Decree No. 944 on the Foreigners’ Participation and Foreign Companies’ Branches and Representative Offices in Libya

Decree No. 944 on the Foreigners’ Participation and Foreign Companies’ Branches and Representative Offices in Libya

Government of National Unity
Ministry of Economy 

Having reviewed: 

• The Constitutional Declaration, issued on 3/8/2011, and its amendments.
• The Libyan Political Agreement was signed on 12/17/2015.
• The outcomes of the Libyan Dialogue Forum held on 9/11/2020.
• The Law on the State’s Financial System and the Budget Regulation, Accounts, and Warehouse Regulations and their amendments.
• Law No. 23 of 2010 on Commercial Activity and its regulations.
• Law No. 12 of 2010 on Labor Relations and its executive regulation.
• The Presidential Council of the Government of National Accord’s Resolution No. 146 of 2020 to Reorganize the Black Record.
• The Decision of the Minister of Economy No. 207 of 2012 on Foreign Participation in Companies, Branches, and Offices that Represent Foreign Companies in Libya.
• Cabinet Resolution of the Government of National Unity No. 235 of 2021 on the Approval of the Organizational Structure of the Ministry of Economy and the Organization of its Administration. 
• The Minister of Economy’s Decree No. 712 of 2021 to Issue a Government Regulation for Joint-Stock Companies Regulated by the Provisions of Law 23 of 2010 on Commercial Activity.
• The Minister of Economy’s Decree No. 494 of 2022 on adopting a Code of Conduct for Companies.
• The Minister of Economy’s Decree No. 750 of 2022 on Forming a Committee and Determining its Tasks and Decree No. 814 of 2022 on Adding a Committee Member.
• And on the letter of the Chairman of the Committee, which was formed according to Decree No. 750 of 2022 dated 2/10/2022.

It is decided:

Chapter One – Definitions

Article 1

The following expressions mean the following:

1. The Ministry: the Ministry of Economy.
2. The Minister: the Minister of Economy.
3. Commercial Activity Law: Law No. 23 of 2010 on Commercial Activity.
4. Corporate Administration: Corporate Administration at the Ministry of Economy’s office.
5. Branch: the branch of a foreign company in Libya.
6. The Parent Company is a foreign company whose headquarters is outside Libya and which has the will to establish an entity in Libya. 
7. Joint venture: a national company jointly owned by a foreign person, whether a natural or legal entity, with a national person, whether legal or natural, according to the ownership ratios stipulated in these regulations.
8. The company works in international cooperation and implements programs and projects funded by authorities, organizations, and donor countries in agreement with the Libyan government.
9. Entity: a branch of a foreign company, a joint venture, or a representative office.
10. Temporary branch: a branch established temporarily for a period of at most 18 months to implement short-term agreements.
11. Representative office: an office to represent the interests of a foreign company in studying the Libyan market without engaging in any commercial activity.
12. The Code of Conduct: the Code issued by the Ministry of Economy by Decree No. 494 of 2022. 
13. Corporate Governance Programs: Corporate Governance Rules issued by the Ministry of Economy by Decree No. 712 of 2021.
14. The blacklist: the register established in the Companies’ Department at the Ministry of Economy’s office to register foreign companies and share violations. Through it, companies registered in this list are prohibited from working in the State of Libya.
15. Business: the acts mentioned in Article 409 of Law No. 23 of 2010 on Commercial Activity.
16. The Notary: the notary public’s office, registered and approved by the Companies’ Department at the Ministry of Economy.
17. The Chamber: Chamber of Commerce, Industry, and Agriculture.

Article 2

The Decree Scope 

The provisions of this Decree apply to joint companies, branches of foreign companies, and representative offices subject to the requirements of Law 23 of 2010 on Commercial Activity.

Chapter Two – General Provisions

Article 3

Creation and Incorporation of Entities

Entities shall be created after completing the documents and procedures provided in this Decree. Applications shall be submitted through the company’s legal representative, law firms, or notary public offices registered in the particular registry in the Companies’ Department at the Ministry.

Article 4

Entities' Obligations

In carrying out its activities, the entities must abide by the following terms:

1. Transfer and localize knowledge and technology as much as possible.
2. Employing national workers in accordance with the percentages specified in the legislation in force.
3. Develop annual programs to train and qualify national workers in the professions occupied by foreign workers.
4. Setting annual programs to replace foreign workers with national labor.
5. Use equipment, machinery, preliminary materials, and production requirements available in the local market.

