The introduction of single-person companies in Lebanon marks a significant milestone in the country’s corporate legal framework. This development, made possible through amendments to the Commercial Law, aims to enhance the flexibility and accessibility of company formation for both Lebanese and foreign entrepreneurs. Below, we explore the legislative changes that have made this possible, focusing on Limited Liability Companies (LLCs) and offshore joint-stock companies (S.A.L.), and delve into the distinctions between single-person companies, commercial enterprises, and various company structures in Lebanon.
The Evolution of Single-Person LLCs in Lebanon
The most notable change introduced by the new Commercial Law, effective July 1, 2019, is the revision of the rules governing Limited Liability Companies (LLCs). Previously, the law required at least three individuals to form an LLC. However, under the amended law, an LLC can now be established by a single partner, making it easier for entrepreneurs to start businesses without the need for additional nominal partners. Notably, there are no restrictions preventing the sole partner from being a foreign national, and the same applies to the company itself.
The Offshore Company Amendment: A Unique Provision
An earlier amendment to the Offshore Company Law on October 10, 2018, further paved the way for single-person companies by allowing offshore companies (S.A.L.) to be established by a single individual. This provision is unique within the Lebanese corporate system, as other types of companies still require two or more shareholders for their establishment. This change was designed to attract both Lebanese and foreign entrepreneurs by simplifying the process and removing the need for nominal shareholders. Additionally, the sole shareholder in an offshore company can be either a natural or a legal person, offering further flexibility.
Key Differences: Single-Person Companies vs. Commercial Enterprises
While single-person companies represent a new avenue for business establishment in Lebanon, they differ fundamentally from commercial enterprises. According to the Lebanese Commercial Law, these distinctions remain unchanged despite the recent amendments:
- Legal Personality: A single-person company enjoys legal personality, whereas a commercial enterprise does not.
- Capital Requirements: An LLC and an Offshore require a minimum legal capital, while a commercial enterprise has no such obligation.
These differences highlight the structural and operational advantages of forming a single-person company over a commercial enterprise.
Implications for Entrepreneurs
The amendments to Lebanon’s Commercial Law and Offshore Company Law have made it significantly easier for both local and international entrepreneurs to establish businesses in the country. By allowing the formation of single-person LLCs and offshore companies, these changes eliminate the need for nominal partnerships and shareholders, reduce administrative burdens, and create more opportunities for streamlined business operations.
These developments are expected to foster greater entrepreneurship and foreign investment in Lebanon, reinforcing the country’s position as a regional hub for business and innovation.
