Libya is embarking on a new generation of world relations and is opening up to foreign investment but finds itself in a situation where it has to change a lot of what was done in the wake of the “Great Revolution”.
The major types of business structures
A new foreign competitor must either seek an investment license, which will be registered at the company house or a commercial license, which will be supervised by the ministry of economy, in order to establish themselves in the Libyan market. In order to conduct business in Libya, foreign businesses typically choose one of the following routes to get a commercial license: Joint-Stock Company, Foreign Company Branch, Representative Office, Commercial Agent, Investment Funds, Free Zones Trade, Foreign Capital Investment, and Joint-Stock Company are only a few examples.
Joint venture
A joint venture company (“Mushtarika”) is a Libyan company with permitted foreign participation. Decree No. 207 of 2012, still, permits foreign participation up to 60 percent with the verification from the Ministry of Economy. A Mushtarika typically adopts the commercial form of a joint-stock company and is at all times, the president of the board of directors (in the case of a joint-stock company), or the director (in the case of a limited liability company) must be a Libyan public. The minimal share capital of a Mushtarika Company, when set up as a joint-stock company is 1 million Libyan Dinars (LYD), outstanding on objectification. A Mushtarika is generally used for foreign-Libyan joint ventures. It may carry on most types of exertion, with the exception of certain areas which are reserved for Libyan citizens. These include retail, the import of goods, marketable agencies, land transport, shipping services, and construction services for systems with a value not exceeding LYD 30 million. Certain other conditioning is reserved for citizens under separate legislation,e.g. security services.
Branch
There’s no regional partner or guarantor demand in the case of a branch office of a
foreign company. Still, the foreign company must demonstrate that it has the necessary experience in its planned area of exertion.
Investment enterprise
Investors may establish investment enterprises for functions in all major industry sectors, other than upstream oil painting and gas. The investment design may be wholly possessed by the foreign investor, as long as the foreign investment exceeds LYD 5 million. If a Libyan partner holds at least 50 percent of the investment, the minimal investment is reduced to LYD 2 million. Levy and customs duty are available. Dividends are freely movable and the investor may enjoy real estate in Libya. An investment enterprise is particularly suitable for capital-related systems. The licensing conditions must be needed in each individual case.
Free zone enterprise
There’s special governance governing free zone enterprises (Law 9 of 2000). A free zone enterprise can be established to manufacture or reuse goods or to give services. A free zone enterprise must have a paid-up capital of at least a hundred thousand USD. Free Zone FZEs qualify for immunity and benefits same as those available to investment enterprises. At present, there’s only one free zone, located at Misurata, 200 km east of Tripoli. It should be noted that further restrictions, similar to limits on foreign shareholdings, are contained in specific regulations, similar to those covering oilfield services, banking, and insurance. Structuring business conditioning in Libya requires careful legal planning and, in view of restrictions of a foreign power, commercial governance arrangements are frequently complex. At the present point in time, it’s unclear what changes the NTC intends to borrow in the medium term and what liberalizations, if any, will be enforced.
Commercial agency
Commercial agency and distribution are substantially governed by the Commercial Code which has revoked the Commercial Agency Law No. 6 of 2004. The Administrative Regulations of the Commercial Agency Law No.136 of 2004 (which continue to be in force) give an expansive list of goods and services for which a regional commercial agent is needed (notable exceptions are foodstuffs and construction accouterments). Only a Libyan public or a wholly Libyan-possessed company can act as a commercial agent. Still, the importation for private use or for the purpose of a specific design doesn’t need a regional commercial agent or distributor. The laws governing agency and distribution have been subject to different modifications, reflecting policy changes of the Libyan government in this area.