Article 5

Prohibitions

Foreigners and entities subject to this regulation are prohibited from practicing the activities mentioned in this article. These activities are limited to national persons only per the following terms:

1. Wholesale and retail trade.
2. Import and export business.
3. Catering services.
4. The work of commercial agencies of all kinds and fields.
5. Inspection activity on all imported and exported merchandise.
6. Accounting, auditing, financial advisory, legal advisory, and lawyers’ business only with the permission of the Bar Association and in accordance with special legislation.
7. The act of bringing in foreign labor and the act of recruitment.
8. Security work.
9. Non-profit business.
10. Ground transportation.
11. Any field restricted to Libyan persons in accordance with the legislation in force or by a decision from the Minister.

Article 6

Contracting and Training National Labor

Any entity's national workforce must be 75% of its total number of employees, and the entity shall train and qualify the national workforce for at least 20% of the total number of national workers from the beginning of the second year from the date of its establishment.

Article 7

Annual Report

The branch and the joint venture are obligated to submit an annual report in the first two months of each year to the corporate management, which must include the following:

1. Contracts concluded inside Libya and the activities carried out by the entity during the past year.
2. The plan and expenses related to social responsibility are mentioned in the Code of Conduct.
3.  The number of national and foreign workers in the branch or joint venture.
4. The number of national employees who benefited from the training programs.
5. The extent to which the branch or the joint venture complies with the corporate governance programs issued by the Ministry.
6. Fill out or update the information form specific to the branch or joint venture issued by the Companies’ Department and attach it to this Decree.
7. Submit or update the branch or joint venture's anti-money laundering policy in accordance with the legislation in force.

Article 8

Work under the Umbrella of National Companies

Foreign companies may not conduct their business inside Libya, which requires the presence of foreign labor, except after establishing one of the entities mentioned in this Decree, without breaching the legislation governing employment contracts.

Article 9

Prohibition of Contracting with Foreign Companies

 All national and foreign bodies operating in Libya are prohibited from contracting with foreign companies outside Libya to execute work inside Libya unless they have obtained the permission stipulated in Articles 13 and 20 of this Decree.

Article 10

Duties and Rights

Entities incorporated under this Decree shall enjoy the same rights and duties that the Libyan legislature granted to nationals, except for those related to the right of real estate ownership.

Article 11

Procedures

All entities, upon incorporation, must adhere to the procedures stipulated by

the competent authorities in accordance with the relevant applicable legislation.

Article 12 

Code of Conduct and Governance 

All entities subject to this Decree are obligated to prepare a code of conduct and corporate governance rules regulation, provided that their provisions do not violate the code of conduct and corporate governance rules issued by the Ministry. 

Chapter Three – Joint Ventures

Article13 

Incorporation Permission

Permission must be obtained from the Minister to establish a joint venture. The application for incorporation is to be submitted to the Companies’ Department, provided that it is referred to the Minister after the application has completed the required documents, within ten working days from the date of application. The Minister may reject the application for the establishment of the joint venture by a reasoned decision. 

Article 14 

Joint Venture Form

The joint venture must be a joint stock company when the partners are a natural person or a national legal entity with a foreign legal entity, and it is not permissible for a joint venture to be, in any circumstance, a holding company. This shall not disrupt the legal status of joint stock companies existing at the time of the issuance of this Decree as long as these companies do not wish to settle their legal status in accordance with this Decree’s provisions.  

The joint venture may also be a limited liability company if all the partners are natural persons, provided that it is in one of the following fields: 

1. Medical equipment and supplies industry. 
2. Food industries, vegetable and fruit preservation, fish preservation, and canning.  
3. Wood and furniture industries. 
4. The recycling and re-making industry.  
5. The clothing and footwear industry. 
6. Designing, installing, and maintaining electronic systems, developing informatics software, and other electronic fields. 

In all cases, the life of the joint venture may be at most 25 years, subject to renewal. 

Article 15 

Specialization Principle 

When founding a joint venture, the parent and the joint venture company must have a common specialization in the field of work and the experience of a foreign natural person in the limited liability joint company. 

