Foreign joint venture companies that were registered before Decree 207 of 2012, which compelled the reduction of their equity holding to a maximum of 49 percent by this month, have been given a temoorary reprieve.
Libya Herald reports that under the Ministry of the Economy's Decree 22, an extension has been granted for JVs that were established before July 2012, when Decree 207 came into force.
This will allow them more time to amend their share participation. Decree 207 did however allow for a maximum 60 percent foreign ownership in special cases approved by the Ministry.
Law firm Clyde & Co. commented:
"It is stated that the extension expires when all laws and decrees relating to business activities have been reviewed. At this stage, however, no time frame has been set for commencement or completion of such a review."
The law firm also pointed out that the key change in Decree 22 is a ban on forming limited liability companies. Partner Adrian Creed noted:
"Arguably, this means that the default option for a foreign partner to set up a company in Libya appears to be through forming a joint stock company. In this respect it should be noted that under existing regulations, a joint stock company must have a minimum of ten shareholders and the minimum capital required is LD 1 million."
Clyde further noted that both Decree 207 and the amendments in Decree 22 have to be read in conjunction with other legacy decrees and laws as, "there are currently considerable uncertainties as to the scope of the application of the recent decrees and what has to be done by companies set up under various laws, in order to comply with them."
(Source: Libya Herald)
