Offshore company law to allow single shareholders. Allows foreigners without work permit requirement

Offshore company law
to allow single shareholders
Allows foreigners without work permit requirement
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Parliament has reduced the minimum requirement to establish an offshore company to a single shareholder. The law used to require at least three shareholders.

Karim Daher, founding partner at HBD-T Law Firm, said that the sole shareholder in an offshore company benefits from the same liability protection that a joint-stock company offers its shareholders. The legal form of offshore companies is unchanged.

According to the new law’s explanatory notes, the purpose of the amendment is to put an end to the practice of many actual single founders of offshore companies who used to bring in nominal shareholders in order to be able to create such companies.

The new law, which amends a legislative decree issued in 1983, stipulates that sole shareholders could be natural persons or legal entities. They could be foreign nationals and don’t need work permits.

An offshore company with a single shareholder cannot be considered a legal entity unless its capital is divided into equal parts represented by fully-subscribed nominal shares. The subscription proceeds must be deposited in a bank account in the name of the company.

Sole shareholders could manage the offshore company and will have all the prerogatives of the board of directors and of general assemblies of shareholders. They can also appoint managers to operate the company.

According to the new law’s explanatory notes, allowing a single shareholder to establish offshore companies encourages a large number of Lebanese, Arab, and foreign investors to take residence in Lebanon and operate their overseas business through such companies.

Offshore companies are only allowed to operate outside the country or in its free zone. They can engage in all kinds of activities with the exception of banking, insurance, and finance.
Reported by Shikrallah Nakhoul
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Date Posted: Oct 31, 2018