Article 16 

The Bylaws of the Joint Venture 

The joint venture is obligated to prepare articles of association and regulations compatible with the legislation in force, provided that they include clear rules for resolving disputes arising between national and foreign partners. The company must at least have an administrative regulation, a financial regulation, and a sanctions list approved by the competent authority. 

Article 17 

The Capital of the Joint Venture 

The minimum capital of the joint stock company is LYD 1,000,000 one million dinars, and the capital paid in cash must be at least 30% of the subscribed capital in accordance with the legislation in force. 

The capital of the limited liability company must be at least LYD 500,000 five hundred thousand dinars, provided that the capital in cash is at least LYD 250,000 two hundred and fifty thousand dinars, to be paid fully upon establishment. 

Article 18 

Property Distribution

Foreigners' contribution to the joint venture for its duration may not exceed 75% seventy-five percent. However, the Minister may decide to extend this ownership to 89% eighty-nine percent after providing the reasons in the application submitted to the Minister. 

Article 19

Conversion into a Joint Venture 

The national company must be converted into a joint venture under the following conditions: 

1. When the National Company sells some of its shares to a foreign natural or legal person after obtaining permission from the Minister, taking into account the provisions of the previous article. 
2. When shares or stocks in a national company are transferred by inheritance to a foreign natural person, this transfer must occur within six months from the date of the decedent’s death, taking into account the provisions of the previous article. 

In all cases, the participation percentages stipulated in Article 18 of these regulations must not be exceeded. 

Chapter Four – Foreign Affiliates

Article 20 

Incorporation

For foreign companies, after obtaining permission from the Minister to establish a branch in Libya, provided that the parent company is not a shareholder in a joint venture operating in the same field or activity, the branch's working period is from two to five years, subject to renewal. The branch must request an extension of the permission for the period necessary to complete the work contracted.  

After meeting the requirements for establishing a joint venture, the branch may also convert into a joint venture. 

Article 21

Allowed Branch Areas

It is authorized to establish a branch of a foreign company in one of the fields listed below. The branch may combine only two of the specified fields after the approval of the Minister, provided that the payment is made.

Registration and renewal fees for each field are separate.

First: civil and contracting acts. This includes the following:

1. Building and construction.
2. Building roads and constructing bridges and dams.
3. Marine construction, such as the construction of sea berths, building docks, ship storage, and deepening of ports.
4. Construction of airfields and airstrips.
5. Extension of railways and the establishment of their stations.
6. Establishment of gas transmission and distribution networks.
7. Installed and maintained home gas networks and calibrated all kinds of gas meters.
8. Digging water wells.

The contract value must be at least 50,000,000 fifty million dinars to conduct activities in the fields mentioned in items 1 to 5.

Second: the field of electricity. This includes the following:

1. Construction and maintenance of power plants, including those that depend on renewable energies.
2. Voltage lowering and raising stations of all kinds.
3. Establishing and maintaining cable networks that transmit electrical energy.
4. Establishing desalination plants based on thermal methods, membranes, and renewable energies.

Third: the oil field. This includes the following:

1. Oil exploration includes surveying the earth's layers through various means, such as geological, geophysical, geochemical, etc.
2. Examination and analysis of data and submission of geological and reservoir studies.
3. Oil well drilling and maintenance, oil well drilling equipment installation and maintenance services, submersible and submersible pumps.
4. Labeling works, mud services, and drilling fluids.
5. Construction of reservoirs and pipelines, maintenance of oil and gas transmission and pumping pipeline stations, and the necessary cathodic protection work.
6. Establishment of oil refineries.
7. Establishment of public offshore platforms for oil and gas exploration.
8. Installation and maintenance of oil refineries and petrochemical plants.
9. Providing maritime transport services for materials, equipment, and machinery related to drilling operations in offshore areas.
10. Demining of oil fields.

Fourth: the field of communications. This includes the following:

1. Installation and maintenance of telecommunication systems and stations.
2. Establishing and maintaining stations, towers, and antennas for wireless communications and air navigation stations.

Fifth: the field of industry. This includes the following:

1. Electrical, mechanical, electromechanical, and technical works are necessary for installing and maintaining factory machinery.
2. Mining and mineral exploration and extraction, except for oil and gas.
3. Construction and maintenance of thermal furnaces for different factories.
4. Installation and maintenance of industrial safety and security systems.

