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The Legal Framework Governing the Presence
and Activities of Foreign Companies
in the Great Jamaheriya (Libya)
 

Prepared by AL-KILANY

Attorney-at-Law and Legal Consultants
 
 

FIRST: DIRECT PRESENCE
 By means of opening a Representative Office (Decision of the General People's Committee (GPC) no. 08/2005.
 By means of opening branches, GPC no. 03/2005.
 By means of establishing a joint company between Libyans and foreigners, GPC no. 171/2006.
 
 
SECOND: INDIRECT PRESENCE
By Means of Commercial Agency:
 
Law no. 06/2004 and executive regulations.
GPC no. 83/2003

FIRST: DIRECT PRESENCE


 
Representative Office Advantages:
 Legal presence in Libya.
 Simplified and short procedures.
Limited (few) documents, and limited local capital (only fifty thousand 50,0000.00 Libyan Dinars)
 
Disadvantages:
 Lacking powers to perform effective business such as negotiation, contracting and invoicing.
Limited powers that don't extend beyond legal representation and securing contact with public and private Libyan parties.
 
Representative office registration procedure differ from Branch opening procedure with regards to:
Required Documents.
 Relevant powers and responsibilities.
Procedure and time required for registration to complete.
 
Opening of Branches
 

Scope of Authorized Activities:
 All activities can only be conducted under joint venture with Libyans (companies or individuals) by establishing Joint Stock Company.
There are certain projects (to be decided by GPC on case by case basis) with special needs because of its location or specification or special requirements can be conducted by a direct involvement of a foreign company.
 Decision no. 443/2006 is with immediate effect but not applicable to already concluded contracts.

 
Conditions to be met in accordance to the GPC 03/2005: The necessary conditions to be met, and original documents to be submitted to open foreign company Branch in Libya :

Decisions made by the Board of Directors of the company to open a branch in Libya including the following:
 
1.Definition of activity to be performed in Libya, which shall be in conformity with the mother company objectives, and included in the activities which foreign company branches maybe authorized to carry out.
2.The amount specified for establishing a Branch and branch management Libya shall not be less than one hundred and fifty thousands 150,000.00 Libyan Dinars.
3.Name of the branch manager, provided that he should be Libyan, or the nationality of the mother company, or the nationality of a company owner.
4.The seat of the main office of the foreign company branch.
 
A copy of the memorandum and articles of association of the mother company.
 
An original and recent extract of the commercial register from the competent body with which the mother company is registered.
 Undertaking from the Board of Directors of the mother company to prepare an annual budget and profit and loss account of the branch.
 Undertaking from the Board of Directors of the mother company not to interfere with the political affairs of Libya.
 Pre-qualification of the company in the field of the activities to be carried on in the Great Jamahiriya.
 Complete the application form to open a foreign company Branch prepared by the administration.
 Translation to Arabic of all the documents which should be authenticated by the competent Libyan consulate.
 
Additional Conditions, GPC no 223/2006:
 Branch manager or assistant branch manager must be a Libyan national.
 The company must be a joint-stock, or limited liability company.
 Foreign companies must provide a statement of its experience in the activities to be carried out in Libya (at least three experience certificates)
 
Partnership: Joint Company between Libyans and Foreigners, GPC no. 171/2006:
 FORM: Joint-stock company in accordance to Libyan commercial law.
 CAPITAL: Minimum of one million 1000,000.00 Libyan Dinars (one third 1/3 of which to be deposited upon in corporation).
 MINIMUM LIBYAN PARTIES SHARE: 35% of the capital.
 ACTIVITY SCOPE: All economic activities namely:

1. Establishment and management of production projects.
2. Establishment and management of free trade zones and transit trade.
3. Establishment and management of touristic facilities.
4. Banking and financial services.
5. Building, construction, contracting and transport.
6. Exportation.
7. Importation.
 
REGISTRATION PROCEDURE AND REQUIREMENTS : Same procedure and requirements for registering Libyan joint-stock companies under Libyan Commercial Law:
 
1. A certification from a bank in Libya confirming that the foreign party has duly remitted its capital share to Libya.
2. If the foreign partner is joint-stock company or limited liability company, it must submit an approval from the board of the directors to participate in establishing the company and its share value.
3. A copy of the Memorandum and Articles of Association of the foreign company.
4. Extract from the foreign Company Registration with the commercial register in its home country.
5. Arabic translation and authentication of the translation from a competent Libyan consulate.
 
1. SUBJECT: Partnership between Libyans (companies or individuals) and Foreigners (companies or individuals)
2. SCOPE of ACTIVITIES: All economical Activities as per regulation no. 171/2006.
3. EFFECT:
 Immediate effect according to article 1 of Decision no. 443/2006.
 Ooreign Companies that are opening low in Libya may complete their ongoing contract.
 New contracts and all new businesses should be concluded in accordance with the new regulation, decision no. 443/2006.
 
SECOND: INDIRECT PRESENCE
Commercial Agency System in accordance with the following legislations:

 The Libyan Commercial Code of 1953
 Law no. 06/2004 and its executive regulation concerning commercial agency regulation.
 GPC no. 93/2006 concerning commercial agency regulation.
 
Commercial Agents Selection Criterion and Procedures:
1. commercial agent shall be of Libyan nationality (Libyan individual or company)
2. Conclusion of commercial agency contract and registration with the concerned department in Ministry of Economic, Commerce and Investment.
3. Commercial agents' contract guidelines, conditions and requirements:
 
Conditions:
1. To be of Libyan Nationality.
2. To be in full legal capacity.
3. Not to be a public official
4. Has not been convicted in a crime defined in section eight in the penalty code, or in economic offenses, unless rehabilitated.
5. Submit a certificate confirming his engagement in import, export or services activities issued by a competent authority.
6. If the applicant is a commercial company, a commercial agent must fulfill the following conditions:
 

To by duly established
 The company purpose must include engagement, wholly or partially in the business provided for article (2) in the regulations.
 The company's capital must be wholly owned by Libyan nationals and remain as such for the duration of the company's term.
 
Obligations, Commercial agent must undertake the following:
 To enter into contract or agreement with a reputable principal, offering efficient and good quality products and services, complying with health requirements, and approved national and international products and services standards.
 Offer warranties for durable products provided by the commercial agency, in accordance to the nature of individual products. In al cases, guarantee period shall not be less t nce to the nature of individual products. han six (6) months, effective from customer purchase date, whether sale was made by the agent or by another distributor.
 He shall at any time, upon request of concerned, replace, repair or substitute the defective products during the period of guarantee of the said products.
 Provide the necessary spare parts, equipments and tools for the offered products, and repair damaged or defective products free of charge during the guarantee period.
 Two percent (2%) of the value of durable goods imported to the Great Jamahiriya must be in the form of spare parts and maintenance equipment and tools.
 To open necessary workshops to prolong the life of products or remove any defect in it; provide the necessary technicians to repair imported damaged or defective products free of charge provided the guarantee period for the damaged or defective goods is still valid.
 Comply with the prices set by law for the provided products and services
 
Decisions issued by GPC no. 83/2006 concerning Commercial Agency Regulations
 
Classification of imported products and material consequent.
 Reorganization of commercial agency conditions into:
 
Three categories of imported products.
First Category:
1. Heavy machinery and equipment.
2. Roads and quarries equipment.
3. Cars, trucks and buses.
4. Agricultural machinery.
5. Medical equipment used for diagnostic and treatment purposes.
 
Second Category:
1. Office machines and equipments.
2. Electrical household appliances.
3. Other electrical appliances.
4. Electronic equipment for various applications.
5. Workshop equipments.
6. Process wood.
7. Light agricultural equipment.
8. Mother and infant requirements.
9. Agricultural materials and equipments.
10. Medical drugs and requirements "Except serums".
11. Detergents and cosmetics.
12. Photocopying machines and equipments.
13. Sea boats, yachts, all types of fishing trawlers.
14. Sea fishing equipment and tools.
15. Bakery equipment.
 
Third Category
1. All other goods not included in this decision.
 
Three categories of commercial agents .
First Category:
1. A commercial agent must be a joint stock company or duly established public company.
2. Forty percent (40%) at minimum of the company shares must be offered to public subscription.
3. Agency must exclusively before on manufacturer.
4. Agency members must be dedicated to the agency business
5. A n agent or his fourth (4 th ) degree relative must not be a public official in a party importing goods subject of agency.
 
Second Category:
1. A duly established joint stock company or partnership.
2. Company must be an agent for three manufacturers at maximum.
3. Agency members must be dedicated to the agency business
4. An agent or his (4 th) degree relative must not be a public official in a party importing goods subject of agency.
 
Third Category:
1. For individuals 3 agents.
2. For company 5 agents.
3. For joint stock company 10 agents
 
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