stamp duty

7.  Auditors: Not - mandatory unless: - Capital exceeds LBP 30 M - Required by partners representing 1/5 of capital  Tax: 15% income tax - 10% capital gains  Costs: Approx US$ 1,800

8. 2. Joint-Stock Company (SAL)  Minimum Capital: LBP 30 M  Minimum Shareholders: 3  Directors: Appointed by General Assembly - Must be shareholders - Majority must be Lebanese.  Chairman-GM: appointed by BOD  General Manager: Not Mandatory

9.  Liability of Shareholders: Limited  Transfer of shares: - Free or subject to preemption rights - Exempt from notarization and stamp duty  Auditors: Principal/Additional  Tax: 15% income tax - 10% capital gains  Costs: Approximately US$ 2,200

10. 3. Holding Company  SAL - Restricted in object  No nationality requirement for Board Members  Tax: progressive  6% for capital ≤ 50,000,000 LBP  4% for capital ≤ 80,000,000 LBP  2% for capital > 80,000,000 LBP

11.  Exemption from tax on capital gains  Exemption from stamp duty  Tax on royalties (10%), interest on loans granted to subsidiaries (10%), management fees (5%)

12. 4. Branch  License from the MOET  Unit of Parent Company  Taxes: 25% of income derived in Lebanon

13. 5. Representative Office for Marketing Purposes  License from the MOET  No capacity to carry out commercial activities  No taxes

14.  In the form of SAL  Object limited to transactions outside Lebanon  No nationality requirement for Directors. Foreign CGM non resident is exempted from work permit  Bank guarantee: LBP 100,000  Tax: LBP 1 M  Exemption from tax on capital gains  Exemption from stamp duty  Exemption from tax on interests generated by loans

15. 1. Requirements relating to an SARL Company:  Majority of Lebanese partners  Majority of capital owned by Lebanese  Manager must be Lebanese 2. Requirements relating to an SAL Company:  Majority of capital must be owned by Lebanese  Two thirds of board members must be Lebanese  Chairman and General Manager must be Lebanese

16.  Restrictions for the acquisition of more than 3,000 sqm 1. SARL:  All partners must be Lebanese  No transfer of parts to non-Lebanese entities 2. SAL  Shareholders must be either Lebanese individuals or Lebanese companies whose respective By-laws prohibit share transfers to non-Lebanese entities

17. 1. SAL  Bylaws  Bank Account  Constitutive General Assembly  First Board of Directors  Commercial Circular  Address  Fees  Certificate of Incorporation

18. 2. SARL  Similar to SAL. However:  No Constitutive General Assembly.  No Board of Directors  Separate request by manager to appoint legal counsel  Manager appointed by GA or in Bylaws  No stamp duty on capital

19. 3. Branch  Bylaws  Corporate resolution resolving to: 1. Open a branch in Lebanon 2. Appoint a branch manager  Clearance certificate by the Israeli Boycott office  Identification documents of branch manager  Address  Incorporation costs: 3,300,000 L.B.P

20.  Corporations: - By-laws, Commercial Registry certificate - Notification from the MOET re-foreign companies - Address  Liberal professions and private business concerns: - Commercial registry certificate, if any - ID - Practice permit or order membership card - Address

21.  Territoriality principle  Income tax subdivided into 2 categories: 1. Tax on the income of physical persons 2. Tax on the profits of companies

22. 1. Individual Enterprises – 5 tranches - 4% on profit ≥LBP 9 M - 7% on profit between LBP 9 M and LBP 24 M - 12% on profit between LBP 24 M and LBP 54 M - 16% on profit between LBP 54 M and LBP 104 M - 21% on fraction of profit exceeding LBP 104 M 2. Companies: 15% profits and 10% capital gains

23.  Progressive tax:  2% on income ≤ LBP 6 M  4% on income between LBP 6 M and LBP 15 M  7% on income between LBP 15 M and LBP30 M  11% on income between LBP30 M and LBP 60 M  15% on income between LBP 60 M and LBP 120M  20% on income exceeding LBP 120 M

24. Withholding tax of 7.5% for services Withholding tax of 7.5% for services Withholding tax of In sum 2.25% for commercial and manufacturing activities

25.  As of February 1 st, 2012: Official monthly minimum wage is 675,000 LBP Minimum wage for daily workers is 30,000 LBP

26.  Lebanese Worker:  Employers fills a form at the MOL reflecting the name of the employee to be hired  In the event the entity has more than 15 employees, a copy of such entity’s internal regulations must be provided to the MOL 

27.  Foreign Worker  Work permit  Categories of work permit  Employer work permit v/s employee work permit  Negative list of Ministry of Labor  General Police Formalities

28.  Employment triggers NSSF registration  Registration of employer with the NSSF should be made within 15 days from the date of employment  Employer must declare to the NSSF any termination of employment within a period of 15 days from the date of such termination

29.  Sickness and maternity branch 7% of salary ceiling of LBP 1,5 M - employer 2% of salary ceiling of LBP 1,5 M - employee  Family Allocation Branch 6% of salary ceiling of LBP 1,5 M - employer  End of Service Indemnity Branch 8.5% of salary and other benefits - employer

30. 1. Lebanese Citizens 2. Expatriates: work permit is a prerequisite  If French, Belgian, Italian or British contributions for all the branches must be paid and employees benefit from all these 3 branches  Citizens of other foreign countries: the employer pays family and medical contributions but no ESI contribution and the employees do not benefit from any of the 3 branches

31.  Law Governing Commercial and Industrial Property dated January 17, 1924. Amended by the Law issued on December 31, 1946  Protection of Literary and Artistic property (Copyrights Law). Law No. 75/99 Issued on April 13, 1999  Patent Law. Law No.240 on August 7, 2000  www.economy.gov.lb www.economy.gov.lb