Sixth: surveying and planning. This includes the following:

1. Surveying and mapping work can be done by various means and for multiple purposes.
2. Providing the necessary engineering services in the planning of cities and urban areas.
3. Preparing studies and designs for engineering projects.

Seventh: the field of environmental protection. This includes the following:

1. Establishing stations for ecological sanitation.
2. Waste treatment, transformation, and recycling.
3. Treating environmental pollution and installing and maintaining equipment for that.
4. Treatment of seawater that overlaps with groundwater and maintenance of water transmission, drainage networks, and lifting stations.

Eighth: the field of computers. This includes the following:

1. Installing automatic control systems, manufacturing, preparing, and maintaining their software.
2. Manufacture of computers and their accessories and electronic chips.

Ninth: the field of technical studies, training, and supervision. This includes the following:

1. Preparing studies in information technology, wireless communications, and control devices, providing the necessary consultations, and supervising their implementation.
2. Training, capacity building, and skill creation in line with the labor market's needs are in contravention of Law No. 18 of 2010 on Education.
3. Preparing technical studies and submitting engineering designs necessary for implementing projects and significant industrial and construction projects.
4. Supervising the implementation of engineering projects.

Tenth: the field of health. This includes the following:

1. Installation, maintenance, and calibration of medical machines and equipment.
2. Management of hospitals and medical units.

Eleventh: the field of air transport and numbering of related messages

Twelfth: the field of international cooperation, which includes all areas of international cooperation in accordance with the rules and provisions established in this Decree. 

Article 22

Branch Capital

The minimum capital of the branch must be LYD 2,000,000 – two million dinars, provided that the capital is LYD 4,000,000 – four million Libyan dinars if the branch operates in two of the specialized fields in Article 21.

Article 23

Branch Management

The branch manager and his deputy manage the branch provided that one is Libyan.

Article 24

Branch Bylaws

The branch must prepare an article of association that complies with the Libyan legislation in force. It must also have at least a bylaw, a financial regulation, and a list of penalties approved by the competent authority.

Article 25

Branch Prohibitions

• The branch may not buy shares of national or foreign companies operating in Libya.
• Working in areas and activities that are not in line with the parent company’s activities and purposes. 
• Working outside the scope of the fields authorized for the branch mentioned in Article 21.

Article 26

Temporary Branch

Foreign companies may open a branch under the name “Temporary Branch” in Libya for one time only, according to the following conditions:

1. The parent company signs a memorandum of understanding or one agreement or more with a foreign or Libyan body that works in Libya.
2. Any agreement or memorandum of understanding is at most 18 months.
3. The agreement is registered with the Tax Department.
4. The scope of the agreement or memorandum of understanding is consistent with the company's objectives.
5. The implementation of the agreement or memorandum of understanding requires the presence of two employees from the parent company.
6. The total number of agreements, or memorandum of understanding, signed with bodies operating in Libya is at most three. 

Article 27

Conversion to a Permanent Branch

The temporary branch must be converted into a permanent branch in the following cases:

1. Bypassing the number of agreements or memorandum of understanding signed by more than three.
2. 3. Signing agreements or memorandum of understanding for exceeding 18 months.
3. The expiration of the branch’s term before the agreement's implementation concluded with the entities operating in Libya.
4. In all cases, the temporary branch does not last for more than 18 months, after which it is converted into a permanent branch or shut down according to the circumstances.

Article 28

Permission for Temporary Branch

The parent company submits a request for permission to establish a temporary branch to the Companies’ Department at the Ministry. The Minister or his authorized representative issues permission to open the temporary branch. The permission shall not be granted until the Companies’ Department confirms that the branch meets the conditions mentioned in the previous articles and the documents and data stipulated for establishing the branch are completed.

Article 29

Temporary Branch Capital

The capital of a temporary branch should be at least LYD 200,000 – two hundred thousand Libyan dinars.

Article 30

Branches of Companies Working in International Cooperation

As an exception to the articles related to the establishment of branches and temporary branches, it is not permissible to establish a branch for companies working in the field of international cooperation or for companies that have a contract in the field of international cooperation, except after verifying the following two conditions:

1. There is an agreement between the Ministry of Foreign Affairs and a donor.
2. Approval of the competent department in the Ministry of Foreign Affairs on the work of the foreign company, which will execute the work funded by the donor.

