Investors must use caution in Libya

As the elections in Libya approach, Mohamed Karbal, the managing director of the Karbal & Co law firm, explains the legal minefield of investing in the country.

There are four ways for foreign investors to conduct business in Libya: establishing a joint venture; opening a branch office; opening a representative office; and through direct investment.

How is a joint venture (JV) established?

There are two types of JV, a joint stock and limited liability. One million Libyan dinars (Dh2.8m) is required for a joint stock, of which 300,000 must be deposited at the stage of establishment.

The percentage share in the company ranges from 65 per cent up to 80 per cent.

For limited liability, the required capital is 50,000 dinars.

What types of business can open a branch office?

Those working in construction and civil works, power and electricity, oil and gas, communication, survey and planning, protection of the environment, IT, consultancy, and health care.

What is the difference between a branch office and a representative office?

A representative office cannot conduct business activities.

The capital required to establish a representative office is 50,000 dinars and the licence is two years.

And for foreign direct investment?

Five million dinars for a corporation or project that is established by foreign nationals and 2m for a joint venture or a joint project.

Are they any catches?

There are 12 areas of activity where foreign partnerships are barred from operating, including retail and wholesale, importing, catering, auditing and law firms, quarry and construction contracts for less than 30m Libyan dinars.

(Source: The National)

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