However, this does not eradicate the need to register the company’s branch with the Companies’ Department at the Ministry of Economy. Branches of international cooperation companies must correct their situation in accordance with the provisions of this article within three months from the date of applying the Decree. Otherwise, the branch work shall be deactivated until the conditions are met. The Ministry may repeal the permission at any time based on public interest and national security.

Chapter Five – Representative Office

Article 31

Establishing a Representative Office

Foreign companies that do not have a branch or a joint company in Libya may establish a representative office after obtaining permission from the Minister. The office’s purpose is to protect the company’s interests, study the market and work environment, collect data, prepare studies, and facilitate the procedures through which the company’s activities are conducted without having the authority to conclude contracts in the office’s name. The office’s term is two years, renewable for the same period.

As an exception, the representative office may conclude the contracts necessary to perform its duties but not for commercial activities.

Article 32

Representative Office Capital

The capital of the representative office must be at least LYD 150,000—one hundred and fifty thousand Libyan dinars.

Chapter Six – Final Provisions

Article 33

Renewal

The entity shall apply to renew its registration four months before the expiry of the permission period.

Article 34

Inactivity

If the entity does not start practicing its activity within six months from the date of its establishment or stops its activity for the same period, it must notify the relevant commercial registry office. If the entity does not carry out its activity or continue it within six months following the notification, the commercial registry may request a competent court to issue its decision to dissolve and liquidate the entity.

Article 35

Entity Evaluation

The Companies’ Department must evaluate the entities before or after granting permission according to the forms prepared for this and verify the data provided by the entities. The Ministry may revoke the consent given to the entity if it is found that the information provided is incorrect or due to considerations of public interest and national security.

Article 36

Grievance

The concerned persons may file a grievance against the procedures and decisions taken by the departments affiliated with the Ministry in implementing this Decree. 

The grievance shall be submitted to the Minister, provided that it includes facts and legal violations, and the necessary documents must support it. The Minister may form a committee to investigate and consider the grievance submitted by the party concerned.

Article 37

Decisions of the Investigation Committee

The decisions issued by the committee formed by the Minister’s decision must be by a majority vote. If the votes of the members attended are equal, the side of the committee chairman shall prevail. The meetings and decisions issued by the committee are recorded in minutes signed by the committee chairman and the attending members, and the committee’s findings are not final or effective until approved by the Minister.

Chapter Seven – Penalties

Article 38

Define Penalties

Without prejudice to the penalties stipulated in the legislation in force, the penalties specified in this article shall be applied to the entities based on a proposal from the penalties’ committee and the Minister’s approval, and they are as follows:

1. Warning. 
2. Fines.
3. Revoking the permission. 
4. Being registered on the Blacklist. 

Article 39

Sanctions Committee

Under this Decree, a sanctions committee that is directly subordinate to the Minister shall be established. It consists of the Undersecretary of the Ministry as Chairman and the membership of the Head of the Legal Department, the Director of the Companies Department, and the Director of the Private Sector Development and Investment Department at the Ministry of Economy.

The committee specializes in tracking violations, verifying them, communicating with the relevant authorities, proposing the necessary penalties, and referring them to the Minister for approval.

Article 40

Warning Penalty

 The entity must be warned to rectify its legal status in the following cases:

1. Violation of the percentages and provisions prescribed for national and foreign workers mentioned in Article 6.
2. Failure to prepare the required bylaws in accordance with the applicable law and regulations.
3. Failure to submit the annual report mentioned in Article 7.

Article 41

Fine Penalty

The entity shall be fined no less than five thousand dinars and no more than twenty-five thousand dinars in the following cases:

1. Working after the expiration of the branch or office’s permission.
2. Violation of the terms and conditions of the permission granted to the branch or office.
3. Violation of Article 18 of this decree. 
4. Failure to register the company's branch working in the international cooperation field in the Companies’ Department per Article 30.

Article 42

Canceling the Entity’s Registration Penalty 

The entity’s registration must be cancelled in the following cases:

1. Violation of Article 6, after being warned to rectify the violations by the Head of the Companies’ Department within thirty working days from the warning date.
2. Violation of Article 8 18 of this Decree. 
3. Failure to submit the annual report mentioned in Article 7 or failure to prepare the necessary internal regulations after a warning to rectify the entity's status by the Head of the Companies’ Department within a maximum period of 90 days from the date of the warning.
4. Violation of the Penal Code provisions, economic crimes, money laundering, and combating terrorism.
5. Violation of public order or breach of national security.

Article 43

Formation of a Committee to Impose the Registration in the Blacklist Penalty and Extend its Functions.

As an exception to Article 39, a committee shall be formed under the chairmanship of the Undersecretary and the membership of each of the following:

1. Head of the Companies’ Department in the Ministry Vice President
2. Head of the Financial Resources Department at the Ministry of Finance.
3. Head of the Manpower Department at the Ministry of Labor.
4. A representative of the Central Bank of Libya
5. General Federation of Chambers of Commerce, Industry, and Agriculture representative.
6. Head of the Legal Department at the Ministry of Economy.

The committee is responsible for the following:

1. Recommending the registration of the foreign entity in the blacklist.
2. Examining the requests submitted by the entities registered in the blacklist to cancel their registration therein after lifting the violation, the lapse of at least five years, and after submitting a written pledge to abide by the laws and provisions in force.

The Companies’ Department undertakes to register the entity in the blacklist or write it off as decided by the Minister, take the necessary measures to cancel the permissions issued to the entity to be registered in the blacklist, circulate the lists of entities that are decided to be registered, prohibit various agencies and administrative units in public and private sectors from dealing with the blacklisted company, and publish the data of entities, which is recorded in the blacklist on the Ministry’s website.

Also, every contract or deal with companies registered on the blacklist is considered null and void.

Article 44

Entity Validity for the Blacklist

The entity must be placed on the blacklist in the following cases:

1. Interfering in the political or security affairs of the state of Libya or violating public order.
2. Delay in the works or projects contracted to implement unless it is due to a foreign cause or force majeure.
3. Failure to pay the final insurance, or not to sign after awarding the bid, or to withdraw from work or leave it without justification. 
4. Fraud, deception, or manipulation in the implementation of projects.
5. Submitting false documents or data.
6. Evasion of legally prescribed taxes and fees.
7. Participation in the supply of goods or products harmful to human or animal health or the environment.
8. Doing business after the expiration date.  
9. Offer or pay a bribe to act or refrain from any action.
10. Performing unauthorized work.
11. The representation office practicing a commercial activity.

Article 45

List Review

 By a decision of the Minister, a specialized committee is formed to review this Decree, at the end of December of each year, in order to work on amending and developing its provisions according to the economic development requirements and the public interest requirements.

Article 46

The Minister of Economy’s Decree No. 207 of 2012 on Foreign Participation in Companies, Branches and Offices that Represent Foreign Companies in Libya and its amendments are repealed. 

Article 47

This Decree shall be enforced from the date of its issuance, and any provision that violates its provisions shall be repealed, and the competent authorities shall implement this Decree. 

Attached Forms

By decision of the Minister of Economy 

No. 944 of 2022

On Foreigners’ Participation and Foreign Companies’ Branches and Representative Offices in Libya

Model number:

Company Profile Number | Branch: 

Date:

Information form for branches and joint companies

In application of the text of Article 6 of the Regulations on Foreigners’ Contribution in Companies, Branches and Representative Offices, this form is filled out by the legal representative of the branch or joint company or his authorised representative, and the person concerned bears the legal responsibility for the data contained therein.

First: identifying the entity

Entity name: 

Incorporation Resolution No:

Address:

Phone numbers:

E-mail:

Website:

Nationality:

Commercial Registration No:

Chamber of Commerce No.: 

Tax Number

Government of National Unity

Ministry of Economy 

Second: entity management

Name of the branch manager, the chairman of the company’s board of directors: 

 E-mail:

Phone:

Name of the deputy director of the branch / general manager of the company: 

E-mail: 

Names of the entity’s departments: 

Names of directors of departments: 

Number of employees of the entity: 

 External references:

 I: ……………………Legal Representative – Authorized Representative I undertake that the above information is entirely correct, written with my knowledge and knowledge, and I bear full legal responsibility for what is stated in it.

Date:

Signature:

Companies Management

The employee has matched the data …………………… Based on the official documents submitted by the legal representative of the joint company/branch or his authorised representative.

Employee signature: