Law No. 23 of 2010 regarding Commercial Activity 

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Law No. 23 of 2010 Regarding Commercial Activities 

Translation from Arabic 

GREAT SOCIALIST PEOPLE'S LIBYAN AREA JAMAHIRIYA General Peopleís Congress 

General Peoples' Congress: 

• In execution of Decision of the Basic Peopleís Congresses in their annual session held for the year 1377 PD (2009), and 
• Having seen the declaration of outbreak of the Peopleís Authority.
• The Grand Green Charter for Human Rights In the Era of Masses.
• Law No. (20) for the year 1991 regarding enhancement of freedom.
• Law No. (1) of 1375 PD (2007) regarding the work system for Peopleís Congresses and Committees. 
• The Commercial Law, and its amendment. 
• Law No. (58) for the year 1970 in respect of the work and its amendments.
• The Libyan Commercial Law issued in 1953 and its amendments.
• Law No. (40) for the year 1956 regarding trademarks and its amendment.
• Law No. (73) for the year 1958 regarding scales, measures and standards.
• Law No. (2) for the year 1962 regarding commercial data.
• Law No. (38) for the year 1968 regarding export and import.
• Law No. (65) of 1970 for specifying certain provisions for merchants, and trading companies and supervision thereof, and its amendments. 
• Law No. (64) for the year 1971 regarding importation.
• Law No. (110) for the year 1975 regarding deciding some provisions related to public bodies, establishments and public sector companies.
• Law No. (17) for year 1977 regarding organization of practicing commercial activities.
• Law No. (8) for the year 1984 regarding rules of commercial dealings and its amendment.
• Law No. (9) for the year 1985 regarding provisions in respect of partnerships (Tasharukiat) and its amendment.
• Law No. (8) for the year 1988 regarding provisions related to economic activity.
• Law No. (13) for the year 1989 regarding control over prices and its amendment.. 
• Law No. (9) for the year 1992 regarding practicing economic activities.
• Law No. (15) for year 1423 PB (1993) in respect of deciding some provisions related to joint-stock companies wholly or partially owned by the community.
• Law No. (4) for the year 1425 PB (1995) on prevention of economy of speculation and its amendments.
• Law No. (4) for the year 1426 PB (1996) regarding organization of importation and distribution of goods.
• Law No. (21) for the year 1369 PD (2001) regarding certain provisions for practicing economic activities and its amendment.
•  Law No. (6) for the year 1372 D regarding organization of commercial agencies.
•  Law No. (3) for the year 1374 PD (2006) regarding public sector companies.
•  Law No. (2) for the year 1375 PD (2007) regarding organization of Inspection and Peopleís Control.
•  Law No. 3 for the year 1375 PD 2007 regarding establishing and organizing the Financial Audit Authority. 
•  Law No. (4) for the year 1372 PD (2004) regarding Chambers of Commerce, Industry and General Association of Chambers.
•  Law No. (9) for the year 1378 PD (2010) regarding investment promotion. 

Formulated the fol owing Law: 

Book One In Practicing Economic Activities 

Section One General Provisions 

Article 1 

Scope of Implementation of this Law 

This Law includes the provisions related to economic activities to be performed by any individual whatsoever his legal capacity. It also includes the provisions organizing tools of practicing economic activity represented in the individual activity, family activity, partnerships, companies and other legal provisions relevant to the economic activity. 

Article 2 

Application of Civil Law 

The provisions of the Civil Law shall be applied to the economic activities which are not provided for in this Law, provided that such provisions shall be applied in as much as their correspondence with General Principles in this Law. 

Article 3 

Application of Precedents and Principles of Justice 

If there is no applicable legislative provisions, the judge shall have the right to be guided by the precedents, equity requirements and commercial integrity.

Article 4 

Application of Tradition 

On determination of the economic activity effects, the judge should apply the established tradition except if it is appeared that the contracting parties have intended to contradict the tradition provisions or the tradition was in conflict with ordered commercial legislative terms. 

The special and local traditions are overweighting the general tradition. 

Section Two On Individuals 

Article 5 

Definition for Practicing Commercial Activity 

Anyone who starts commercial works and takes thereof as his usual profession shall be considered as a commercial activity practitioner. As regards the family activity, the provisions of organizing a particular partnership shall be applied. 

Article 6 

An Exceptional Case 

Anyone who declared in the press or circulars or any other means of the shop which he established and opened for engaging in Commercial transactions shall be considered as a probationer of commercial activity. 

Article 7 

Legal Age for Practicing Commercial Activity 

Anyone who attained activity in full eighteen years of age may practice commercial activity unless another legislation requires higher qualification. 

Article 8 

Practicing Commercial Activity to Others Account 

1. The guardian or the custodian or the curator may practice commerce to the minors or alike account under a permission of the court of the First Instance which the commercial activity falls under its jurisdiction.
2. In this case, the bankruptcy of the minor or alike may be declared, without applying against them the criminal consequences of the bankruptcy declaration. 

Article 9 

Practicing of Commercial Activity by Women 

1. The womenís qualification for practicing commercial activity shall be organized by their personal status law. 
2. The foreign wife who engages in practicing economic activity in Jamahiriya is supposed to practice thereof under permission of the husband. If the personal status law of the couple allows the husband to protest against engagement of her wife in commerce or withdrawal of his previous permission, this must be written down in the Commercial Register and published as per legal methods. 
3. Protestation or withdrawal of the permission shall not result in any effect except from the date of its publication.
4. Protestation or withdrawal of the permission shall not affect the rights gained by the others. 
5. The merchant foreign wife is supposed to have been married according to the system of separation of the funds unless she has been declared the financial agreement in her marriage contract. 

Declaration shall be through entry in the Commercial Register which the commercial shop falls under its jurisdiction and shall be published according to legal methods. 

In case of lack of the declaration shown in the previous paragraph, a third party may prove that the marriage was effected according to a financial system more appropriate to his favour. 

The judgment issued outside Jamahiriya on separation of the couple funds shall not be a contest against the third party, except from the date of its registration in the Commercial Register Office. The commercial shop, in which the couple or one of them starts his trade, falls under its jurisdiction and shall be published as per legal method. 

Article 10 

Junior Merchants 

Individuals who engage in small size commerce of small expenditures, so that they often depend on their physical endeavors to gain little profits to ensure

their living more than depending on their cash capital as a traveling salesman or day salesman shall neither be subject to duties of commercial books nor to rules of bankruptcy declaration nor to bankruptcy and protective reconciliation provided for in this Law. 

Article 11 

Public Establishments and Bodies 

The estate, public administrative units, committees, clubs and legal personality societies which do not aim at gaining, even if they carried out commercial transactions, but their mentioned transactions shall be subject to provisions of this Law.

Section Three Companies 

Chapter One Common Provisions 

Branch One General Provisions 

Article 12 

Companies Types

Companies which their purposes are performance of commercial activity according to one of the commercial companies kinds provided for in Article (13) of this Law shall be established. The Civil activities shall be practiced in a group according to civil companies provided for in Chapter Three of this Section. 

Article 13 

Commercial Companies 

The Joint-Stock Companies, limited companies, companies limited by shares, joint-stock companies and limited liability companies are considered as commercial companies whatever the nature of their activity provided that the partnership companies are considered as commercial or civil by the nature of their activity. 

Article 14 

Companyís Memorandum of Association 

In other than partnership companies, the memorandum and articles of association of the company should be in the form of official entries. The memorandum and articles of association of the company should contain its legal form, name duration, office, headquarters, paid capital in cases required by law and its purposes, in consideration of the unity of purpose and specialization in a manner of form to be organized under a resolution to be issued by the General Peopleís Committee. 

In all the cases, the company activity shall be appropriate to its capital according to classification of the companies to be issued under a resolution of the General Peopleís Committee.

Article 15 

Capital 

Unless the law provides otherwise, the founders of the companies shall fix the capital which they deem appropriate to achieve the company purpose. 

Article 16 

Data of Company Document 

The company head office, the Commercial Register Office in which it is registered, registration number must be laid-down in documents and correspondence of the company. As regards Joint-Stock Companies, companies limited by shares and limited liability companies there should be laid-down, in addition to the above the subscribed capital and the actual paid thereof. 

Article 17 

Submission to Libyan Law 

The Companies having their head offices in Jamahiriya shall be subject to the Libyan Law. The head office is considered to be in Jamahiriya if its main activity or actual management exists therein. 

The companies to be established within the territory of the country shall be subject to provision of the Libyan Laws even if their purpose is performance of the activity abroad. 

Article 18 

External Auditor 

Any company organized under provisions of this law should nominate an external auditor or more, as per the cases, if it exceeded its estimated capital to be fixed by a resolution of the concerned secretary. The external auditor also must be amongst the persons authorized to practice such profession. The report to be issued by the external auditor as well as the balance sheet and the final accounts audited by him shall be considered correct and a pretext before others unless the contrary is confirmed. 

Article 19 

Prohibition of Partner Dismissal 

The partner may not be dismissed from the company unless in cases allowable by the law or in cases provided for in the memorandum or the Articles of Association. The partner obligation also may not be emphasized unless with him consent. 

Article 20 

Management Errors 

If it is appeared that the insufficiency of the companyís assets and funds to pay its debts is due to gross errors in management. The manager or the managerís shall bear these debts wholly or partly as per percentage of contribution of their errors to occurrence of the same. 

Article 21 

Prescription of the Case of Responsibility 

The case of civil responsibility against the partner, which depends on his capacity as a partner in the company shall be prescribed after lapse of five years from the date of striking out of the company from the Commercial Register or from the date of registration of getting out of the company. The case of responsibility against the managers shall prescribe after five years from the date of striking out of the company from the Commercial Register or from the date of registration of expiry of their function in the concerned Commercial Register. 

Article 22 

Public and Mixed Company 

The provisions of this law shall apply to the companies to be established by the State or those which the ownership of their shares shall pass wholly or partly totally to it or to other public legal personalities as regards what is not provided for in laws organizing thereof in a particular manner. 

Article 23 

Forms of Memorandums and Articles of Association 

The concerned secretary may issue a resolution on guided forms of memorandums and articles of associations of companies and partnerships.

Branch Two Registration and Declaration of Companies 

Article 24 

Registration in Commercial Register 

All the companies organized under this law, whatever the nature of their activity shall register in the concerned Commercial Register with exception of a particular partnership. 

Registration shall be done by deposit of a copy of the memorandum and articles of association as well as other documents required by the Commercial Register. 

Article 25 

Body Corporate 

The company shall get the benefit of the legal personality with effect from the date of its registration in the Commercial Register and shall end on striking out therefrom. 

After registration in the Commercial Register, the company shall have the right to take a resolution on bearing the effects of the contracts and legal dispositions carried out by the founders for necessities of the foundation phase, so that the rights and obligations shall be directly under company protection. 

Article 26 

Companyís Declaration 

After completion of formalities of registration in the Commercial Register, the company declares its establishment in a legally defined manner, within ten days from the date of registration in the Commercial Register. 

Article 27 

Necessity of Changes Registration 

The resolutions related to the following matters shall be subject to formalities of registration in the Commercial Register as well as formalities of declaration provided for in the previous articles within ten days from the date of their issuance: 

1. Amendment of the articles association.
2. Nomination of manager, definition and termination of their functions. 
3. Dissolution and liquidation of the company. 
4. Merger or division or change of the legal form. 
5. Declaration of finalization of accounts after dissolution or liquidation or merger or division of the company. 

The legal representative of the company shall assume, at his risk, performance of formalities of legally prescribed registration and declaration. 

Article 28 

Cancellation of Formalities 

Non-observance of rules of registration and declaration referred to two previous articles shall result in cancellation of registration formalities. 

Nevertheless, nor the legal representative of the company, neither the joining partners may not protest by this cancellation against the others. 

Article 29 

Actual Company 

The cancellation judgment issued after registration in the Commercial Register shall neither affect the correctness of the executed acts and disposition of the company, nor release the partners from payment of their shares in full except after payment of the company debts. 

Judgment on cancellation shall not be allowable if its cause is removed by an action registered in the Commercial Register. 

Branch Three Dissolution and Liquidation 

Article 30 

Types of Dissolution 

The company dissolution shall be voluntarily or judicially. The company shall be dissolved voluntarily by a resolution to be taken by the partners according to terms and conditions provided for in the memorandum and articles of association and shall be dissolved judicially by a judgment to be issued by the competent court in other cases not attributable to partners will. Each partner may resort also to the competent court to claim for dissolution of the company if the other partners breached their duties or due to continuous dispute between them or for serious reasons in which the partners have no role. 

Article 31 

Decrease in Company Assets 

If the value of the company assets is decreased by less than half of its capital due to the losses confirmed in its financial statements, the manager or the manager must convene partners meeting for dissolving the company or continuing its activity after reinstating the capital to at least more than half. 

Article 32 

Expiry of Company Duration 

The company shall be dissolved on expiry of its fixed duration unless the partners extended thereof as per terms of the memorandum or articles of association prior to expiry of that duration, unless the law states otherwise. 

Article 33 

Realization of the Purpose or Impossibility of its Realization 

The Company shall be considered as dissolved whenever realized its purpose or whenever realization of the same became impossible. 

Article 34 

Transfer of Shares or Portions to One Person 

If all the shares or portions are transferred to one person, then the person to whom the ownership of shares and portions is passed must take the initiative to sell what is exceeding the limits provided for in this Law within a period not exceeding one year, otherwise the company shall be considered as dissolved by operation of the Law. 

Provisions of this article shall not apply in case the shares are transferred to a holding company. 

Article 35 

The Company which did not Practice its Activity 

If the company did not start exercising its activities or suspended thereof for six successive months, it should notify the concerned Commercial Register Office thereof. If it did not exercise the activity or continued thereof during the six months following the notice, the concerned Commercial Register Office shall ask the competent Court of the First Instance to issue a resolution of dissolution and liquidation of the Company. 

Article 36 

Availability of One of the Cases of Company Dissolution 

The company shall be in state of liquidation once one of the cases from which the Company dissolution follows is available. The directors should consider themselves in the position of liquidators so that their functions shall be restricted to urgent matters. They shall not take up any new jobs, otherwise they shall be responsible therefore jointly and severally. Their assignment shall be finally ended once the liquidator is nominated. 

The directors shall be responsible for keeping companyís assets until delivery to the liquidator. The company name must be followed by the expression of (company under liquidation). Its legal personality shall continue inasmuch as necessary for liquidation until striking it off the Commercial Register. It may not be allowed to protest against a third party that the company is under liquidation, except after registration of the fact in the Commercial Register and publication thereof as per legally established methods. 

Article 37 

Rules Adopted in Liquidation 

The liquidation of the company shall be carried out as per provisions of the articles of association inasmuch as not contradicting the provisions laid-down in this Law. If its articles of association are devoid of a special provision or when judged void and null, the provision applied in liquidation set out in this Law shall be followed. 

Article 38 

Nomination of Liquidators 

The partner shall assume, according to the legal form of the company, nomination of a liquidator or liquidators as per the cases, inasmuch as not contradicting the conditions laid in the contract or articles of association. The liquidator may be amongst the partners or a third party. If the partners are not able to nominate a liquidator, the President of the competent Court of First Instance shall nominate him based on a request from anyone who has

interest therein. If the company is dissolved by a judicial judgment, the Court shall assume nomination of the liquidator or liquidators. 

Liquidators must register the decision of their nomination in the concerned Commercial Register within ten days from the date of being informed thereof. The authority which nominated the liquidators shall fix their fees and take the resolution of their removal or replacement. 

Article 39 

Multiplicity of Liquidators 

If the liquidators are multiple, it shall not be allowed for one of them to start his job alone unless he is expressly permitted to do so or if the work is pressing and required by maintenance of companyís right. 

Article 40 

Primary Duties of Liquidators 

The liquidator or liquidators may not start their functions except after registration of their nomination resolution in the Commercial Register accompanied by their written signatures specimens. The resolution of their nomination must be published also in the legally established manners within ten days from the date of registration of the resolution in the Commercial Register. Once starting his task, the liquidator along with the manager or managers shall take inventory of the company assets and liabilities. The minutes of the inventory shall be signed by all of them, and afterwards a notice shall be addressed to the company creditors and shall be published in two daily national newspapers to serve notice to the creditors that they should submit their claims against the company. 

Article 41 

Some Prohibition on the Liquidator 

The liquidator may resort to arbitration if expressly prevented therefrom. The liquidator may not give guarantees or conduct a reconciliation unless after approval of the partners or the competent Court as per the cases. 

Article 42 

Partners Meeting in the Beginning of Liquidation 

The liquidator must convene the partners meeting within the three months following commencement of his assignments to present to them a report on the companyís financial position and liquidation measures which he intends to follow. If the liquidator did not do so, anyone who has interest may resort to the President of the Court of First instance to issue an order for holding the meeting. 

Article 43 

Representation of the Company under Liquidation 

The liquidator is considered as a legal representative of the company under liquidation. He shall continue execution of the current contracts as required by the liquidation necessities. He may sell the Company properties, either real estate or movable by auction or bidding unless the order of his nomination provided for restriction of this power and this restriction shall not be a pretext against the others. The liquidator shall remain responsible before the company, partners and third parties for mistakes to be committed by him during performance of his assignments in the same manner as managers. The case of responsibility shall be prescribed after the lapse of five years with effect from the date of the companyís striking out from the Commercial Register. 

Article 44 

Liquidation Duration 

1. The liquidator must complete the liquidation tasks within one year from the date of commencement of his assignment. If this period is not sufficient, the liquidator must submit a report showing the delay reasons and the period necessary for completion of the liquidation tasks. 
2. The period for the same liquidator or liquidators may be extended for a period or periods not exceeding one year by the virtue of a resolution of partners or the Court as per the cases. 

Article 45 

Continuity of Assignment of Some Bodies of the Company 

The assignments and powers of the Companyís general assembly and the control body during the liquidation period inasmuch as not contradicting its procedures. 

Article 46 

Debts of the Company under Liquidation 

All the debts of the Company when paid as registration of the company dissolution in the commercial register and from that date, the procedures of execution of the judgment against the company shall be arrested. The judgment amounts shall be considered as debts on the company which the liquidator shall assume settlement thereof according to priorities and guarantees which he has. The dissolution of the company shall not result in termination of contracts of real estateís lease in which it exercises its activities. 

Article 47 

Payment of Debts 

The liquidator shall pay the debts to the creditors according to their order and if they are equal in one order and the result of the liquidation is not sufficient to pay all their dues in full. The distribution thereof shall be according to percentages of those dues. The liquidator shall keep away the amounts necessary for payment of dues of the delayed creditors whenever their dues are fixed and of limited amount. 

If it appears to the liquidator that the company funds are not sufficient to pay its due debts, he should invite the partners to take the necessary decisions including entry into protective reconciliation with creditors or recourse to the competent Court for bankruptcy declaration. 

Article 48 

Distribution of Liquidation Result 

The result of liquidation shall be distributed after reimbursement of the financial shares to partners each according to his share in the profits. The partners may reimburse the movable and real estate properties which they have offered as shares in the company, if those properties are still maintaining their identity without modification or transformation and they shall have to pay the value difference if necessary. 

Article 49 

Meeting of Partners at the End of Liquidation 

Before completion of his assignment, the liquidator must convene the partners meeting in order to agree on completion of liquidation, adoption of its final accounts and liquidatorís acquaintance. The partners meeting shall be informed of an ordinary general assembly as per terms and conditions to be required by the legal form of the company. The liquidator shall have the right to discuss and vote if he is a partner. 

If the meeting of partners is difficult or if the company interest requires getting along without this meeting a recourse may be made to the president of the competent Court of the First Instance to get a decision of approval on liquidation accounts and adoption of the completion.

Article 50 

Striking the Company off the Commercial Register 

The liquidator must strike the company off the Commercial Register and publish the same according to the Law. 

Chapter Two Commercial Companies 

Branch One Individualís Companies 

First: Joint Liability Company 

Article 51 

Definition 

All the partners in joint liability company are responsible jointly and severally for company obligation and any agreement contrary thereto shall not be applied against a third party. The partnerís rights in the company shall be in front of shares. 

Article 52 

Company Name 

The joint-liability company must have a trade name, so that the trade name shall include the partnerís name of one of them with expression of (and co- partners). The expression of (joint liability company) must be added to the name which shall be selected. 

Article 53 

Rules Ought to be Applied to the Joint Liability Company 

The provisions provided for in the following article shall be applied to the joint liability company, and in default of a provision, the provisions of the civil law regarding the limited companies shall be applied.

Article 54 

Memorandum of Association 

The memorandum of association of the company should contain the following data: 

1. Name, surname of each partner, his father name, country, nationality, date of birth and identity number. 
2. Company name. 
3. Names of partners entrusted with the management and representation of the company. 
4. Companyís headquarters and main office. 
5. Company purposes. 
6. Share of each partner and its value. 
7. Statement of what is to be abode by the partner who shall provide work instead of his shares. 
8. Rules to be followed in distribution of profits and the amount of share of each partner in profits and losses. 
9. Company duration. 
10. Position to which the company shall pass in case of lack or shortage in partnerís qualification or declaration of his bankruptcy. 

Article 55 

Company Registration 

The managers shall lodge the companyís memorandum and articles of association with the Commercial Register Office which the head Office of the Company falls under its jurisdiction within thirty days from the date of signing the memorandum of association. 

If the directors delay in lodging the memorandum within the duration set out in the previous paragraph, each partner shall have the right to do so at the company expenses or to issue a judicial order obliging the directors to do so and obliging also the notary public who put the memorandum of association on formal paper to lodge the same.

Article 56 

Partners Dispositions 

The provisions of the civil law regarding the limited partnerships shall organize the relations between the company and third parties, with maintenance of responsibility of all the partners jointly and severally until the same is registered in the Commercial Register. However, any partner disposed in the company name shall be legally supposed to represent it even before the jurisdiction. The agreement that entitles one of the partners only to represent the company or which limits the power of representation of some of them shall not be considered effective in respect of a third party unless it is approved that the third party has knowledge thereof. 

Article 57 

Company Representation 

The manager who is entitled to represent the company shall have the right to perform what is included in its purposes, save what is excepted by the memorandum of association or the power of attorney granted to him. These exceptions should not be stuck to against the third party unless registered in the Commercial Register or unless proved that the third party has knowledge thereof. 

The Directors who represent the company should lodge specimens of their written signatures with the Commercial Register Office within ten days from the date of their knowledge of the nomination. 

Article 58 

Removal of the Manager 

If the company manager is a partner therein and nominated in the companyís memorandum of association in this capacity, he may not be removed from its management except by consent of all the partners or by a decision of the Court. But if he is a partner therein but nominated in that capacity under special contract independent from companyís memorandum, he may be removed from its management by a resolution to be issued by the majority of other partners, unless the company memorandum provides for otherwise.

Article 59 

Cases of Dismissal of a Partner 

The partners in a joint liability company should not remove any of them from the company except by a resolution from the court based on request one of the partners if one of the cases provided for in companyís memorandum of association or those in which the law allows for dismissal of the partner is ascertained against the partner. 

Article 60 

Companyís Branches 

A true copy of the companyís memorandum of association should be lodged with the Commercial Register Office of the authority in which the company shall establish branches, within ten days from establishing those branches. 

In the copy the name of the Commercial Register office in which the company is registered and the date of registration should be laid down. Specimens of the written signature of the company representative approved for the branch should also be lodged in the Commercial Register Office in the jurisdiction of which the branch is located. 

The company shall advise the Commercial Register Office within the jurisdiction of which the company head office is located, if the establishment of the branch within the above-mentioned period. 

Article 61 

Registration of Variations 

The directors should apply, within ten days, to the concerned Commercial Register Office for registration of emergent variation to the memorandum of association and other facts which should be registered. 

If change of memorandum of association is due to a resolution taken by the partners a formal copy of the resolution should be lodged. 

Variations to be introduced to the memorandum of association of the company shall not be effective against the third parties unless registered. 

Article 62 

Prohibition of Competition 

The partner may not, without consent of the remaining partners, exercise to his creditor to the credit of another person an activity contrary to company activity or to be jointly or severally a partner in another competitor company. It is supposed that approval must be obtained if the exercise of the activity or participation in competitor company antecedent to the companyís memorandum of association and the partners were at knowledge thereof. 

If the partner violated thereof, the company shall have the right to dismiss the partner and shall claim compensation for the damages. 

Article 63 

Company Books 

The responsible of the company management shall be bound to keep the legally prescribed commercial books. 

Article 64 

Distribution of Profits 

Amounts of money should not be distributed to the partners unless the company has actually collected thereof. If a loss appears in the capital, the profits should not be distributed before reinstating the capital or shall be reduced at the amount of the loss.

Article 65 

Responsibility of the Partner 

Subject to the following article the partner in Limited Liability Company shall be considered jointly and severally responsible with all his co-partner for the liabilities and obligation which were incumbent upon the company during his existence as a partner therein, this responsibility and guarantee shall pass to his successors after his death within his legacy. 

Entrance of a new partner in the company shall make him responsible for its liabilities prior to his entrance and ongoing out of the partner from the company the responsibility of the partner for the liabilities of the partnerís responsibility for liabilities following registration of his going out of company in the Commercial Register shall be stopped. 

Nevertheless, the partner shall be responsible on the same condition of the liabilities prior to the fact of registration of his going out in the Commercial Register. 

Anyone who impersonates the capacity of the partner in a limited liability company whether in words or in writing or by disposal or allows a third party knowledgeably to show thereof, shall be responsible also as a partner in that company towards every creditor believing of correctness of the undue assumption. 

Article 66 

Partner Guarantee 

The creditor of the limited liability company shall not enforce against the partners own funds unless after warning the company and lapse of eight days without payment or provision of sufficient guarantees by the company. The competent court may extend such terms to a new term not exceeding other eight days. Every partner shall have the right to recourse to the partners of the percentage of the company liabilities which he paid for each of them. 

Article 67 

Personal Creditor of the Partner 

The personal creditor of the partner may not claim for liquidation of his debitor share as long as the company is existing. However, the creditor may attach his debitorís share of the realized profits. 

Article 68 

Reduction of the Capital 

The resolution in respect of the capital reduction resolution may not be implemented through reimbursing the shares which have been paid or exempt the partners from what is remained with them, provided that the company creditor who get back his credit. Until prior to registration of the reduction resolution shall submit an objection there against within the said term. Nevertheless, the court may issue an order to implement the capital reduction resolution and entrusting the company to submit an appropriate guarantee to the objecting creditor.

Article 69 

Extension of Company Term 

The creditor of one of the partners may raise his objection before the competent court against extension of company term within three months from registration of the extension resolution in the Commercial Register. 

If the objection is accepted the company should liquidate the share of the debting partner within three months from judgment notification.

If the company term is renewed implicitly every partner may withdraw therefrom if he expresses his desire therein by a prior notification of not less than three months duration. The creditor of the partner may claim for liquidation of his debitorís share. 

Article 70 

Company Dissolution 

1. In addition to the general reasons for companiesí dissolution, the company shall be dissolved for the following reasons: 
2. Agreement of all the partners. 
3. Declaration of its bankruptcy which shall result in bankruptcy of the partners therein. 
4. Declaration of bankruptcy of one the partners, or prevent him from exercising a trade profession, or lack of or shortage of qualification unless the memorandum of association provides for its continuation or the remaining partners decide thereof unanimously. 
5. For other reasons to be provided for in the companyís memorandum of association. 

Article 71 

Death of the Partner 

If one of the partners in a limited liability company died, the company shall remain existing and its existence shall continue. The successors of the dead partner shall be partners therein if the same is provided for in the company memorandum of association and therein no minor or one who devoides of legal qualification. The company shall be transformed legally into limited partnership in which the successors shall be silent partners therein. 

If the limited liability company continues after death of any of the partners therein without an express provision, in its memorandum or in any other memorandum signed by all the partners prior to death of the partner, allowing for its continuation, then it shall be transformed legally into a limited partnership and the successors shall not be responsible for company liabilities except in the limit of succession funds.

Article 72 

Continuity of the Company 

If the company continued after declaration of bankruptcy of one of the partners or prevented from practicing his commercial profession or lost his qualification. The rights of the disqualified partner should be fixed on the basis of their value on the day of his disqualification by an expert to be nominated by the remaining partners or by a judge of Summary Proceedings. 

Article 73 

Nomination of the Liquidator 

The liquidation of the company shall be carried out either by all the partners if necessary or by one liquidator or more to be nominated by the majority of the partners. 

If the partners do not agree on nomination of the liquidator, the Court shall assume thereof upon request of one of the partners. In cases where the company is in operative, the court shall nominate the liquidator and determine the method of liquidation upon request of anyone who has interest therein. 

Until nomination of the liquidator, the director or the directors shall be considered as liquidator towards the third party. 

Article 74 

Liquidator Obligations 

The liquidators of the limited liability companies should start their works by preparation of statement including company properties and assets and shall strive to determine their rights with third parties and their obligations to others. They shall have no right to assign any of these properties, assets and rights unless by a prior consent of all the partners. 

Article 75 

Liquidation Balance Sheet 

The liquidators should, having completed liquidation operations, prepare the final balance sheet and the statement proposed for distribution of liquidation proceeds. 

The partners should be notified by registered mail with acknowledging receipt of the balance sheet signed by the liquidators and statement of assets proposed to be distributed.

Both the balance sheet and distribution project are considered as agreed upon if no contestation is presented in their respect within sixty days from the date of notification. If the correctness of the balance sheet and distribution project is contested, the liquidator may request consideration of the issues related to the balance sheet separately for those related to distribution. 

The liquidators shall be acquitted from responsibility towards the partners with effect from getting the balance sheet approved. 

Article 76 

Striking the Company Off 

Having approved the liquidation final balance sheet, the liquidators must request striking the company off the Commercial Register. From the date of striking out, the creditors of the company who have not paid their debts shall claim for payment thereof from the partners own properties. The personal creditors of the partner shall not complete with company creditors in the amounts to be received by the partners from liquidation proceeds. 

If non-payment of the company creditors debts due to error of the liquidators they may claim the liquidators therefore. 

The books of accounts and other documents which do not concern the partners severally should be lodged with the person who is to be nominated by the majority. These papers and documents shall be kept for five years with effect from the date of striking the company off the Commercial Register. 

Second: Limited Partnership 

Article 77 

Definition 

The limited partnership is the company which shall be contracted between at least a working partner and at least a silent partner. The working partners shall be jointly and severally accountable for company obligations, while the silent partners shall be accountable in the limit of the shares which they have provided. 

The silent partners should provide financial shares. 

Article 78 

Companyís Name 

The limited partnership must have a trade name, so that the trade name shall include the name of at least one of working partners with expression of (and co-partners). If the silent partner accepts that his name shall appear in the company name he shall be responsible for its obligations towards the third party jointly and severally with working partners. 

The name must be followed by an expression of (limited partnership). 

Article 79 

Rules Ought to be Applied to the Limited Partnership 

The provisions of the Joint Liability Companies shall apply to the limited partnership inasmuch as not contradict the rules set out in the following articles. 

Article 80 

Memorandum of Association 

The memorandum of association of the company should establish the limited partnership by a formal contract and shall show therein the names of the working partners and names of the silent partners. 

Article 81 

Non-Registration in the Register 

The provisions of article (56) shall apply to the relations between partners and third parties until it shall be registered in the Commercial Register. However, the silent partners shall not be asked except in the limits of their shares, unless they have participated in company management. 

Article 82 

The Working Partners 

The working partners shall have the same rights and the same duties as the partners in joint liability companies. The management of the company shall not be entrusted to silent partners.

Article 83 

Correctness of Resolution 

The working partners in limited partnership shall consider any conflict arising out in the company by unanimous resolution or by majority as per contract or articles of association provisions, provided that no change or modification may be introduced to the company activity and purpose except by consent of all the working partners. 

Article 84 

Nomination and Removal of Directors 

For correctness of nomination and removal of management responsibility, if they are not nominated in the articles of association itself they should obtain the consent of all the working partners and consent of a number of silent partners representing the majority of the subscribed capital unless the articles of association provided for a higher percentage. 

Article 85 

Silent Partners 

The silent partners shall neither perform any management jobs nor conclude contract or commercial transactions in company name unless they have given special power to the attorney for any contracting or certain transaction. The silent partner who violates this prohibition shall be jointly responsible towards the third parties for all the obligations of the company. He may be dismissed from it also, nevertheless, the silent partners shall contribute to company works under directorís supervision. If the articles of association allow thereof they may grant powers and give instructions for certain works and shall carry out inspection and control works. 

In any way, they shall have the right to be notified each year of the balance sheet and profits and losses account and they are entitled also to assure of their correctness and see the accounts books and documents of the company. 

Article 86 

Profits Receivable in Good Faith 

The silent partners are not bound to repay the profits which they have received in good faith according to the balance sheet which was legally agreed upon.

Article 87 

Transfer of the Silent Partner Share 

The share of the silent partner shall be transferable by succession and legacy, without prejudice to provisions of the articles of association, the share may be transferred and its consequent effect towards the company if a number of partners representing capital majority agreed thereupon. 

Article 88 

Bankruptcy of the Silent Partner 

The memorandum of association of the limited partnership shall not be canceled by bankruptcy of the silent partner and the action of application for cancellation thereof shall not be accepted from him. 

Article 89 

Company Dissolution Reasons 

In addition to the reasons laid down in the previous articles the company shall be dissolved if the working partners alone are remaining therein or the silent partners only, unless a decision is taken to compensate for the partner whose place became vacant or the remaining partners decide to transform the company into another legal form within six months. If the company became devoid of the working partners, the silent partners shall nominate, within the period mentioned in the previous paragraph, an interim director to perform the normal administrative jobs, the interim director shall not gain the capacity of the working partner. 

Article 90 

Rights of the Company Creditors after Liquidation 

The company creditors who were not able to receive their rights from the company liquidation, may, in addition to claiming the working partners and the liquidators under provisions of article (76) stick to their rights before the silent partners in the limits of the share to be passed to them from liquidation without competition by the personal partners of the silent partners.

Third: Particular Partnership 

Article 91 

Definition 

The Particular Partnership is a memorandum that does not subject to formal conditions imposed on the named commercial company. It is a partnership under which a person shares another person in a certain portion of profits of his activity or profits of a transaction or more against an agreed portion to be given by the particular partner within a certain period. 

Article 92 

Multiplicity of Partnerships 

A person who already shared another person in a transaction or a certain activity shall not share other persons therein except by consent of the particular partners unless there is an agreement stipulates otherwise. 

Article 93 

Rights and Obligations of the Third Parties 

The third parties shall neither gain rights nor bear obligations except towards the principal particular partnership owner. 

Article 94 

Rights of the Principal Particular Partnership Owner and Particular Partners 

The principal owner of the particular partnership shall manage the activity or the transaction. The memorandum of association may include the extent of control of the particular partner and the method of its exercise. 

In all the cases, the particular partner shall have the right to obtain an accounting statement of the transaction after its execution or an annual statement of the activity management if it extends to more than one year. 

Article 95 

Division of Profits and Losses 

The particular partner shall incur a portion of losses at the percentage of his profits provided that such portion shall not exceed his share in the partnership, unless otherwise agreed upon.

Article 96 

Participation in Profits and Losses 

The articles (92 & 93) shall apply to the contract of participation in profits of a certain activity without participation in losses, as well as on contract which entitles one of its parties to the right to participation in profits and losses without providing a certain financial share. 

Article 97 

Confirmation of the Company 

The particular partnership may be confirmed between the partners by all the methods of confirmation regardless of the nature of activity of the company. 

Branch Two Funds Companies 

Joint-Stock Company 

Article 98 

Definition 

The joint stock company is the company in which the shareholders shall not be responsible for company debts and obligations except at the amount of their shares value. 

First: Foundation of the Company 

1. Special Subscription 

Article 99 

Definition of the Special Subscription 

The joint-stock company shall be founded through special subscription as following: 

1. By a resolution of the directors of the holding company. 
2. By a contract between two shareholders or more.
3. By a contract signed by a number of natural or legal personalities or by both together, provided that the maximum contribution of each of them shall be fixed by a resolution of the General Peopleís Committee. 
4. By a resolution issued by a competent public authority as regards the public joint-stock companies.

Article 100 

Company Name 

The Joint-Stock Company shall have a certain trade name, such name should not be derived from a natural personality name, unless the aim of the company is to invest a legally registered patent in the name of such persons or the company is owned on or after its foundation by another trade company and taken its name. 

The name of the company must be followed by the expression of (Libyan Joint- Stock Company) or its initials (LSSCO). 

Article 101 

Memorandum of the Company 

The Joint-Stock Company shall not be established unless by a formal memorandum of association. The memorandum of association should include the following data: 

1. Name, surname and fatherís name of the shareholder, his country, domicile, nationality, date of birth, identity Card No. and the number of the subscribed shares. 
2. Company name and head office. 
3. Company purposes. 
4. Amount of the subscribed capital shall not be less than the minimum which shall be fixed by a resolution of the General Peopleís Committee, to be fully subscribed and indication of the paid amount thereof so as not to be less than (30%) of the subscribed cash capital. 
5. Nominal value of shares, their number and class. The minimum and maximum value of one share shall be fixed by a resolution of the General Peopleís Committee.
6. Value of the rights and funds submitted in kind. 
7. Rules which should be followed for distribution of profits. 
8. Members of the Board of Directors which should not be less than three and not more than eleven members including the Chairman. It is necessary to mention the name and surname of each member, his fatherís name, country, domicile, nationality, date of birth and number of his identity card. 
9. Number of members of the Control Board, with name and surname of each member, his fatherís name, country, domicile, nationality, date of birth and number of his identity card. 
10. Companyís duration. 

The Articles of Association shall be considered as an integral part of the memorandum even if in separate documents. 

Article 102 

Responsibility for Works Prior to Registration 

Anyone who performed works in company name prior to its registration shall be jointly and unlimitedly responsible towards the other parties, unless the company decides to bear the obligations according to provision of Article (25) issuance and sale of shares prior to registration of the company in Commercial Register shall be deemed null and void. 

Article 103 

Kinds of Shareholdings 

The share of the shareholder shall be in cash unless otherwise provided for in the memorandum of association. If the shareholder has undertaken to present his share on the basis of transfer of ownership of a certain thing, then, the provisions of the sale contract shall apply to what is related to share guarantee if lost or became due or if there is a defect or shortage therein. 

If the partner has undertaken to present his share in form of debts with a third party, his obligation towards the company shall not be ended unless the percentage provided for in the memorandum of association is paid, provided that the same shall not be less than three tenth (3/10) of his share value. In addition, the partner shall be responsible of compensation for the damage if that percentage is not paid prior to registration of the company in Commercial Register or if the share value is not paid on the date fixed for cash payment of the remaining shares. 

Article 104 

Rules for Estimation of the Share in Kind 

Anyone who contributes to the company in kind should present a report from a sworn expert to be nominated by the President of the Court of the First Instance under jurisdiction of which the funds intended for estimation are falling, it shall contain statement of the advance payments in kind and the estimated value of each category, the bases on which the estimation is based and such report shall be attached to the memorandum of association. 

The Board of Directors and the Control Board must ascertain the correctness of the estimation set out in the previous chapter within six months from the date of establishment of the company. 

The Board of Directors and the Control Board shall have the right to request the competent Court to reconsider the estimation if it appeared that there are good reasons. In this case the shares shall remain lodged with the company and shall not be disposed off unless after completion of their estimation reconsideration. 

If it is appeared that, the value of the funds presented in kind is less by more than one fifth of the founderís estimation, the company must reduce the capital by the percentage of the difference and the uncovered shares shall be canceled, provided that the partner may who shall pay in kind shall replenish the shortage by cash payment of its amount or withdraw from the company. 

Article 105 

Non-Payment of Share Value 

If the shareholder did not pay the value of his share after being notified by a registered letter and after lapse of thirty days from the date of publication of this notice as per legal methods, the Board of Directors may sell his share through one of the stock market agent or one of the banks or one of the specialized authorities, at his own expenses and risk. 

If the sale is not effected due to lack of a buyer, the Board of Directors may decide the prescription of the shareholders right and maintaining the paid amounts in addition to claim for compensation when necessary.

Article 106 

Additional Payment 

The Companyís memorandum of association may provide for obligating the shareholders to submit additional legal works other than money with statement of their kind, duration and methods of their performance, allocation therefore and the penalties to be imposed in case of non- performance thereof. The shares of these shareholders shall be nominal, which their ownership shall not be transferred unless by agreement of the Board of Directors. 

The obligations set out in this article may not be changed except by consent of all the shareholders, unless the memorandum of association indicates otherwise. 

2. Public Subscription 

Article 107 

Foundation of the Company through Public Subscription 

The foundation of the company which its capital shall not be less than the amount which is to be fixed by the resolution of the General Peopleís Committee through public subscription on the basis of a program showing its purposes, its capital and the main provisions set out in the memorandum of association and the share allocated to founders in the profits and the terms within which the memorandum of association shall be concluded and the method of notification and announcements. 

Before announcement of the program to the public, it shall be lodged with a notary public office signed by the founders and the signatures are formally approved. 

The subscription shall be put down in the formal instrument, in which the name, surname, fatherís name, nationality, country, work place, domicile, date of birth, number of identity card of the subscriber shall be indicated therein along with indication of the number of subscribed shares and the date of subscription.

Article 108 

Invitation of Subscribers 

After collection of subscriptions, the founders should inform to the subscriber by a registered letters or as per the method set out in the program a term not exceeding thirty days to deposit at least three tenths (3/10) of the value of the subscribed cash shares with one of the banks operating in Jamahiriya, provided that the shareholding of any person in company capital shall not be more than the percentage to be fixed by a resolution of the General Peopleís Committee. If such a term is ended without payment of the amount, the founders may either bring an action against the delayed subscribers or exempt them from the obligation. In the latter case the foundation of the company shall not be proceeded except after completion of the subscribed shares allocation which their holders delayed in payment. 

The founders shall convoke the subscriberís assembly, composed of all the shareholders in the company capital, within twenty days following the term fixed to make the payment provided for in the previous paragraph unless the establishment program fixes another term by a registered letter in the manner set out in the program, to be sent to each subscriber before at least ten days prior the date fixed for holding the assembly. The issues intended for consideration shall be shown in the invitation and an advertisement thereon shall be published in one of the national daily newspapers. 

Article 109 

Subscriberís Assembly 

The subscriberís assembly including the founders shall resolve the following matters: 

1. Satisfaction of the conditions required for company establishment. Contents of memorandum of association. 
2. Allocation of profits maintained by founders for themselves. 
3. Selection of members of the Board of Directors and Control Board. 
4. The same provisions which apply to the extraordinary general assembly as to the quorum required for the validity of the meeting and taking a decision shall apply to subscriberís assembly

Article 110 

Memorandum of Association 

Having implemented the measures required by the previous article, the attendance shall conclude a memorandum of association which should be lodged for registration in the Commercial Register within ten days from the date of its signature. 

Article 111 

Founders 

The founders are the persons who signed the program of foundation on company establishment through public subscription or who gave rise to its establishment. 

The subscribers should subscribe to not less than twenty percent (20%) of the shares and not more than fifty percent (50%) of the company capital, provided that the sharing of each natural person shall not be more than the percentage to be fixed by a resolution of the General Peopleís Committee. The rest shall be put into public subscription through the financial stock market. 

Before declaration of the program they should pay at least three tents of the subscribed cash shares unless the special laws provide for otherwise. 

Article 112 

Founders Obligations 

The founder shall be jointly responsible before third parties for the obligations which they have undertaken to establish the company. The company shall exempt the founders from those obligations and repay the expenses which they have incurred within the limits to be required by 

company establishment or what is decided by subscriberís assembly. If the company is not established for whatsoever reason, then the founders shall have the right to recourse to the subscribers. 

Article 113 

Founders Responsibility 

Founders are jointly responsible to the company and third parties for the following matter: 

1. Subscription to the full capital and payment of the monthly installments required for company establishment.
2. Availability of the components in kind according to an expert report. 
3. Validity of the data which they have revealed to the public for company establishment. 

Those in whose names the founders dealt shall be considered responsible at the same degree towards the company and their parties. 

Article 114 

Shares of Founders in Profits 

The founders may allocate for themselves according to the memorandum of association a part of the net profits in accordance with the annual balance sheet, not exceeding in total one tenth of those profits for maximum five years and they may not stipulate any other benefits. 

Second: Shares 

1. General Provisions 

Article 115 

Issue of Shares 

The capital of the joint-stock company shall be divided into shares equal in their nominal value and subject to circulation. The share shall be indivisible. But successors or those who own a share or shares in common may nominate their representative to exercise their rights in the company. If they failed to do so within the period to be fixed by the Board of Directors, then the Board shall nominate one of them. 

Article 116 

Shareís Core Data 

The share should include the following Basic Data: 

1. Companyís name, head office and duration. 
2. Date of memorandum of association, date and number of registration, commercial register office in which the company is registered.
3. Shareís nominal value, class and amount of company capital and number of the issued shares. 
4. Value of the paid installments, if the share value has not been paid. 
5. Special rights and duties. 
6. Signature of the companyís legal representative. 

The automatic signature shall be valid if the original form is lodged with the Commercial Register Office in which the company is registered. The signature may be informatics (electronic) as to be organized by law. 

Article 117 

Provisional Certificate 

The company shall deliver to each shareholder within three months following registration of the company in the Commercial Register a provisional certificate representing the shares which he owns. 

The certificate shall include particularly the name of the shareholder, number of the subscribed shares and how to pay their value, the amount paid out of this value date of payment, the serial number of the provisional certificate and the numbers of the shares which it represents, company capital and its head office. 

The company shall deliver the provisional certificate representing the shares from a coupons book; serial numbers shall be given to it and shall be signed by the Chairman of the Board of Directors and sealed by company seal. The provisional certificate can be also in the form of informatics documents (electronic) in the manner to be organized by law. 

Article 118 

Classes of Shares 

The company shares shall be nominal. It shall not be allowed to issue a share by less than its nominal value. It may be provided in the memorandum of association for restriction of disposal of the share by special conditions

Article 119 

Enjoyment Shares 

The company, if the articles of association allows, may issue enjoyment shares against the shares which their holders received their nominal value. The articles of association shall show the methods which should be followed. 

The enjoyment shares replaced by the amortized shares shall not entitled their holders to the right of selection in the General Assembly, unless the memorandum of association provides otherwise, but entitled their holders to participation in distribution of net profits after payment of a profit equal to the legal interest for shares which their value is not reimbursed. 

In case of liquidation, the enjoyment shares shall be given the right to participation in division of the remaining assets of the company after payment of other shares at their nominal value. 

Article 120 

Purchasing of Shares by the Company 

The company may not purchase the shares pertaining to it unless by the ordinary General Assembly permission, provided that the price shall be paid from the net profits and their value shall be paid in full. 

The right of selection arising out of the shares owned by the company shall be stopped. The Board of Directors should dispose thereof within one year from the date of its ownership, unless the Extraordinary General Assembly decides to cancel thereof and reduce the capital according to the value of such shares or replacing thereof by enjoyment shares. 

Article 121 

Registration of Purchasing of Companies Shares 

The companies may not invest the capital even partially for purchasing shares of a company which they control or shares of other companies which are subject to their control. 

The company is considered subject to control of another company when the controlling company has in its possession a number of shares enabling it to get the majority of opinions in the ordinary General Assembly or when the company becomes subject to control of another company according to certain 

restrictions in a special memorandum of association.

Article 122 

Prevention of Exchange of Subscription 

The capital of the company shall neither be allowed to be established nor to be increased by exchange of subscription by shares between it and another company even by other persons. 

Article 123 

Participations 

The company shall not be entitled to participate in works of other companies even if the same is allowed by the memorandum of association in general manner if the participation shall practically lead to essential change in company purpose provided for in the memorandum of association unless the same is intended for formation of a holding company. 

However, the company may own shares in other company exercising an activity different from its activity, provided that the percentage of that shareholding shall not exceed ten (10) percent of the capital of the latter company. If the two companies exercise the same activity, the previous percentage may be exceeded. 

Article 124 

Giving the Shares in Pledge 

In case giving the shares or the provisional certificates in pledge, the pledger creditor shall have the right to receive the profits and utilize the right to receive the profits and utilize the rights related to the share, including attendance of ordinarily General Assembly meetings and participation in their deliberations and the right of selection therein unless otherwise agreed in the pledging contract. 

The share owner shall reserve the right of selection in the extraordinary General assembly. 

Article 125 

One Shareholder 

Without prejudice to the provisions governing the holding companies, if the company did not meet its obligations arising out during the period in which the shares were in the hands of one person, such person shall be unlimitedly responsible for those obligations.

2. Preferred Shares 

Article 126 

Issue of Preferred Shares 

The shares give their owners equal financial and non-financial rights. However, it is allowable to issue shares entitling their owners with different rights either under the memorandum of association or according to amendments to be introduced thereto afterwards. 

Article 127 

Preference is Distribution of Profits 

Some shares of the company may have preference in distribution of the profits by being entitled to a certain percentage of the profits on conditions and dates to be defined by the articles of association. They shall also have the right of priority in payment of their profits for any years in which the profits were not distributed in addition to the profit decided thereto in that fiscal year. 

Article 128 

Limitation of Selection Right 

The preferred shares provided for in the previous article shall not enjoy the right to selection in the ordinary General Assembly unless the articles of association provides otherwise. 

If the shareholder did not receive profits during three successive years. The right to selection shall return to such shares. 

Article 129 

Percentage of the Preferred Shares 

The percentage of the preferred shares of limited selection shall not exceed half the capital of the company. 

If the application of the shareholders for preferred shares exceeded the percentage provided for in the previous paragraph, the shareholder shall be granted preferred shares each according to his shareholding in the company.

Article 130 

Transfer of Shares 

The company articles of association may provide for transferability or replacement of any class of shares issued thereunder into another class by a request of the shareholder and company approval according to the percentages and the method defined in the articles of association. 

Article 131 

Special Assemblies 

If there are different classes of shares, the owners of such shares collectively in their respective special assembly shall agree on the resolutions to be taken by the General Assembly if those resolutions prejudice their rights. In the respect of the validity of holding of the special assemblies and their resolutions, the rules governing the extraordinary Assemblies shall be respected. 

3. Shares Circulation 

Article 132 

Prohibition of Shares Circulation 

The shares may not be circulated except after publication of the approved annual balance sheet, profits and losses accounts for a period not less than one year. 

With exception of provision of the previous paragraph, the ownership of shares may be affected by transfer between the shareholders. 

Article 133 

Suspension of Registration of Transfer of Shares 

The Board of Directors may suspend registration of transfer of shares during the period between the date of convening the General Assembly meeting and the date of its holding. 

Article 134 

Prevention of the Company from Granting Loans on its Shares 

The company may neither pay in advance any guaranteed thing in its name nor lend funds to a third party if the purpose thereof is to purchase its shares thereby.

Article 135 

Disposal over Nominal Shares 

The company shares are transferable, however, the sale of the nominal shares or provisional certificates shall not be applicable to the company or third partyís right unless written down in a special register. 

Registration shall be in presence of the contracting parties or their representatives and company representatives. The company may reject registration of the sale in the following cases: 

1. If the shares are pledged or detained by court resolution. 
2. If the shares or the provisional certificates are lost and no new certificates or shares are given in substitute. 
3. If the sale or transfer of ownership is contrary to the Law or the memorandum of association or the articles of association of the company. 
4. If the company has a debt on the shareholder, it shall have the right to suspend registration of sale of his shares, until full payment of his debt. 

The share may also be circulated by informatics dealing (electronic) in the manner to be organized by the law. 

Article 136 

Responsibility for Disposal over Shares which their Value is Unpaid 

Anyone who transferred shares which their value is not paid in full to others he shall be responsible with them for payment of the unpaid installment for three years with effect from the date of transfer. 

The shareholder who disposed over the share may not be asked to pay the installments except if claiming of the possessor of shares is failed. 

Article 137 

Restrictions on Circulation of Shares 

With exception of cases of succession, the transfer of shares to a third party may be subject to approval of the Board of Directors if the same is provided for by the memorandum or articles of association. In this case the application for approval must include the name of names of the assignees, number of shares intended for transfer and the price agreed upon.

Article 138 

Approval of the Company 

The Company approval shall be explicit or implicit after sixty days from the date of submission of application for approval to transfer the shares. 

If the company did not approve transfer of the shares, the Board of Directors must find, within ninety days from the date of notification of rejection, another purchaser amongst the shareholders or a third party. The Board of Directors also may strive for purchasing of those shares by the company in order to reduce afterwards the capital by their value. 

If agreement is not reached on the price, an expert to be nominated by the competent Court of the First Instance shall fix thereof. If the term indicated in this paragraph is ended without finding a purchaser by the company, it shall be considered as an approval for transfer of share. 

Article 139 

Lapse of Circulation Prohibition 

The conditions related to preference or approval or other restrictions limiting circulation of shares shall be considered canceled in case of enforcement on shares due to non-payment of their nominal value or insertion of shares in the financial stock market. 

Article 140 

Approval for Giving Shares in Pledge 

If the company agreed for giving shares in pledge, this shall be considered as a prior approval for transfer the shares given in pledge to their purchaser in case of enforcement thereof. 

Third: Amendment of the Capital 

1. Capital Increase 

Article 141 

Conditions for Capital Increase 

By a resolution of the extraordinary General Assembly, the company capital may be increased. The capital may not be increased by cash allotments except after full payment of the subscribed capital by the shareholders.

The memorandum of association may provide for authorization of the Board of Directors with power to increase the company capital once or more by issuing ordinary shares in the limits of a certain amount, provided that the duration of such power shall not exceed one year from the date of registration of the company in Commercial Register. This authorization may be empowered to the Board of Directors by an amendment to be introduced to the memorandum of association during existence of the company and shall remain in force for one year from the date of the resolution adjudicating thereof. 

The resolution of the Board of Directors in respect of company capital increase should be registered in the concerned Commercial Register within ten days from the date of the increase realization. 

Article 142 

Methods of Capital Increase 

The capital shall be increased by one of the following methods: 

1. Issue of new shares at the increase value and at the same nominal value. 
2. Increase of nominal value of the original shares. 
3. Transfer the transferable loan bills into shares. 

Article 143 

Coverage of the Value of Increase in Capital 

The value of increase in the capital shall be covered by one of the following means: 

1. Payment of additional amounts or allotments in kind by shareholders or others. 
2. Transfer of the surplus of the legal reserves or other reserves or carried over profits to new shares to be distributed to shareholders free of charge at the proportion of the old shares possessed by each of them. 
3. Transfer of debts due to the company to shares.

Article 144 

Distribution of New Shares 

The new shares shall be distributed to the shareholders at the proportion of shares which they own, provided that they shall not exceed the shares which they have requested. 

The rest of the new shares shall be distributed to the shareholders who have applied for more than the proportion of the shares which they own according to provision of the previous paragraph. 

The rest of the new shares shall be offered for public subscription and the provisions related to public subscription on company foundation shall be followed therein. 

Article 145 

Increase of Capital through Public Subscription 

In case of offering new shares for public subscription, an announcement for subscription shall be written, including particularly the following data: 

1. Reason for capital increase. 
2. Resolution of the extraordinary General Assembly for capital increase. 
3. Company capital on issue of new shares, amount of the proposed increase, number of the new shares and allowance of the issue. 
4. Statement of the elements in kind provided as a portion of capital increase. 
5. Statement of the average profits distributed by the company during the three years preceding the resolution of capital increase. 
6. Declaration from Control Board on validity of the data set out in the circular and correspondence of legal conditions of the capital increase. 

The announcement shall be signed by the chairman of the Board of Directors and Chief of the Control Board and shall be responsible jointly for the validity of the data set out therein.

Article 146 

Issuance Allowance 

The nominal value of the new shears shall be equal to the original shares. The extraordinary General Assembly may decide the issuance allowance, in addition to the nominal value of the shares. Its value shall be fixed and the net of this allowance shall be added to the legal reserves until it reaches to the amount fixed in the articles of associations. 

Article 147 

Right of the Shareholder Priority 

The shareholders shall have subscription priority in new shares unless the extraordinary General Assembly decides otherwise for reasons required by the company interest. 

Statement shall be published in one of the daily newspapers, including declaration of the shareholders priority in subscription, date of its opening, date of its closure and the rate of the new shares. In addition, the shareholders may be notified of registered letters or by others means of communication. 

Each shareholder should express his desire in using his right in subscription priority in new shares or dispose over such rights during thirty (30) days from the date of the declaration set out in the previous paragraph. 

Article 148 

Increase of the Capital by Shares in Kind 

In evaluation of the shares in kind to be provided on capital increase, the provisions established in evaluation of the shares in kind on company foundation shall be followed. 

Article 149 

Cancellation of Capital Increase 

If the subscription to increase of the capital is not complete, the subscription shall be cancelled unless the extraordinary General Assembly decides to content with the subscribed amount.

Article 150 

Registration of Capital Increase 

The legal representative of the company shall register the capital increase in the concerned Commercial Register within ten days from the date of realization of the increase by submitting a certificate proving payment of the payable portion of the cash shares and the minutes of evaluation of the shares in kind. 

The capital increase may not be mentioned in company documents and instruments except after finalization of registration. 

2. Capital Reduction 

Article 151 

Conditions of Capital Reduction 

If it is appeared that the company capital is more than the amount required by its purposes, the extraordinary General Assembly may reduce it through exemption of the shareholders from payment of their remaining installments or through reimbursement of a portion of the capital to them in the limits allowable by the Law. 

The reduction resolution shall not be issued except after recital of report of the Control Board and external auditor, if any, on its imperative reasons, about companyís obligations and on effect of the reduction on these obligations. 

The reduction shall not be a pretext against the creditors, whose debts arose out prior to registration of the reduction resolution in the Commercial Register, who expressed their objections within sixty days from the date of registration, and submitted their documents to the competent Court on the said date, unless these creditors have received their current debts or obtained sufficient guarantees for payment of their term debts. 

Article 152 

Reduction Due to Losses 

When it has been clear that the company capital was reduced by an amount more than one third of it due to losses, the Board of Directors shall convoke the extraordinary assembly expeditiously to take the appropriate arrangements.

Report on the companyís financial position accompanied by statement containing comments of the Control Board must be presented to the General Assembly. 

A copy of the Board of Directors report and Control Board statement shall be lodged with company head office for the eight days period preceding the date of holding the General Assembly so that he shareholders shall be able to peruse thereof. 

During the second fiscal year, if it is appeared that the losses did not fall to less than one third, the assembly which considers the balance sheet of that year shall decide reduction of the capital by the portion of the realized losses, otherwise the Board of Directors and the Control Board shall issue an order from the Court in respect of reduction thereof by the amount of the losses mentioned in the balance sheet. 

The Court shall have the right to issue an order for the required reduction of the capital upon a resolution to be issued following opinion of the public prosecution, and the Board of Directors shall register the resolution in the commercial registration. 

This resolution may be complaint against to the Court of Appeal during thirty days from the date of registration. 

Four: Company Bodies 

1. General Assembly 
2. General Provisions 

Article 153 

Assembly Constitution 

The companyís General Assembly shall be composed of all the shareholders. It shall be held by two bodies: Ordinary General Assembly and Extraordinary General Assembly. 

The meetings of the General Assembly shall be in the place where the company head office is located, unless the articles of association provides for otherwise.

Article 154 

Convocation of the General Assembly 

The Board of Directors shall convoke the General Assembly for holding by an advertisement in one of the daily newspaper, in addition to any electronic or normal means of communications showing the day of the meeting, hour, place and agenda before at least fifteen (15) days from the date fixed for the meeting. 

The agenda of the ordinary General Assemblies may include the item of (the jobs to come) in addition to any topics presented by shareholders representing then percent of the capital, provided that the same shall be submitted to the 

Board of Directors before five days from the date fixed for holding the General Assembly, then the assembly president must mention these agendas in the beginning of the assembly meeting and to be added to the items set out in advertisement provided agreement of the majority of the attendance. 

If those formalities are not observed and the capital is represented in full in the meeting which is attended by the Board of Directors and Control Board, then this General Assembly is considered as validly held. However, any of the members representing the capital may protest against consideration of the issue which he have no sufficient information thereabout. 

Article 155 

Convocation of the General Assembly by a Minority of Shareholders 

The Board of Directors shall convoke the General Assembly without delay, if the same is requested by a number of shareholders representing at least one tenth of the company capital and they showed in their request the issues intended for discussion. If the Board of Directors did not do so or the Control Board instead of it, the president of the Court of the First Instance shall, upon request of those shareholders, convene the General Assembly by an order to be issued by him, indicating therein the person who will preside over the meeting. 

Article 156 

Attendance of the Meeting 

The General Assembly meeting may be attended by the shareholders whose names are written down in the company register before at least five (5) days to the meeting date, as well as for the shareholders who deposited, during the same period, their shares with main office of the company or one of the banks shown in the convocation.

Article 157 

Assembly Presidency 

The General Assembly shall be presided over by the person nominated in the memorandum or articles of association. If the memorandum or the articles of association does not provide for nomination of the president or absence of the nominated person. The attendance shall have the right to nominate the president in a preparatory meeting to be presided over by the Chairman of the Board of Directors. 

The Assembly president shall assume nomination of the Secretary and two persons to Court votes. 

Article 158 

Deputation in Attending the Assembly Meeting 

The shareholders may depute their representatives in the General Assembly unless the memorandum of association provides otherwise. 

The deputation and its respective documents should be in writing and to be kept at the company head office. The members of the Board of Directors or the General Managers shall not represent the shareholders in the Assembly. 

Article 159 

Conflict of Shareholders Interest 

A shareholder may not select over resolutions in which he has direct or indirect interest to himself or to the account of others whom he represents or deputies contrary to the company interest. In case of violation the issued resolution shall be contestable, if it is appeared that unless the voting of the shareholders who should have been refrained, the required majority would not have been realized and it was the nature of the resolution to inflict damage to the company. 

The Board of Directors may not select over the resolutions related to responsibility of its members. The shares which do not entitle the right of selection under this article shall not be counted except for the purpose of getting the required quorum for validity of the meeting. 

Article 160 

Assembly Resolutions 

The resolutions to be taken by the General Assembly according to the law, memorandum and articles of association shall be binding to all the shareholders. The Board of Directors, the Control Board and absent and opponent shareholders may contest against the validity of the taken resolutions if involved violation of the law or companyís memorandum and articles of association. 

The effects of cancellation of the resolution shall apply to all the shareholders. The Board of Directors is considered bound to take the actions consequent upon cancellation in execution of this resolution the rights gained by the third parties in good faith shall not be prejudiced. In accordance with provisions of this law, the cancellation of the resolution shall not be valid if substituted by a resolution correcting the defects of the first resolution according to provisions of this law. 

Article 161 

Formalities of Contestation against Assembly Resolutions 

The contestation shall be brought before the Court of the First Instance where the company main office is located in its jurisdiction. The Court president shall impose on the contestant by a resolution to be issued by his provision of suitable guarantee to face the possible damages which may occur and entail compensation. The contestation must be brought within sixty (60) days from the date of issue of the contested resolution or from the date of registration if the resolution is subject to registration in the Commercial Register. All the contestations related to the same resolution shall be considered all at once and resolved by one judgment. 

The president of the Court or the examining magistrate shall arrest execution of the contested resolution by a causative decision if requested by the contestant and existence of important reasons imposing such decision after hearing the statements of the Board of Directors and Control Board, and the decision shall be notified to the Board of Directors. 

Article 162 

Second Convocation for Assembly Meeting 

If the established quorum for validity of the meeting is not complete, the General Assembly must be convocated once again. 

The date of the second meeting may be fixed in the first advertisement, provided that the two meetings shall not be on the same day. If the first advertisement did not mention the date of the second holding of the assembly, a new advertisement must be published within thirty (30) days from the date of the first meeting.

1. Ordinary General Meeting 

Article 163 

Powers of the Assembly 

1. Presentation and discussion of the report of the Board of Directors, Control Board and the external auditor. 
2. Approval of financial statements (balance sheet and profits and losses account). 
3. Approval of profits distribution. 
4. Selection of the Board of Directors, chairman and member of the Control Board and fixing their remuneration as well as nomination of the external auditor and fixation of his fees. 
5. Consideration of issues to be presented by the Board of Directors, as well as affairs regarding responsibility of the Board of Directors and Control Board. 
6. The General Assembly may not discuss other than the matters included on the agenda. However, it may discuss the dangerous facts which may be revealed during the meeting, in which their presentation to the assembly shall be requested by a number of shareholders representing at least ten (10) percent of the capital. 

The Ordinary General Assembly may hold a meeting at least once a year during the four months following the end of the company fiscal year. 

If special circumstances require, the term may be extended, provided that it shall not exceed six months from the end of the previous fiscal year. 

Article 164 

Quorum of the Ordinary General Assembly in the First Meeting 

The Ordinary General Assembly shall be considered validly held if attended by a number of members representing at least half the company capital, with exception of shares of limited voting right. 

The assembly shall take its resolutions by the majority of the actual capital, unless the memorandum or the articles of association provides for a higher majority.

Article 165 

Quorum of the Ordinary General Assembly in the Second Meeting 

The second meeting of the General Assembly shall be valid whatever the number of the attendance may be and whatever the value of the capital which they represent may amounted to consideration may not be taken into other than what is contained in the agenda of the first meeting. Resolutions shall be taken by majority of the present capital. 

Article 166 

Minutes of Assembly Resolutions 

The resolutions of the General Assembly should be written down in a minutes to be signed by the president of the session, secretary or a notary public. The summary of the shareholders statement should be written down in the minutes if they requested thereof.

2. Extraordinary General Assembly 

Article 167 

Powers of the Extraordinary General Assembly 

The powers of the Extraordinary General Assembly shall be restricted to looking into amendment of the memorandum and articles of association, issue of loan securities, nomination of liquidators, definition of their powers 

according to law. The Extraordinary General Assembly shall be concerned also with agreement on resolutions of the Board of Directors related to disposal of more than half the company assets. 

Article 168 

Quorum of the Extraordinary General Assembly in the First Meeting 

The Extraordinary General Assembly shall be considered validly held if attended by a number of shareholders representing more than two thirds of the company capital. The resolution of the Extraordinary General Assembly shall be taken by majority representing more than half the company capital, unless the memorandum or the articles of association provides for the necessity of getting a higher majority.

The members of the Board of Directors, Control Board, absent shareholders and opponent may contest against the validity of the resolution taken contrary to the law or to the memorandum of association according to provisions of Article 160. 

Article 169 

Quorum of the Extraordinary General Assembly in the Second Meeting 

If the quorum was not complete in the first meeting, the second meeting of the Extraordinary General Assembly shall be valid by attendance of a majority exceeding half the capital, unless the memorandum or the articles of association provides for the necessity of getting higher majority. The resolutions shall be taken by a majority exceeding one third of the company capital. 

In all the cases, if the agenda of the Extraordinary General Assembly meeting includes modification of the company purposes or transfer thereof or dissolution prior to the decided term or removal of its head office abroad or issue of preferred shares, the validity of the resolutions to be taken in the second meeting should obtain the approval of more than half the company capital. 

The resolution to be taken in the second meeting shall be subject to contestation according to provisions of Article 160. 

Article 170 

Unavailability of the Quorum 

If the quorum necessary for the validity of taking resolutions in the second meeting is not complete, the Extraordinary General Assembly shall not be convened for discussing the same items unless after lapse of six months from the validity of the meeting holding and resolution taking the provisions of Article 168 of this Law shall be applied. 

Article 171 

Reduction of the Extraordinary General Assembly Minutes 

A formal notary public shall assume execution of the minutes of meeting of the Extraordinary General Assembly. The resolutions taken in this meeting and a summary of the shareholders statements if they requested so shall be written down in the minutes.

2. Company Management 
3. Board of Directors

Article 172 

Powers of the Board 

The company management shall be assumed by a Board of Directors from the shareholders or others. If the General Assembly did not nominate a Chairman of the Board of Directors, the members shall select him amongst themselves. The chairman of the Board should be a natural person. 

The Board of Directors shall have the right to take all the resolutions and conclude all the disposals necessary for achieving the company purpose and activity. However, it should present the resolutions, which lead to disposal of more than half the company assets, to the Extraordinary General Assembly for approval. 

The Board of Directors shall hold its sessions at the head office of the company, unless otherwise stated by the articles of association. 

Article 173 

Board of Directors nomination 

The General Assembly shall be concerned with Board of Directors nomination if not nominated under the memorandum of association. The subscriberís assembly shall assume the first Board of Directors of the Company. 

A member who is disqualified or lacking qualification or declared his bankruptcy unless rehabilitated or convicted for a crime or felony breaching the honour or fidelity may not be nominated in the Board of Directors. If anyone of those members is nominated, such nomination shall be null and void. 

The public and private persons shall assume nomination of their representatives in the Board of Directors and their removal or replacement. These representatives are civilly and criminally responsible for performance of their tasks in the Board of Director. The legal persons which they represent are considered as their guarantors in performance of these tasks.

Article 174 

Duration of the Board of Directors 

The duration of the Board of Directors shall be three renewable years, unless the memorandum or the articles of association of the company states otherwise. 

The General Assembly may remove the Board of Directors wholly or partly even if it has been nominated under memorandum of association. The removed members shall reserve his right to compensation if the removal is unjustified. 

Article 175 

Multiplication of Membership 

No member may, in his capacity or his capacity as a representative of others, combine the membership of the Board of Directors to more than three joint stock companies, and each membership decided to violate the provisions of this Article shall be null and void, and the nullity shall apply to the most recent membership.

Article 176 

Registration of Nomination Resolution 

The Board of Directors shall ask for registration of its nomination resolution with the concerned Commercial Register Office within ten days from the date of nomination, with statement of the name of each of them in triple, his surname / fatherís name, home country, place of work, domicile, date of his birth and his identification number. 

Article 177 

Job Assignment 

The member of the Board of Directors who assigns his post should notify the Board of Directors and the Control Board Chief in writing. The assignment shall leave its effects immediately if the majority of the Board of Directors is existing, unless from the date of availability of such majority to the Board due to admission of the new member to such task.

Article 178 

Vacancy of a Post 

If a post of one or more members of the Board of Directors becoame vacant during the fiscal year, the remaining members must nominate one to replace him by consent of the Control Board. The members so nominated shall keep their posts until the first meeting of the General Assembly. 

If the membership of the majority of the Board became vacant, those who remain on office should convene the General Assembly to complete nomination of its member. The assignment of the members nominated by the assembly shall terminate with termination of the tenure of the members existing at the time of their nomination. 

If the post of all the members of the Board is vacated, the provisions of the second paragraph of Article 203 member must be applied. 

Article 179 

Validity of Board Resolution 

It is stipulated that the resolutions of the Board of Directors shall be valid by consent of absolute majority of its members, unless otherwise provided for in the memorandum or Articles of Association on higher majority. 

The member of the Board of Directors shall not delegate another person on his behalf. Any vote to be given on behalf of any absent member shall be null and void. 

Article 180 

Legal Representative of the Company 

The Chairman of the Board of Directors shall be considered as the company legal representative. He shall assume also the tasks of the General Manager if such function is not entrusted to another person. He must lodge the specimen of his signature with concerned Commercial Register Office. 

Article 181 

Conflict of Interests 

The Chairman of members of the Board of Directors shall not be a party in any compensation contracts to be concluded with the company except with prior permission of the General Assembly. Any contract concluded contrary to that shall be null and void.

If the Chairman or a member of the Board of Directors has interest in an operation or a transaction for his own account or for the account of one of his relatives up to the fourth degree or for the account of the party which he represents or deputates contrary to the company interest, he should inform the Board of Directors and the Control Board thereof. He should refrain also from participation in deliberations in respect of that operation or transaction. If the member violates this prohibition he shall be responsible for the losses which the company may incur due to completion of the operation or the transaction. 

The absent or the opponent members of the Board of Directors or the Control Board may challenge the Board resolution within three months from the date of the resolution, if in its nature to inflict damages to the company and it would have been difficult to get the necessary majority without the vote of the member who should have been refrained from voting. 

The rights gained by a third party, in good faith, in implementation of this resolution shall not be prejudiced.

Article 182 

Board of Directors Responsibility 

The Chairman and member of the Board of Directors should improve the performance of duties legally imposed upon them according to the memorandum of association and in the manner requires by the law in the respect of the agency. They shall be jointly responsible to the company for the damages to be inflicted upon it due to non-performance of those duties. 

In any case, the Chairman and members of the Board of Directors shall be jointly responsible for the lack of attendance to good progress of the company works in general and for not affording efforts to prevent occurrence or removal or mitigation of the burden of consequences of the harmful acts in spite of their knowledge thereof. The responsibility shall not be extended to a party who did not commit an error and confirmed, without delay, his objection in the minutes of the session and resolution of the Board and immediately advised the Chief of the Control Board thereof. 

Article 183 

Obligations of the Board of Directors 

Prior to at least seven days to the holding of the General Assembly which will be convened for consideration of the Board of Directors report, the Board of

Directors shall put annually at the disposal of the shareholders, for their respective information, a detailed statement, signed by the Chairman of the Board of Directors, containing the following: 

1. All the amounts received by the Chairman of the Board of Directors and each of the Board members during the fiscal year as to wages, salaries, and fees against attendance of the Board sessions, expenses, allowances as well as the amount received by each of them in form of a commission or otherwise in his capacity as a technical or administrative official or agent, any technical or administrative or advisory job performed for the company. 
2. Advantages in kind which are enjoyed by the Chairman and members of the Board of Directors during the fiscal year as a car, houses or a like. 
3. Remunerationís, dividend allocations which the Board of Directors propose to distribute to each of its members, as well as the amounts allocated to each of the present and former members of Directors as a pension or indemnity for the end of services. 
4. Donations with statement of details and good reasons for each donation. 

The Control Board and the external auditor should ascertain of the availability of such statement and reference should be made thereto in their reports. 

Article 184 

Company Right to Responsibility Lawsuit 

The lawsuit of responsibility of the Board of Directors shall be brought upon a resolution of the General Assembly even if the company was in stage of liquidation. 

The resolution regarding responsibility of the Board may be taken during the balance sheet discussion even if it is not mentioned on agenda. 

The resolution on institution of the responsibility lawsuit shall result in removal of the responsibility provided that the resolution should have been taking by a majority representing at least on fifth of the company capital. In this case, the assembly shall take the initiative to nominate their successors. 

The company may assign the responsibility lawsuit as well as it may conclude a reconciliation in that respect, if the General Assembly decided expressly to assign or reconcile and there was no counter voting by a number of partners representing no less than one fifth of the capital.

Article 185 

Responsibility towards Company Creditors 

The Chairman and members of the Board of Directors shall be responsible towards company creditor for non-performance of duties related to maintenance of the company components and keeping them complete. 

The creditors are entitled to bring a case when it shall be clear that the company properties are not sufficient to payment of their debts. In case of company bankruptcy, the receiver in bankruptcy shall be entrusted to bring the case. 

The creditors shall reserve their right to bring the case even if the company assigned the case of the Board of Directors responsibility or concluded a reconciliation n this respect. 

Article 186 

Personal Case by Shareholders or Third Parties 

The provisions of the previous articles shall not prejudice the rights of the shareholder or a third party with Board of Directors to claim compensation for the damages fallen directly upon him because of their acts due to an error or deception

2. The Executive Committee 

Article 187 

Committee Formation 

The Board of Directors may delegate some of its powers to the Executive Committee composed of some of its members or to one its members, provided that the Board shall determine the extent of such delegation in delegation resolution. 

The delegation shall not be extended to what is related to preparation of the balance sheet and amendment of the capital. 

Article 188 

Responsibility of the Board for Committee Acts 

Without prejudice to provision of Article (182) the Board of Directors shall remain responsible for its negligence in following up implementation of the delegation granted according to provisions of the previous Article.

3. General Managers 

Article 189 

Nomination of the General Managers 

If the Articles of Association provides so, the Board of Directors shall nominate a General Manager from amongst its members or from outside the Board. 

It shall also have the right to nominate Assistant General Manager and Managers of Departments as per the cases and according to rules to be shown by the Articles of Association. 

Article 190 

Managerís Representative Authority 

The General Managers shall have the authority to represent the company as related to powers vested in them, without prejudice to third partiesí rights in good faith. 

Article 191 

Conflict of interest

The provisions related to conflict of interest applicable in respect of members of the Board of Directors shall apply to the General Manager. 

Article 192 

Responsibility of the Manager 

The General Managers shall be accountable for implementation of their tasks in the same manner of accountability of members of the Board of Directors in the limits of their powers. 

Article 193 

Prohibitions on Managers 

The General Manager shall not be a Chairman or a member of a Board of Directors of another company without prior permission of the Board of Directors. 

He shall not gather between memberships of Board of Directors of more than two companies. Any membership established contrary to provisions of this Article shall be considered null and void and the invalidity shall apply to the most recent membership.

Article 194 

Attendance of Board Meetings 

The General Manager should attend the meetings of the Board of Directors, they shall have right to participate in its deliberations without having the right to selection. 

They should attend also the meetings of the Executive Committees if they asked to do so.

Article 195 

Definition of Tasks and Remunerations 

The Board of Directors shall define the tasks and duties entrusted to General Managers. It shall fix also their remunerations and advantages. They shall have the right to claim compensation if they are removed without a reasonable cause. 

3. Control Over the Company 
4. Control Board

Article 196 

Constitution of Control Board 

The Control Board shall be composed of three acting members; one of them shall be a holder of a university degree in Accounting and another holding a university degree in Law. 

Two reserve members should also be nominated to the Board, satisfying the conditions stated in previous paragraphs. 

The member of the Control Board either a shareholder or not shall satisfy the conditions stipulated on members of the Board of Directors. 

The General Assembly shall be concerned with the nomination of the Control Board. It also assumes fixation of the remuneration of its Chief and members. 

In case of shareholding of one of the public or private legal persons, that authority shall assume nomination of its representative in the Control Board, provided that he shall satisfy the necessary conditions. Such representative shall be civilly and criminally responsible for performance of his tasks in the

Control Board. The legal person which he represents shall be his guarantor in performance of such task. 

When the State nominates one controller or more, the Board Chief shall be selected from amongst those who are nominated by the State. 

The Articles of Association of the Banks subject to supervision of the Central Bank of Libya shall not provide for nomination of the Control Board and to substitute if by other controlling methods. 

Article 197 

Nomination Objections 

It shall not be right to nominate in the Control Board a person having a kinship or affinity to the fourth degree with the Chairman or one of the Board of Directors members, on the General Managers of the Company, as well as anyone who has relation with the same company or other companies which are subject to its supervision under a continuous relation of paid employment. If one of those persons is nominated contrary to provisions of this Article, his nomination shall be null and void. 

Also, one who has been a Chairman or a member in Control Board of another company shall not be nominated in the Board of Directors of the company except after three years of expiry of his employment in Control Board. 

Article 198 

Nomination of Controller and Termination of their Task 

The Chief and members of the Control Board for the First Party by the subscriberís assembly if they are not nominated in the memorandum of association of the company. Afterward, they shall be nominated by the shareholders Ordinary General Assembly; they shall be nominated for three renewable years and shall not be removed except for a reasonable reason. 

The validity of resolution of their removal requires approval of the competent Court of the First Instances by a resolution to be issued after hearing the statements of the Chief or the member of the Control Board to be dismissed. 

The Board of Directors shall register the resolution of nomination of the Control Board and termination of its task in the concerned Commercial Register within ten days from the date of the resolution.

Article 199 

Replacement of Controllers 

In case of death of one of the Control Board members or assigns his post or lapse of his membership, he shall be replaced by the eldest of the Board reserve members, with consideration of filling up the gap of the missed specialization in the Board. He shall remain in his office until holding of the first General Assembly which will nominate the acting and reserve controllerís necessary for completion of the Control Board in the manner requires by Article 196. The task of the Controller so nominated shall expire with expiry of the tenure of the Acting Controllers. 

Article 200 

Duties and Powers of the Controllers 

The Control Board must control the Company Management; ensure the legal progress of its works and the validity and legitimacy of the Memorandum of Association. It must ensure keeping of books and accounting documents of the company as per regularly and legally established rules. Also, to ensure conformity of the balance sheet, profits and losses account with results confirmed in records, accounting documents and books of the company. It shall verify observance of the provisions prescribed in evaluation of the company components as per Article (228). 

The Control Board shall also verify at least every three months the availability of financial and securities values of the company, either owned or pledged with it or kept on the basis of guarantee or consignment or guardianship. The member of the Control Board, even individually, shall require from the Board of Directors or the General Managers information about progress of the company work or on certain operations. The verification and investigations shall be written down in the register of the Control Board meetings and resolutions. 

Article 201 

Meetings and Resolutions of the Control Board 

The Control Board shall meet at least once every three months. If a member is absent without acceptable reason from attendance of two meetings in the same financial session, he shall be considered as assigning his task. 

The Committee shall execute a minutes of its meetings to be registered in its respective register and to be signed by the meeting attendance.

The Committee shall take its resolutions by absolute majority, and the opponent shall have the right to confirm the reasons of his opposition. 

Article 202 

Participation in Board of Directors and General Assembly Sessions 

The Control Board must attend the Board of Directors and General Assembly sessions; it may also attend the Executive Committee sessions. 

If the Chief or one of the Control Board members was absent, without acceptable reasons, from attendance of the General Assembly sessions or fromattendance of two sessions of the Board of Directors during the fiscal year of the Company they shall be considered as assigning their task. 

Article 203 

Duties of the Controllers on Negligence of the Board of Directors 

The Control board shall convene the General Assembly and shall publish the advertisements imposes by law whenever the Board of Directors neglects to do so. 

It should convene also the General Assembly for nomination or completion of the Board of Directors if the number of its members decreases for any reason whatsoever from the quorum required for the validity of the meeting. In case of necessity it shall have the right to request the competent court to nominate a judicial administrator until nomination of the Board of Directors. 

Article 204 

Controllers Responsibility 

The Control Board members should improve the performance of their duties in the manner required by the law in the respect of the agency. They are responsible for the validity of their witnesses. They should keep the secrecy of the works and documents which they see ex-officio. They are also jointly responsible with the Board of Directors for their acts or negligence, if it is appeared that the damage would not have been occurred if they have performed their required task diligently and carefully. 

The action of responsibility of members of the Control Board shall be subject to the same provisions established in respect of the Board of Directors responsibility.

Article 205 

Complaint to Control Board 

Any shareholder may notify the Control Board of anything entails complaint. The Board must pay attention to the complaint and shall make reference thereto in its report to the General Assembly. 

If the complaint is brought by a number of shareholders representing a portion of twenty fraction of the capital, the Control Board should immediately conduct investigation in the complaint subject matters and shall submit the result and proposal, it deems appropriate to the General Assembly. If it appeared that the complaint is serious and its handling requires immediate action it shall convene the General Assembly. 

Article 206 

Recourse to Jurisdiction 

If it is appeared, according to conduct of the company affairs by the Board of Directors or Control Board any inspiration of suspicion and that they are negligent in performance of their duties, the partners who represent one tenth of the company capital may bring their complaint to the competent court of the First Instance. 

The Court shall have the right to order for inspection of the company management at the expenses of the complaining parties, after hearing the statements of the members of the Board of Directors and control Board in consultation room and to impose submission of guarantee, if necessary, on the complaining parties. If the actual misconduct is confirmed to the court, it may order for precautionary measures as it deems appropriate and to convene the General Assembly for taking the appropriate resolutions. 

The public prosecution shall follow the same measures provided for in the first paragraph of this article. In this case the company shall bear the inspection costs. 

Article 207 

Nomination of a Judicial Administrator 

In very dangerous cases the Court may remove the Board of Directors and the Control Board and nominates a judicial administrator and defines his powers and duration of his task. 

The judicial administrator may bring a responsibility action against the Board of Directors and the Control Board. The judicial administrator shall, prior to expiry of his task, convene the General Assembly under his chairmanship for nomination of new Board of Directors and Control Board or to consider his proposal to put the company under liquidation if necessary. 

2. External Auditor 

Article 208 

Duties of the Extend Auditor 

With exception of provisions of the Article (18) of this law. An external auditor or more persons licensed to practice such trade shall check the financial statements of the company to be presented to the General Assembly in its ordinary annual holding session. 

He shall be responsible for performance of his task at the same manner in which the Chief and members of the Control Board are accountable in the limits of that task. 

Article 209 

External Auditorís Report 

The external auditor should submit a written report containing his opinion on accounting and financial matters of the company, particularly the following: 

1. Soundness of company accounts, validity of the final financial data and conformity of these accounts with provisions of the law, related laws and companyís articles of association. 
2. Implementation of the approved accounting standards (effective) by the company, particularly those related to books keeping, inventory of companyís assets and obligation and the method of presentation of the final financial data. 

Article 210 

Necessity of Data Presentation 

The Company Management (Board of Directors and Managers) should present the final financial data to the external auditor for revision within sixty days to the end of the fiscal year.

The external auditor shall complete the accounts audit and present his report to the General Assembly of the company within no more than forty-five days from the date of receiving the financial data. 

Article 211 

Registration of Reports in the Commercial Register 

A copy of the minutes of meeting of the General Assembly, Board of Directors report, Control Board report and report of the external auditor shall be sent to the concerned Commercial Register within ten days from the date of their approval by the General Assembly. 

Five: Loan Securities 

Article 212 

Conditions of Securities Issuance 

The company may issue nominal loan securities to their holder at amounts not exceeding the paid up capital according to the latest approved balance sheet. 

The company may not issue loan securities except after full payment of the subscribed capital. 

Article 213 

Lodgment and Registration of the Resolution 

The Ordinary General Assembly must agree on issuance of the loan securities unless resulting in variation of company capital. It should be registered in the concerned Commercial Register within ten days from the date of the agreement. The resolution of the General Assembly shall not be implemented except after its registration in the Commercial Register and shall be subject to complain against before the competent court by the former creditors within thirty days from the date of registration. 

Article 214 

Reduction of the Capital 

The Company which issued loan security shall not decide to reduce its capital except to the extent of the depreciated securities. If it decided reduction of the capital due to losses, the evaluation of the legal reserve should be continuous on the basis of the existing capital at the time of securities issuance, until the total of the company capital and the legal reserve become equal to the amount of the circulated securities. 

Article 215 

Contents of Loan Security 

The loan securities should contain the following: 

1. Company name, purposes, head office and the Commercial Register Office in which it is registered. 
2. Company capital at the time of loan securities issuance. 
3. Date of the assembly resolution and date of its registration in the register. 
4. Total of the issued securities, the nominal value of each security, interest rate mode of payment and mode of depreciation. 
5. Guarantees on which it depends. 

Article 216 

Transfer of Securities into Shares 

The Company shall have the right to issue loan securities transferable into shares by a resolution of the Extraordinary General Assembly to be offered to subscription according to the rules of subscription to shares. 

The securities shall be transferred to shares through redemption, cancellation of the securities and granting their holders shares against them and addition of their value to the capital. 

Article 217 

Securities Holders Assembly 

The shareholders shall have their own assembly which shall assure consideration of the following issues: 

1. Nomination and removal of their General Representative.
2. Amendments to loan conditions. 
3. Proposal of protective reconciliation with the company.
4. Formation of a financial balance to face the necessary expenses in order to protect their common interests and the mode of representation of its account. 
5. Other issues related to their interests. 

Article 218 

Meetings of the Securities Holders Assembly 

The Board of Directors or the representative of the holders of the loan securities shall convene the General Assembly of the Securities Holders, when they deem it necessary or when requested to do so by a number of Securities Holders representing a portion of twenty fractions of the issued securities which are still existing. 

The same provisions established in respect of the Extraordinary Shareholders Assembly shall apply to the Securities Holders Assembly for the validity of the resolutions related to item (2) of the previous article; the selection even in the second meeting shall be issued by a number of the Loan Securities Holders representing no less than half the issued Securities which are not depreciated. 

The Loan Securities which may be possessed by the company shall not entitle to participate in assembly resolutions. However, the Board of Directors and the Control Board may attend the meetings of the Securities Holders Assembly. 

Article 219 

Common Representative of Securities Holders 

A person other than Securities Holders may be selected to be their common representative. If the Assembly did not nominate a Common Representative, he shall be nominated by the Chief Justice under a resolution to be issued upon request of one or more of the Securities Holders or one of Companyís Directors. 

A member of the Board of Directors or Control board or one who was subordinated to a debtor Company as well as anyone who satisfies the elements which prevent from assuming the post of a Common Representative of the Securities Holders. If one of those is nominated, he should be dismissed.

The tenure of the Common Representative shall not be more than three years, but it shall be renewable. 

The Securities Holders Assembly shall fix the remuneration of the Common Representative who should request registration of his nomination in the Commercial Register within fifteen days from the date of being notified of the nomination resolution. 

Article 220 

Duties and Powers of the Common Representative 

The Common Representative should implement the resolutions of the Securities Holders Assembly; protect their common interests in their relation with the company. He shall have the right to attend the processes of withdrawal of Securities intended for depreciation as well as to attend the meetings of the Shareholders Assembly. 

The Common Representative shall have the right to bring a lawsuit on behalf of the Securities Holders for protection of their interests even in case of conclusion of a protective reconciliation with the company or declaration of its bankruptcy. 

Article 221 

Voting on Reimbursement of Securities Value 

The processes of voting on reimbursement of the Securities value shall be in presence of the Common Representative of their holders and in his absence, shall be in the presence of a Notary Public, otherwise the voting shall be null and void. 

Article 222 

Personal Lawsuits of the Securities Holders 

The provisions of the previous articles shall not prevent the Securities Holders from bringing personal lawsuits provided that these lawsuits shall not conflict with General Assembly resolutions according to Article (217). 

The resolution to be issued by the Securities Holders General Assembly shall apply to the absent and dissenting Securities Holders. Each Securities Holder shall have the right to challenge the resolutions which did not take into consideration the provisions of the law according to provisions of articles (160) and (168).

Six: Companyís Accounting Organization 

1. Companyís Books 

Article 223 

Books ought to be Kept 

The Joint-Stock Company should keep the following books in addition to other accounting books and entries supposed to be kept by the merchants: 

1. Shareholders register in which the names, surnames, nationalities, home countries of the shareholders and numbers and quantity of the shears for registration of dispositions to be effected on the mentioned shares or the temporary certificates representing them shall be entered. 
2. Loan Securities register for entering the amount of the issued Securities, the securities which their value is repaid, names and surnames of the nominal Loan Securities Holders and all what is to come upon Securities as to transfer and entries. 
3. Register of minutes and resolutions of the General Assembly in which the minutes written down on formal papers shall be recorded also. 
4. Register of minutes and resolutions of the Board of Directors Sessions. 
5. Register of minutes and resolution of the Control Authorityís sessions. 
6. Register of minutes and resolutions of the Executive Committeeís Sessions. 
7. Register of minutes and resolutions of the Loan Securities Holders General Assembly if the Company issued Loan Securities. 

The Board of Directors shall be responsible for keeping the books set out in items (1, 2, 3 & 4) while the Control Authority shall be accountable for keeping the register set out under item (5). The Executive Committee also shall be accountable for the register mentioned under item (6), while the Common Representative of the Loan Securities Holders shall be responsible for keeping the register laid down under item (7). 

Before using the said registers, they should be numbered serially; each page thereof shall be stamped and shall be officially endorsed every year.

Article 224 

Examination of Companyís Books Right 

The partners shall have the right to examine the two registers set out under items (1 & 2) of the previous article and to have their summaries at their cost. 

Such right entitles also the Common Representative of the Loan Securities Holders Assembly as to the two registers set out in item (2, 3) of the previous article as well as the holders of the Loan Securities as regards the register mentioned under No. (7). 

Article 225 

Informatics (Electronic) Books 

The Company may keep accounting documents in connected and sequenced typing paper form used in informatics (electronic) systems dated and numbered in the manner to be shown by the law. 

It may also keep the accounting documents in informatics (electronic) systems form not subject to modification of the data set out therein. 

The previous two forms shall have the evidence of the conventional commercial books. 

2. The Balance Sheet 

Article 226 

Preparation of the Balance Sheet and Financial Statements 

The Board of Directors should prepare the financial statements of the company, their complementary clarifications, gained profits and incurred losses. 

It should also submit a report explaining the progress of the companyís works. 

Article 227 

Contents of the Balance Sheet 

Without prejudice to the laws of the companies which exercise certain activity, the assets and liabilities of the company should be mentioned in the balance sheet at their total value and each item shall be stated alone and no clearing should be effected between them.

Assets: 

1. Amounts claimed from shareholders and not yet paid. 
2. Properties. 
3. Immobile establishments and equipment. 
4. Industrial patents rights and rights of utilization of intellectual products. 
5. Concessions, registered marks and economic value of the shop. Movables. 
6. Raw materials and goods. 
7. Money and paper money available at hand or deposited with third party. 
8. Financial security of fixed and variable profits. 
9. Partnerships, with a statement of what is purchased by the company of their shares. 
10. Debts on company clients. 
11. Debts on company clients. 
12. Debts of the company to banks. 
13. Other debts claimed from third party. 

Liabilities: 

1. Company capital with its nominal company with statement of the equities separated from other kinds of the shares. 
2. Legal reserve balance. 
3. Reserve provided for in the memorandum and optional reserve. 
4. Amounts of depreciation, renewal and guarantee again the risk of drop of the assets value.
5. Amounts allocated for compensation of company employees.
6. Debts restricted with guarantees in kinds. 
7. Debts claimed by suppliers. 
8. Debts of the company to banks or other suppliers. 
9. Debts claimed by the related companies. 
10. Loan Securities issued and still existing. 
11. Other debts claimed from the company. 
12. What is deposited optionally or compulsory by third parties. 

Article 228 

Rules of Estimation 

When estimating the elements of statements of which the company assets are composed, the following rules should be followed: 

1. The properties, immovable establishments and movable equipment shall not be estimated at more than their cost price. In each financial turnover, the value must be reduced at the amount of the depreciation in that turnover by including the depreciation balance in special item of liabilities. 
2. The raw materials and goods shall not be estimated at a higher price than the minimum price at their of their purchase value or at a higher price than the market price in demand at the conclusion of the turnover. 
3. The industrial patents and the rights of utilization of patents, concessions and registered marks shall not be estimated at a price higher than the price of their purchase and costs. Such price shall be reduced in each turnover at the rate of the time lapsed to those elements or at the rate of forfeiture of the right in utilization thereof. 
4. Value of shares or paper money of fixed or variable revenue shall be estimated by the Board of Directors aiming at diligence and wisdom, taking into consideration as to the paper money circulated in the stock market their price on market. The Control Authority shall be informed of the rules which are followed in estimation. The Control Authority should make notice of these rules in its report to the General Assembly.
5. The partnerships which have no capacity of shares shall be estimated at an amount not exceeding what is to be appeared in the last related balance sheet. 
6. The estimation of the debts claimed by the company on the basis of the proposed possibility of their payment 
7. The difference which may occur between the amounts due on issued Loan Securities on their maturity and the amounts collected during the issuance time may be entered into a special statement of the assets item. 

In this case, a part of the difference should be depreciated in each turnover according to the methods specified for depreciation. The reductions of the assets element may be shown in special separated items in liabilities of each of those elements. 

If special reasons preventing following of the rules established in this article are fond, then the Board of Directors and the Control Authority should show in detail the reasons which made them refrain from those rules in their reports presented to the Assembly. 

Article 229 

Entries Repeated in a Number of Turnovers 

The expenses of construction and development which have no equivalence in the assets may be depreciated through annual deduction in their value for no more than five years if approved by the Control Authority. 

Taking into consideration what is provided for by the respective laws, agreement must be concluded with Control Authority on methods of entry applied in estimation of the positive and negative interest and deduction of the value due to the company and on it. The Control Authority report must also include these methods. 

Article 230 

Shopís Moral Value 

The moral value of the shop shall not be entered into the balance sheet assets unless evaluated when purchasing the shop at no more than the paid amount. 

What is paid should be depreciated successively at turnovers to be appropriately estimated by the Board of Directors and Control Authority.

Article 231 

Legal Reserve Balance 

A sum not less than five percent should be deducted from the net annual profits for constituting the legal reserve until such balance reaches to at least one quarter of the company capital. 

Article 232 

Increase of Shares Price 

What is to be passed to the company of the amount to be available when issuing shares at a price higher than their nominal value, may not be distributed as profits except after constitution of the full legal reserve. 

Article 233 

Participation in Profits 

What is deserved by the partnerís founders and the Board of Directors shall be calculated from the profits portion based on the net profits resulting from the balance sheet after deduction of the legal reserve. 

Article 234 

Control Authority Reports and Lodgment of the Balance Sheet 

The Board of Directors must inform the Control Authority of the Balance Sheet, its report and what shall be followed as to documents and instruments during at least thirty days prior the day fixed for General Assembly holding which will consider the same. 

The Control Authority should present to the General Assembly a report about the result of the fiscal year showing its opinion and proposals regarding the progress of the company works, correctness of its accounts, balance sheet and approval thereof. 

A copy of the balance sheet attached with reports of the Board of Directors and Control Authority should be lodged with the main office of the company during the fifteen days preceding the assembly meeting. It shall remain lodged until endorsed, and during the said period the shareholder may see it. 

Article 235 

Distribution of Profits to the Shareholders 

The General Assembly which shall endorse the balance sheet shall decide to distribute profits to the shareholders. Dividends shall not be paid unless on the basis of the profits resulting according to the endorsed balance sheet.

If losses appeared in company capital, profits may not be distributed except after restoration of the capital or deduction thereof at the amount of the losses. 

The profits paid contrary to provision of this law, if the shareholders received thereof in good faith and based on endorsed balance sheet. 

Article 236 

Effect of Approval of the Balance Sheet 

Approval of the balance sheet by the General Assembly shall not result in exemption of members of the Board of Directors, General Managers and Control Authority from the responsibility consequent upon company management. 

Article 237 

Lodgment of Balance Sheet 

The Board of Directors must lodge a copy of the balance sheet attached with its report, report of the Control Authority and minutes of approval of the General Assembly with the Commercial Register Office within ten days from the approval. 

Seven: Company Dissolution and Liquidation 

Article 238 

Additional Reasons 

In addition to the normal reasons for company dissolution, provided for in this Law, the Joint-Stock Company shall be dissolved and liquidated for the following reasons: 

1. Issuance of a resolution by the Extraordinary General Assembly.
2. Disability of the General Assembly to perform its tasks. 
3. Occurrence of one of the reasons provided for in the Memorandum of Association.

Article 239 

Occurrence of a Matter Requires Dissolution 

If a matter requiring dissolution of the company occurred, the Board of Directors must convene the Extraordinary General Assembly within thirty days to take the resolutions related to Company Liquidation. 

Article 240 

Nomination and Dismissal of Liquidators 

The General Assembly shall be concerned with nomination of Liquidators, unless the Memorandum of Association states otherwise. The General Assembly shall take its resolutions by the majority required in respect of the Extraordinary General Assembly. 

When the required majority is not obtained, the Liquidators shall be nominated by a resolution at the President of the Court of the First Instance upon request of the shareholders or Board of Directors or the Control Authority. 

The Liquidators may be dismissed by the Assembly by the majority required for the Extraordinary Assembly or by a resolution of the competent Court of First Instance upon request of shareholders or Control Authority or the Public Prosecution if the same so requires. 

The same provisions shall apply in case of Liquidators replacement. 

Article 241 

General Assembly Approval 

Any agreement between the Liquidators and the Joint-Stock Company creditors shall be binding if coupled with General Assembly approval. 

Article 242 

Request for Resolution on Administrative Liquidation Formalities 

The Liquidator and any debitor or creditor of the Joint-Stock Company and any interested individual shall have the right to request the Court to resolve on any issue arising out in Administrative Liquidation Formalities according to the method in which decision shall be made on matter to be arising out in judicial liquidation measures under provisions of this Law.

Article 243 

Convocation of the General Assembly 

During the progress of the liquidation, the Liquidator may convoke the companyís General Assembly to obtain its consent on any matter he deems appropriate including refraining from liquidation. 

The Control Authority or the external auditor also, if any, shall have the right to convoke the General Assembly, if the Liquidator refrains from taking such action. 

Article 244 

Lodging of the Liquidation Balance Sheet 

The final liquidation balance sheet shall be lodged accompanied by signatures of the Liquidators and attached with a report of the Control Authority and external Auditorís certificate, with concerned Commercial Register Office for enrollment, provided that the balance sheet shall show the portion of any share in distribution of assets. 

Any shareholder may complain before the Court of the First Instance against the Liquidators within the three months following enrollment. 

The Court shall render judgment on the complaints to be brought to it in one session and each shareholder shall have the right to intervene therein. 

The case shall not be considered unless after the lapse of the said term and the judgment shall be a pretext even on those parties who did not intervene in the lawsuit. 

If the term of the three months is lapsed without submission of complaints, the balance sheet shall be considered as certified and the liquidators shall be exempted from obligation. 

Article 245 

Deposit of Unrelieved Amounts 

The amounts to be passed to the shareholders from the Final Liquidation balance sheet shall be deposited with one of the banks with statement of the shareholderís name, surname or the serial numbers of the shares if they are to their bearer, if these shareholders did not receive the same within three months from the date of lodgment of the balance sheet to the Commercial Register.

Article 246 

Company Striking Off 

The Liquidator should ask for striking the company off the Commercial Register after approval of the final balance sheet or the Liquidation or after three months from its lodgment to the concerned Commercial Register. 

After a company strikes off, its creditor, who is unable to receive their rights wholly or partly, may claim the shareholders at a rate not exceeding the amount which has been received from the result of the final balance sheet of the Liquidation, during five years from the date of registration of the striking off. The company creditors shall not be subject to competition of the shareholders personal creditors within the limits of those amounts. 

They may also recourse to the Liquidators if non-payment of the debts is due to their fault. 

Article 247 

Lodgment of Company Books 

After completion of the liquidation and distribution of assets or deposit of the amounts provided for in Article (245), the company books should be lodged with concerned Commercial Register and shall be kept therein for five years period from the date of registration of the company striking off and any individual may see the same after payment of the prescribed fees. 

Article 248 

Compulsory Liquidation 

The Court may decide compulsory liquidation of the company upon request of any interested party in the following cases: 

1. If the company committed gross infringement of the Law or its Articles of Association. 
2. Impossibility to run its works or disability of the General Assembly to continue performance of its tasks. 
3. If the company suspended its works for more than one year without justification or legitimate reason. 
4. If the total losses of the company exceeded (75%) three quarters of its total capital unless the companyís General Assembly decided to increase the company capital immediately to not less than two thirds of the subscribed capital.

Eighth: The Holding Company 

Article 249 

Company Form 

The Holding Company is a Joint-Stock Company which administratively and financially controls one or more of other companies which shall become its subsidiaries, through its ownership of at least the absolute majority of the shares of that company or those companies, either Joint-Stock Companies or Companies of Limited Liability or Companies Limited by shares. The expression of Holding company shall be added in addition to the company name on all its papers, notices and all the other documents issued by it. 

Any Joint-Stock Company shall not own more than fifty percent in any of the companies mentioned in paragraph (1) unless changes its legal form to a holding company. 

The Holding Company shall not own a portion mentioned in Joint Liability Companies or in Limited Partnerships and the subsidiary company shall be prevented from owning any shares in the Holding Company. 

Article 250 

Company Purposes 

The Holding Company purposes shall be the following: 

1. Establishment of its subsidiary companies or control of management of other companies or contribution to its capital. 
2. Investment of its funds in shares, securities and paper money.
3. Establishment and management of funds and investment portfolios.
4. Provisions of loans, guarantees and funding to its subsidiaries. 
5. Ownership of patent on inventions, trademarks, concessions and other moral rights, utilization and renting thereof to its subsidiaries or to third parties.

Article 251 

Financial Relations of the Company 

The Holding Company may provide loans, guarantees and funding to its subsidiaries to perform these operations among themselves on the following conditions: 

1. The operation shall be reasonable to its actual practical need. 
2. The operation shall be effected normally without including unusual conditions in such operations. 
3. It shall not result in a damage or burdensome to the existing company and the later shall receive an amount or an actual output from the operations. 
4. The operation shall not be based on tax considerations or observance of personal interests to the responsible of the concerned management. 

Article 252 

Companyís Capital 

The capital of the Holding Company must be sufficient for meeting its purposes. The paid up capital on foundation must not be less than one million Dinars or three tens of the subscribed capital whichever is more. 

Article 253 

Nomination of its Representative in the Subsidiaries 

The Holding Company shall nominate its representatives in its subsidiaries at the amount of their contribution to the capital. If the subsidiary company is fully owned by the holding company, the Board of Directors of the Holding company shall be considered as a General Assembly of the Subsidiary. If the Subsidiary in its turn is a Holding Company, them the In its turn is a Holding Company, then the Board of its Directors shall be considered as a General Assembly of its Subsidiaries. 

Article 254 

Accumulated balance Sheet and Financial Statements 

The Holding Company must prepare, at the end of each fiscal year, accumulated balance sheet, statement of profits and losses or the monetary flows to it and to all its Subsidiaries and shall present them to the General Assembly along with related clarifications and data, according to the requirements of the applicable accounting standards and rules. 

Article 255 

Company Responsibility 

The Holding Company shall not be considered responsible for debts of its Subsidiaries. Although, the Holding Company shall be responsible for debts of its Subsidiary in case of its bankruptcy if the ration of what its owns exceeds (75%) seventy-five percent of its capital. 

Nine: Public Joint-Stock Company 

Article 256 

Definition 

The public Joint-Stock Company, means any company that its full capital is owned by one or more public legal personalities. The public companies take the form of Joint-Stock Companies and the provisions of this law apply to them. 

Article 257 

Establishment of the Public Company 

Taking into consideration the provisions governing the Joint-Stock Companies, the public company shall be established by a resolution of the General Peopleís Committee including the Articles of Association, upon economic feasibility study to be presented by the concerned authority. 

Article 258 

General Assembly of the Company 

The General Assembly of the company composes of the shareholders and the legal person who contributes to the company shall nominate his representative. If the company is fully owned by one of the public legal personalities, then such personality shall assume formation of the General Assembly of the company from an odd number of persons of capacity and experience in the field of company activity provided that their number shall not be less than seven persons including the chairman of the Assembly.

Article 259 

Responsibility of Assembly Members 

The members of the General Assembly should exercise their powers with observance and compliance necessary for achieving the company purpose. They are responsible for errors, shortcomings and negligence in taking resolutions. 

Article 260 

Other Bodies of the Company 

The bodies of the public company y shall be composed according to what is governed by this law and the public companies not to be subject to the comptrollers system provided for in the state financial system law. 

Third Branch Double Nature Companies 

First: Company Limited by Shares 

Article 261 

Definition 

The Company Limited by Shares: Is the company which is composed of two categories of companies, one of them acting partners and the other silent partners. 

The acting partners in the company limited by shares shall be unlimitedly jointly responsible for company obligations, while the silent partners shall not be bound, except at the amount of their shares in the capital to which they are subscribed. The company capital shall be divided into shares of equal value. The contribution allotment shall be shares only. 

Article 262 

Company Name 

The Company Limited by shares shall operate under a trade name in addition to at least a name of one of the acting partners including mentioning of the legal relation between the partners the company may operate under a created name and in both case the expression of (Company Limited by Shares) must be added.

The name of the silent partner may not be mentioned in company name, and if it is mentioned with his knowledge, then he shall be responsible for its obligations jointly in good faith with respect to third parties. 

Article 263 

Rules ought to be Applied 

The rules provided for in respect of the Joint-Stock Companies shall be applied to the Company Limited by share inasmuch as not contradict with following provisions. 

The provisions of Article (81) shall be applied to the relations between the acting partners and the third parties pending registration of the company in the Commercial Register. 

Article 264 

Memorandum of Association 

The Memorandum of Association should include the names of the acting partners. Their capacity as acting partners shall legally result in their consideration as company directors and shall have the same duties prescribed in respect of the Board of Directors in the Joint-Stock Company. 

Article 265 

Removal of Directors 

The Directors shall be removed by a resolution to be issued by the majority required in the Joint-Stock Company Extraordinary General Assembly. If removal is affected without reason, the removed Director may claim for compensation. 

Article 266 

Replacement of Directors 

The General Assembly shall nominate a Director in lieu of the Director which his post became vacant for any reason whatsoever according to the majority prescribed in the previous article. 

If the Directors are multiple, the Directors remaining on their posts must approve the nomination, thus the new Director shall gain the capacity of the acting partner once he accepts the nomination.

Article 267 

The Effect to be resulted from Vacancy of the Directors Post 

If the post of all the Directors became vacant and no directors are nominated in their place, the Control Authority shall nominate an interim a Director, once the vacancy is ascertained, so as to perform the urgent management works for a period not exceeding six months. 

The interim Director shall not gain the capacity of the acting partner. 

The Control Authority shall convene the Extraordinary General Assembly within one month from the date of nomination of the interim director to determine the company destiny. 

Article 268 

Control Authority and Responsibility Lawsuit 

The shares of the acting partners shall not entitle the voting right on General Assembly resolutions related to nomination or dismissal of Control Authority members or bringing responsibility lawsuit against them. 

Article 269 

Amendment or Memorandum of Association 

The General Assembly must approve the amendments to be introduced to the Memorandum of Association. The resolution shall be considered valid whenever issued by majority in respect of validity of resolutions of the Joint- Stock Company Extraordinary General Assembly. 

In addition, the consent of all the acting partners should also be obtained. 

Article 270 

Responsibility of the Acting Partners 

The responsibilities of the acting partners towards the third parties in a company limited by shares shall be governed by the provisions established in respect of partnerís responsibility in a Joint Liability Company. 

The Acting Partner whose capacity as a Director arising out of the company management which have arisen out after registration of expiration of his job in the Commercial Register.

Second: Limited Liability Company 

1. General Provisions

Article 271 

Definition 

The Limited Liability Company: A Company which the number of partner therein shall not be more than twenty-five and not less than two partners. Each of them shall be accountable only for the amount of his allotment in the capital. The allotments of the partners shall not be represented by shares. 

Article 272 

Company Name 

The Limited Liability Company shall have a trade-name ñ the expression of (Limited Liability Company) must be added to the company name. if the directors neglected consideration of this provision they shall be responsible for compensating the damages resulting therefrom. 

Article 273 

Restrictions on Company 

The purpose of the Limited Liability Company shall not be the performance of the banking operations or insurance. By a resolution of the concerned secretary some other activities may be prohibited to companies. 

Article 274 

Prohibition of General Subscription to the Company 

The company may not resort to general subscription for forming or increasing its capital, it may also not issue Loan Securities. 

Article 275 

Company Capital 

The capital of the company shall not be less than three thousand Libyan Dinars (LD 3,000) to be divided into equal shares so that the nominal value of the share shall not be less than (LD 10) Ten Dinars.

If the company capital reaches to the minimum provided for in the fourth paragraph of the Article (101) or exceeds that, then in respect of payment thereof the rules followed in the Joint-Stock Companies shall be applied thereto. 

Article 276 

Memorandum of Association 

The company must be established under a formal Memorandum of Association containing the following: 

1. Name and surname of each partner and name of his father, his home country, nationality, date of his birth and number of his identity card. 
2. Name of the company and its main office. 
3. Company purpose. 
4. Capital amount, share of each partner, statement of shares in kind, their value and names of the persons, if any, who presented them and the provisions of the Joint-Stock Company, shall be applied to their estimation. 
5. Conditions for assignment of shares. 
6. Prescribed rules of distribution of profits and losses. 
7. Number of Directors and their authority and mentioning who has the right to represent the company. 
8. Members of the Control Authority if their nomination is must.
9. Company duration. 

Article 277 

Distribution of Shares 

The Limited Liability Company shall not be established unless all the shares therein are distributed. 

If what is presented by the partner is a share in kind, the rules followed in the Joint-Stock Company in respect of evaluation of shares should be applied.

Article 278 

Transfer of Shares 

The shares shall be subject to sale unless the Memorandum of Association provides for otherwise. Anyone who intends to sell his share to other than the partners, he should notify the directors of the proposal presented to him. 

Article 279 

Form of Shares Assignment 

The partner may assign his share to one of the partners or to a third party under a formal entry according to the Memorandum of Association of the Company. Such assignment shall not be a pretext against the company or the third party except from the date of its registration in the company register and in the Commercial Register. The company may not withhold registration of the assignment in the register unless contradicted what is provided for in the Memorandum of Association of the company. 

Article 280 

Notice to Partners 

If one of the partners intends to assign his share to a person other than the partners in the company with or without compensation, he should notify the other partners through the company director of the assignment conditions. The director should notify the partners once the notice is arrived. Any partner may claim for redemption of the share at the price to be agreed upon. In case of disagreement on the price, an expert to be nominated by the competent Court of the First Instance shall estimate this price in the date of redemption. If thirty days are passed from the date of the notice without using the redemption right by one of the partners, the partner shall be free to dispose of his shares. 

Article 281 

Multiplicity of Claimers for Redemption 

If the right of redemption is used by more than a partner, then the sold shares should be divided among them at the rate of share of each of them in the capital. 

Article 282 

Transfer by Succession 

The share of each partner shall be transferred to his successors thus the legatee shall take the power of the successor.

Article 283 

Enforcement on Shares 

If a creditor of one of the partners proceeded with formalities of enforcement on his debitorís share, he may agree with the debtor and the company on the mode and conditions of the sale, otherwise the share must be offered for sale in public auction. The company may redeem the sold shares in the favour of a partner or more on the same conditions of awarding of the auction, within fifteen (15) days from the date of awarding of the auction. These provisions shall be applied in case of bankruptcy of the partner. 

2. Company Bodies 
3. General Assembly 

Article 284 

Convocation of the General Assembly 

The Limited Liability Company shall have a General Assembly to be composed of all the partners. 

The Directors should convoke the General Assembly by registered letters with acknowledgement receipt to be sent to the partners in their domiciles shown on company register before at least eight days prior to holding date, without prejudice to provisions of the Memorandum of Association. 

The day, venue, fixed time of the meeting and the agenda should be mentioned in the letter. 

The General Assembly should be held once a year during the three months following the end of the company fiscal year. It may be convened in each time upon request of the Directors or Control Authority or a number of partners representing one quarter of the company capital. 

Article 285 

Resolution of the Assembly 

The resolutions of the Ordinary General Assembly shall be issued by majority of the company by capital, unless otherwise provided for by the Memorandum Of Association. The Extraordinary General Assembly resolutions shall be issued by majority of the number of partners representing at least one third of the company capital

2. Company Management 

Article 286 

Nomination of Directors 

The Company Management shall be entrusted to one or more persons either among the partners or others to be nominated by the General Assembly as power provided for in the Memorandum or Articles of Association of the Company. 

Article 287 

Complaint against Resolutions of the Directors or Control Authority 

The provisions provided for in Joint-Stock Companies shall be applied in respect of complaint against disposal of Directors or the Control Authority in company affairs. 

Article 288 

Nomination of the Control Authority 

1. The partners should nominate the Control Authority if the company capital exceeded (LD 100,000) one hundred thousand Libyan Dinars. 
2. The provisions governing the Control Authority in Joint-Stock Companies shall apply in respect thereof. 
3. Company Accounting System 

Article 289 

Company Books 

In addition to accounting books and entries to be imposed on merchants by law, the company should keep the following books: 

1. Partners register, in which the partnerís names, value of their shares and changes to be occurred to their personalities should be recorded. 
2. Register of minutes and resolutions of the General Assembly and minutes written down on formal contract shall be set forth also therein. 
3. Register of sessions and resolutions of Directors.
4. Register of sessions and resolutions, if any, of the Control Authority. 

The directors shall be bound to keep the first three registers, the Control Authority shall keep the fourth register and the partners shall have the right to see the two registers set out in item (1, 2) and to obtain summaries thereof at their cost. 

Article 290 

Balance Sheet 

The balance sheet must be prepared according to the provisions provided for in respect of Joint-Stock Companies. 

The directors must lodge a copy of the balance sheet along with profits and loss account and their report with companyís main office within no less than fifteen (15) days prior to General Assembly holding. 

If there is a Control Authority, then the provisions of Article (230) shall be applied. 

Article 291 

Amendments to Memorandum of Association and Dissolution of the Company 

As regards amendment of the Memorandum of Association, increase and decrease of the capital, dissolution and liquidation of the company and other matters not provided for in special provision, the rules provided for in respect of Joint-Stock Companies shall be applied. 

Fourth Branch Transformation, Merger, Division and Gathering of the Company 

First: Company Transformation 

Article 292 

Transformation Between Joint-Stock Liability Company and Limited Partnership 

The Joint-Stock Company may be transformed into a Limited Partnership.

The Limited Partnership also may be transformed into a Limited Liability Company and in both cases the consent of all the partners should be obtained. 

Article 293 

Transformation into other Companies 

The Joint Liability Company or the Limited Partnership shall have the right to be transformed into a Limited Liability company or a company Limited by shares or Joint-Stock Company with consent of all the partners. In this case the partners shall not be released from guaranteeing the companies obligations prior to publication of resolution of modification to the Commercial Register unless the creditorís acceptance of such modification is stated. 

Non objection of the creditors in writing to the resolution of company transformation within thirty (30) days from the date of their notification by a registered letter in the address lodged with company shall be considered as good as a consent. 

Article 294 

Transformation into Joint-Stock Company 

The Limited Liability Company and the Company Limited by shares which its capital is fully paid up may be transformed into Joint-Stock Company according to the provisions provided for in this Law, upon a resolutions of the Extraordinary General Meeting. 

Article 295 

Withdrawal from the Company 

If the Company is transformed into a Joint-Stock Company or to a Company Limited by shares, each partner shall be concerned with a number of shares equaling the value of his allotment according to the latest approved balance sheet. 

The partner who has objection to the resolution of transformation may request withdrawal from the Company. 

Article 296 

Estimation of Assets 

Prior to registration of the company transformation resolution, the assets and the requirements shall be re-estimated by a Committee of experts to be formed by the competent Court of the First Instance upon company request, provided that a certified public accountant should be among the experts committee. 

Article 297 

The Necessary of Satisfying the Necessary Conditions 

The Company shall not be transformed unless after satisfaction of the necessary conditions of the legal form to be transformed into and finalization established under this Law. 

Article 298 

Continuity of the Legal Personality 

The transformation of the company into another kind of companies shall not lead to emergence of a new legal personality. The legal personality of the company shall remain and shall maintain all its rights and shall be responsible for its obligations preceding the transformation. 

Second: Merger of Companies 

Article 299 

Types of Merger 

Without prejudice to the competition provisions set out in this law and other applicable legislations, two or more companies may be merged under a merger contract by which a new company shall be established to replace the merged companies or merging a company or more in an existing company. 

Article 300 

Merger Contract 

The merger contract shall fix the capital of the new company and a number of allotments or shares shall be allocated for the partners in each of the merged companies equaling the value of the amounts passed to the new company from that one. 

These allotments or shares shall be distributed among the said partners at the rate of their shareholding and allotment in the merged company.

Article 301 

Merger Procedures 

The merger shall be completed by following the under-mentioned procedures: 

1. Issuance of the merger resolution by the Extraordinary General Assembly for each of the merged and merging companies. 
2. Evaluation of assets and requirements of each of the merged companies according to the report of the experts to be nominated by the competent Court of First Instance, provided that a certified public accountant shall be among the committee for fixing the net rights of shareholders or partners. 
3. Signing the merger contract by the authorized signatories of the merged companies and merging company. 

Article 302 

Serving Notice to Creditors 

The legal representatives of the companies concerned with merger must notify the creditors of the merged and merging companies of the merger resolution within ten days from the date of its registration in the Commercial Register and publication in code of procedures and advertisement in two daily national newspapers. 

The resolution shall not be considered effective unless after lapse of ninety (90) days from the date of registration in the concerned Commercial Register without objection from any of the creditors or by issuance of a final judgment by the competent Court rejecting the objection brought during that period. 

The legal personality of the merged companies shall expire by execution of the above referred resolution and the company resulting from merger or the merging company shall replace the merged companies in all their rights and obligations. 

Article 303 

Increase of Capital 

The capital of the merging company shall be increased to the equivalent of the net rights of shareholders or partners in the merged company or companies according to the result of its evaluation.

The increase in capital shall be divided into shares or new allotment to be distributed to the partners and shareholders of the merged company or companies at the rate of their shareholding or allotments therein. 

Article 304 

Contestation against Merger Resolution 

The contestation against the merger shall not suspend the continuity of acting thereupon until a final judgment is issued by the Court on its invalidity, when considering the invalidity lawsuit the Court my fix by itself a time limit for correction of the reasons which led to appeal for invalidity. It may dismiss the lawsuit of claiming for invalidity, if the concerned authority have corrected the terms prior to judgment pronouncement. 

Article 305 

Responsibility of the Merged Companies Bodies 

Each of the chairman, members of the Board of Directors, General Manager, members of the Control Authority, certified public accountants of the company or the merged companies is personally responsible towards the third parties for any claims or obligations or allegations, put on their companies, which are neither recorded nor declared prior to conclusion of merger contract, unless it is proved that they have no knowledge thereof. 

The company emerging from merger or the merging company shall bear the obligations stemmed from the companies merged with it, which have been concealed from the responsible employees of those countries with its right to recourse therein. 

Article 306 

Registration of Merger Resolution 

The merger resolution as well as the new Memorandum and Articles of Association and what has come about them as to amendment as per the cases shall be registered in the concerned Commercial Register. It shall be published according to the measures established in this Law. 

The registration of the companies which their legal personality is expired shall be stroke out according to the measures established under this Law.

Third: Division of Companies 

Article 307 

Definitions 

The Joint-Stock Companies, Companies Limited by Shares and Limited Liability Companies may divide their financial obligations to other existing or created companies. The division may also be effected under resolution of the concerned secretary upon recommendation of the competition board. 

The companies mentioned in the previous paragraph may be divided according to competition provisions set out in this Law. 

The division may be wholly including all the financial obligation of the company, provided that the company capital shall be fully paid up, the division may also be partially. 

The whole division shall lead to dissolution of the company without its liquidation, with necessity that the legal representative shall request striking out of its registration from the concerned Commercial Register. 

Article 308 

Division Resolution 

The division shall be effected by a resolution to be issued by the Extraordinary General Assembly and it should include the following data: 

1. Objective of the divisions. 
2. Trade-name, main office and legal form of the companies emerging from division. 
3. Names of directors or members of the Board of Directors of the companies emerging from divisions. 
4. Value of the assets and liabilities transferred to companies emerging from division. 
5. Value of allotments or shares of the company if the division is partial and the value of allotments or shares of the partners in case of the whole division.
6. Definition of the rate of distribution of shares or allotments and reasons for their selection. 
7. List of distribution of the human resources among the companies emerging from division. 

The resolution of the division should be registered in the concerned Commercial Register within ten (10) days from the date of its taking. 

Article 309 

Evaluation of the Elements and the Form of the Emerging Companies 

The elements composing the assets and Liabilities transferred to the companies emerging from division shall be evaluated according to the resolution of a committee of experts to be nominated by the competent Court of the First Instance. 

The companies emerging from division may take any of the legal forms of the companies, with the necessity of observance of conditions and measures legally established for the selection form.

Article 310 

Non-renewal of debt

The division of the company shall not lead to renewal of the debt towards its creditors. The companies emerging from division shall be considered jointly responsible towards the creditors of the company which has been divided. 

Article 311 

Objection to Division 

The shareholders or the partners who objected to the resolution of division may withdraw from the company. 

Four: Gathering of Companies 

Article 312 

Definition 

Without prejudice to provisions of the competition set out in this law, the companies gather for achieving a job or certain activity.

Article 313 

Selection of the Legal Personality 

The gathering companies shall not enjoy the legal personality and each company shall remain in gathering or coalition keeping its legal personality. 

Article 314 

Memorandum of Association of the Gathering 

The Memorandum of Association of the gathering shall organize the ways of cooperation, its management, distribution of the functions and definition of responsibilities between the companies incorporated thereunto. 

Article 315 

Relation with Third Party 

The provisions organizing the particular partnership shall be applied to the relation between the companies gathering and third party. 

Chapter Three Civil Companies 

First Branch Partnerships 

Article 316 

Definition 

The partnership is a civil company in which the national individuals participate directly between them with effort or effort and money together as part timer by themselves without employing third party for practicing the professional, occupational and agricultural activities. The number of participants shall not be less than three persons and no one or some of them shall not be individualized as an employer also the partnership capital should be suitable to its activity. 

Article 317 

Conditions of Foundation 

Conditions of foundation of the partnership include the following:

1. The partners shall have Libyan nationality. 
2. All the partners shall be full legal capacity. 
3. Each partner shall be healthy fit to practice the activity to be practiced by the partnership. 
4. Unity and specialization shall be respected in definition of partnership purpose. 
5. The partners shall be holders of the necessary scientific qualification if the occupation or the profession so requires. 

Article 318 

Memorandum of Association 

The Memorandum and Articles of Association of the partnership shall determine the following matters: 

1. The method of meeting of partners and the quorum necessary for taking the resolution. 
2. The method of organization of minutes of meetings and accounting books of the partnership. 
3. Allotments of partners, quality of the partnership and share of each in profits and losses. 
4. Nomination of the partnershipís legal representative. 

Article 319 

Disapproval of Seeking Help from a Third Party 

Each partner should have an active role in the partnership activity, and it is not allowed to seek help from a third party to perform the partnership works. 

Article 320 

Responsibility of the Partner 

The partner in the partnership shall be unlimitedly responsible for its debts within the limits of his part in those debts.

Article 321 

External Auditor 

The partners shall assume nomination of the partnership of an external auditor in cases which so required according to provisions of Article (18) of this Law. 

Article 322 

Rules ought to be applied 

The provisions organising the joint liability company shall be applied to the partnership in matter not particularly provided for in this chapter. 

If the partnership did not abide by the provisions set out in this chapter, then the partners should dissolve it or change its legal form to a trading company. 

Second Branch Real-Estate Utilisation Company 

Article 323 

Definition 

The Real-Estate Utilisation Company is a civil company specialized in construction and sale of various buildings. 

The Public Real-Estate Utilisation Company may construct, sale, rent and hire various buildings. 

The controls necessary for licensing the practice of this activity shall be defined by a resolution of the Peopleís Committee. 

Article 324 

Capital Payment 

Half of the capital of the Real-Estate Utilisation Company must be paid as a minimum on foundation. 

The Articles of Association shall fix the date or dates on which the remaining of the capital shall be paid so as to be completed within five (5) years from the date of company registration in the Commercial Register.

Article 325 

Allotment 

The company capital shall be divided into equal allotments in their nominal value. The Articles of Association shall define the method and conditions of allotment circulation or assignment. 

Article 326 

Partnerís Liability 

The partner in Real-Estate Utilisation Company is considered unlimitedly responsible for the company debt regarding what is concerned him of those debts. 

Article 327 

Company Management 

The Management of the Company shall be assumed by a director to be nominated by the partners. The Directors shall be the legal representative of the company in dealing with the third parties and before the jurisdiction. 

Article 328 

Powers of the Director 

The Director shall have the right to take all the resolutions necessary for achieving the company purpose. Any restriction to be imposed by the partners in this concern shall not apply in dealing with the third parties unless registered in the Commercial Register or the knowledge of the third party 

thereof is proved 

Article 329 

General Assembly 

The partners shall constitute a General Assembly to be the higher authority in the company and shall exercise the powers provided for in the Articles of Association particularly it should perform the following: 

1. Drawing up the Articles of Association and introducing amendments thereto. 
2. Selection of the director, fixing his remuneration, releasing and dismissing him.
3. Selection of an external auditor, fixing his fees, releasing and dismissing him according to provisions of Article (18) of this Law. 
4. Approval of the balance sheet, taking resolutions regarding reduction or distribution of profits, and relieving the director or the liquidator from obligations. 

The Articles of Association shall sow the measures related to convocation of the General Assembly and the method of taking resolutions. 

Article 330 

Provisions ought to be applied 

The provisions regarding Joint-Liability Company shall be applied to the Real-Estate Utilisation Company in what I not particularly provided for. 

Branch Three Cooperative Companies 

First: General Provisions 

Article 331 

Company Establishment 

The establishments which intend mutual cooperation on the basis of a kind of limited or unlimited liability cooperative companies may be established according to the following provisions. 

Article 332 

Unlimited Liability Cooperative Companies 

In unlimited liability cooperative companies the company shall be accountable for its obligations within the limits of its components. In case of declaration of bankruptcy of the unlimited liability companies, the partners shall be unlimitedly liable in a subordinate manner. 

Article 333 

Limited Liability Cooperative Company 

In the limited liability cooperative companies, the contribution allotment shall be on the basis of the shares and the company shall be accountable for its obligations within the scope of its components.

It may be also provided for in Memorandum of Association that in case of declaration of the company bankruptcy, each partner shall be jointly liable in subordinately manner for a double amount of his allotment. 

Article 344 

Company Name 

In the name of the company however it was selected, its description as a limited liability cooperative company or as an unlimited liability cooperative company as per the case, shall be indicated. 

Article 345 

Rule ought to Applied 

The rules established in respect of the Joint-Stock Companies regarding the additional allotments and advances, assembly, directors, controllers, company books, balance sheet and liquidation shall be applied to the cooperative companies in all the cases inasmuch as not to contradict the following provisions and provisions of the special laws. 

Article 346 

Cooperative Companies which are Subject to Special Laws 

The following provisions shall be applied to the cooperative companies which are subject to special laws as far as they are in conformity with the special laws. 

Second: Foundation 

Article 337 

Memorandum of Association 

The Memorandum of Association should be written down on a formal paper including the following data: 

1. Name and surname of each partner, his fatherís name, domicile and nationality. 
2. Name, head office of the company and its branch offices, if any.
3. Company purpose.
4. Statement of the company as to liability, if it is a limited liability, the shares and allotment of the capital shall be stated, and statement of whether there is a consequent liability to partners as per the case. 
5. Amount subscribed by each partner and what is paid up in capital or value or the normal value if the capital is divided into shears. 
6. Value of the rights to be provided by the partners and the value of the advances in kind. 
7. Conditions of memberís admission in the company and the mode and date of provision of the capital. 
8. Conditions of withdrawal of the partner from the company and his dismissal therefrom. 
9. Rules of profits distribution, the highest percentage to be distributed and what is to be passed to the company of the remaining profits. 
10. Mode of convocation of the General Assembly if it is decided to refrain from the mode to be decided by the Law. 
11. Number of directors and external of their authority with definition of the director who is entrusted with company representation. 
12. Number of members of the Control Authority. 
13. Company duration. 

The Articles of Association for company works running shall be considered as an integral part of the Memorandum of Association and shall be added to it even in separate contract. 

Article 338 

Change of Partners and Amendment of the Capital 

The change of number of partners or their personality shall not lead to introduction of any amendment in Memorandum of Association. The company capital is not limited by any amount even if the company is a limited liability company. 

The directors must lodge with the Commercial Register each three months a list showing a change of the partners who are unlimitedly liable and the partners who have abode by liabilities in a double manner to their allotment so as to be enrolled in the register. 

Three: Allotments and Shares 

Article 339 

Purchasing by the Company to its Own Shares and Allotments 

The Memorandum of Association may provide for entrusting the directors with right to purchase the company shares and allotments or redeeming their value to their owners, provided that the purchasing or the redemption shall be through the amounts available from net profits fixed in the balance sheet. 

Article 340 

Transfer of Allotments and Shares 

The transfer of allotments or shares shall not be effective in respect of the company unless approved by the directors. Notwithstanding the partnerís right to withdraw from the company, the Memorandum of Association may prohibit effective transfer of allotments and shares regarding the company. 

Article 341 

Non-Payment of Allotments and Shares 

If the partner delays in payment of the full or part of the subscribed allotments and shares value after being given notice to pay, he may be dismissed from the company. 

Article 342 

Admission of New Partners 

The new partners shall be admitted by a resolution of the directors upon request of the concerned: 

The new partner must pay, in addition to the allotment or share price, an amount to be fixed by the directors for each fiscal year taking into consideration the fixed reserve balances in the latest approved balance sheet.

Article 343 

Withdrawal of Partner 

In cases where the Law or the Memorandum of Association permits withdrawal of partners, the partner who desires to withdraw shall notify the company of his desires to withdraw shall notify the company of his desire by a registered letter. The directors shall indicate thereof in partners register. 

The withdrawal shall be effective from the date of ending of the current fiscal year if the application is submitted before three months otherwise from the date of ending of the next fiscal year. 

Article 344 

Dismissal of thee Partner 

In addition to dismissal of the partner for non-payment of the value of allotments or shares or for other reasons set out in the Memorandum of Association, the dismissal occurs if the partner breaches his obligation or lost his legal rehabilitation or became attached or a judgment issued against himrequires his deprivation from civil rights or if he declared his bankruptcy. 

If the dismissal is not occurred by operation of the Law, the Assembly of partners or Directors shall decide thereof, if so entitled by the Memorandumof Association and this resolution shall be notified to the dismissal partner. 

The dismissal partner shall object to his dismissal before the Court of the First Instance within (30) thirty days from the date of notifying him of the resolution. 

The Court may stay the execution of the resolution. 

The dismissal resolution shall be effective from the date of its registration in partners register. 

Article 345 

Partnerís Death 

In case of death of the partner his successors shall have the right to claim liquidation of their predecessorís allotment or reimburse of shares value to them according to provisions of the following article unless the Memorandum Of Association shall provide for continuation of the company with successors themselves.

Article 346 

Liquidation of the Allotment and Reimbursement of Shares Value 

In case of withdrawal of the partner from the company or his dismissal or death, the allotment shall be liquidated or the shares value shall be reimbursed based on the fiscal year balance sheet in which the relation between the partner and the company is ended. Payment shall be effected within the six months following the date of approval of that balance sheet. 

Article 347 

Responsibility of the Ousted Partner and Successors 

The partner whose relation with the company is ended shall remain responsible towards it for payment of the remaining capital for two years from the date of his withdrawal from the company or his dismissal or from the date of transfer of his allotment or shares. 

The said partner shall remain liable for the same period towards the third party within the limits of the subordinate liability provided for in Memorandum of Association for company obligations to the day on which the capacity of the partner removed from him. 

The successors of the partner shall remain liable in the same manner and for the same period towards the company and third parties. 

Article 348 

Partnerís Special Creditor 

The debtor partnerís allotment and shares are not enforceable by his special creditor as far as the company is existing, but in case of extension of the company term the special creditor may contradict such extension. 

Four: Company Bodies 

1. General Assembly 

Article 349 

Voting Right in General Assembly 

The partners who have registered their names in partners register for not less than three months prior to the date of its holding shall have the voting right in the Assembly.

Any partner shall have one vote whatever the value of his allotment or number of his shares. However, if there are legal personalities among the partners, in consideration of the value of their allotments or shares or number of their members, the Memorandum of Association may provide for entitling them more than one vote provided that the number of votes shall not exceed five. 

The majority required for the legal quorum for assembly formation and validity of its resolution shall be calculated on the basis of the votes entitled to the partners. 

The Memorandum of Association may provide for fixing the required majorities contrary to the prescribed majorities regarding the Joint-Stock Companies. 

The vote may be casted by correspondence if the Memorandum of Association so stated. In this case the advertisement of convocation of the General Assembly should include the topic to be considered in detail. 

Article 350 

Presence in the Assembly 

The partner may not entrust other person on his behalf except from among the partners or in cases permits by the Memorandum of Association and one partner may not be present for more than five partners. 

2. Board of Directors and Control Authority 

Article 351 

Directors and Controllers 

The directors should be partners or agents to partner legal personalities and they should provide a guarantee at the rate and in the manner provided for in the Memorandum of Association unless exempted therefrom by the contract. 

The Memorandum of Association may provide for selection of a director or a controller among the affiliates to the different categories of partners regarding the interest of each category in company activity. 

The Memorandum of Association may also of empowering the state or the public institution with the right of nomination of one or more controlling directors.

In any case the partnerís assembly shall be concerned with nomination of the majority of directors and controllers. 

Article 352 

Distribution of Profit 

The fifth of annual net profits should be allocated for the legal reserve however, its sum is amounted. 

The available portion of the profits should be allocated after deduction of the legal reserve or what is set out in the Memorandum of Association which is not distributed to partners for achieving the purposes of the company interests. 

Five: Modification of Memorandum of Association and Expiry of the Company 

Article 353 

Modification of Memorandum of Association 

The provisions related to similar resolutions established in respect of Joint- Stock Companies shall be applied to the resolutions resulting in modification of the Memorandum of Association and diminution of partnerís liability towards the third party and progress of its works as cooperative company. 

Article 354 

Company Dissolution 

The cooperative company shall be dissolved for the reasons for which the Joint-Stock Companies dissolve as well as with capital total loss. 

Article 355 

Incapacity for Payment 

If it is appeared that the company assets, even if it is in the phase of liquidation, are not sufficient to meet its debts, the concerned administrative authority entrusted to control the company may request for its replacement under receivership in bankruptcy.

Article 356 

Responsibility of the Company and Subordination 

In case of declaration of bankruptcy of a cooperative company, in which the partners shall be subordinately liable in a limited or unlimited manner. They are to be accountable for the company debts each at the rate of his share in the losses according to the list of a distribution to be set by the receiver in bankruptcy, and shall be distributed at the same rate of the amounts required from partners who fail to pay. 

After closing the bankruptcy the creditors remain keeping their rights for payment of their debts towards each partner within the limits of his subordinate liability unless the bankruptcy ends with conclusion of a reconciliation with the company. 

Six: Control 

Article 357 

Control over Cooperative Company 

The cooperative companies shall be subject to licensing, control and other methods of supervision to be decided by the special Laws. 

Article 358 

Management of the Company by the Authorizer of the concerned Authority 

If the cooperative companies are illegally running, the concerned administrative authority may release the directors and controllers from their functions and the company management shall be entrusted to an authorizer whose authority and duration of his secondment shall be determined. 

The authorizer may be entrusted with the powers of the General Assembly within certain works, but his resolutions in this respect shall not be valid except after approval of the concerned administrative authority. 

Article 359 

Dissolution of the Assembly by the Order of the concerned Administrative Authority 

If the concerned administrative authority deemed that a cooperative company is not in a position enables it to achieve its purposes for which it has been

established or did not lodge its balance sheet for two successive fiscal years or did not perform any of its activities, it may dissolve the company upon a resolution to be issued by it and shall order registration thereof in the Commercial Register and shall be published as per the legally applicable methods. 

If it found that the liquidation is necessary, the administrative authority shall nominate in its resolution one authorizer or more to perform the liquidation. 

Seven: Cooperative Companies for Managing Public Benefit Utilities and Institutions 

Article 360 

Definition 

The cooperative companies for management are companies which do not seek for realizing profit in basic manner, ad assume management of the public benefit utilities and institutions. 

Article 361 

Partners Liability 

The liability of e partners in the company shall be unlimited ad the company shall ensure performance of its responsibilities towards the third party. 

Article 362 

Provisions ought to be Applied 

These provisions shall be applied to such type of the companies for which no special provision is provided for in the rules established in respect of the cooperative companies inasmuch as not contradict the following provisions and provisions of the special laws.

Article 363 

Company Purposes 

The company must follow the general policy to be set up by the concerned sector in the utility which assume its management, it shall not exercise any purpose other than the purpose for which it has been established.

Article 364 

Company Name 

In the name of the company however, it was selected, its description as an unlimited liability cooperative company for management. Provided that the name shall include an indication of the type of the utility which assumes its management. 

Article 365 

Memorandum of Association 

The Memorandum of Association of the company must be formal and includes the following data: 

1. Name ad surname of each partner, his fatherís name, home country, domicile, nationality, date of his birth ad number of his identity card. 
2. Company name, head office and its branch offices if any. 
3. Company purposes. 
4. Amount of capital, mode of its provision and what is paid thereof. 
5. Conditions of admission of the new partner in the company. 
6. Conditions organising withdrawal of the partner from the company and cases of his dismissal therefrom. 
7. Rules of distribution of profits. 
8. Mode of convocation of the General Assembly. 
9. Number of directors, the extent of their authority with indication of the director who shall represent the company. 
10. Number of members of the Control Authority. 
11. Company duration. 

Article 366 

Registration in Commercial Register 

The company shall gain the legal personality as soon as registered in the concerned Commercial Register. It shall not exercise its activity except after obtaining permission of the concerned sector.

Article 367 

The Capital 

The company capital shall be divided in a number of allotments equal in the nominal value. The allotments shall be distributed to the partners equally between them. 

The company allotments must be in cash and the allotment nominal value shall not be less than (LD 10) ten Dinars. 

At least half of the allotment value shall be paid on foundation. The remaining value shall be paid within two years from the date of registration of the company in Commercial Register. 

Article 368 

Rights of Successors 

In case of death of the partner, his successors shall have the right to claim for liquidation of their predecessorís allotment or reimbursement of the allotment value to them according to provisions of the Article (345), and afterwards of this Law. They shall have the right to continue in the partnership if one of the successors is one of the specialists in the company field of specialization. 

Article 369 

Company Bodies 

The provisions provided for in respect of Joint-Stock Companies shall be applied in respect to the General Assembly, Board of Directors and Control Authority, provided that the number of the company Board of Directors shall not be less than five members. The resolution of the General Assembly on constitution of the Board of Directors and Control Authority shall be approved by the concerned sector.

Article 370 

Nomination of the Controller 

In the company there shall be one or more experienced and specialized controllers to be nominated from the concerned sector, the controller must attend meeting of the Board of Directors without having the right to selection. 

He should submit a quarterly report on progress of activity of the company and its branches, if any, to the concerned sector.

He shall promptly notify the concerned sector of any infringements or negligence in company works. 

Article 371 

Nomination of an External Auditor 

The company must nominate an external auditor who should submit his report to the company General Assembly and a copy thereof shall be submitted to the concerned sector.

Article 372 

Distribution of Profits 

The annual net profits of the company shall be distributed as following: 

1. Thirty percent (30%) for the legal reserve whatever its sum is amounted. 
2. Not more than twenty (20%) percent of the profits shall be distributed to the partners. 
3. The other reserves shall be allocated for development of the public utilities to be managed by the company. 

Article 373 

Dissolution and Changes to Come About to the Company 

The company may not be dissolved or merged or its activity may not be replaced or suspended from practicing the activity or provision of services except by approval of the concerned sector. 

Article 374 

Forms of Contract and Articles of Associations 

The concerned secretary shall issue a resolution regarding approval of the contract form and company Articles of Associations after consultation with concerned sector.

Chapter Four Contribution of Foreigner, Representation Branches and Offices of the Foreign Companies in Great Jamahiriya 

Article 375 

Contribution in Libyan Companies and Foreign Companies Representative Branches and Offices 

The foreigners, either natural or legal personalities, may contribute to the companies according to provisions of this Law. The percentages of the contribution and the field prohibited to the foreigners shall be fixed by a resolution of the concerned secretary. 

The foreign companies may open branches or representation offices in Great Jamahiriya under a permission of the concerned secretary. The fields in which the opening of representation offices and branches shall be allowed as well as the permission duration and conditions for its renewal shall be decided by a resolution of the concerned secretary. 

The branch or the office shall be amerced by a fine not less than (LD 5,000) five thousand Libyan Dinars if it continues exercise of its activity after expiry of the permission duration granted to it or contradicts any of the conditions included in the resolution of the permission issued to it without prejudice to claim for compensation if necessary. 

Article 376 

Balance Sheet 

The representation branch or office should have a separate balance sheet shows its financial position, provided that the balance sheet shall be audited by an external auditor and shall be lodged with Commercial Register within ten (10) days from the date of its finalization. 

Article 377 

Powers of the Representation Bureau 

The representation bureau shall protect the company interests study the markets, gather information, prepare studies and facilitate the procedures for practicing its activity without having the power to conclude contracts in its name.

Chapter Five Investment Funds 

Article 378 

Definition 

The investment fund is a legal personality entity to be established according to provisions of this Law for investment of monies. The legal personality shall be gained with effect from its registration in the Commercial Register. 

The founders may be banks or insurance companies, they may also be the specialized financial companies. 

The investment fund may not be established unless after getting prior permission from the general authority control and supervision over markets and non-banking financial tools provided for in Article (394). 

The fund shall be registered following satisfaction of foundation conditions in the funds register in the Commercial Register. The founder may establish more than one Fund. 

Article 380 

Objectives 

The investment funds aim at investment of their monies in securities. They shall not be allowed to practice and banking operations, particularly lending or securing others or speculation in currencies or precious metals. These funds shall not be allowed also to deal in other movable financial values or in other investment fields unless by special license from the general authority for control and supervision over the markets and non-banking financial tools, in the limits of the investment ratio to be decided by it, provided that the fund shall provide an study containing statement of the movable values fields and other fields in which it want to invest, and reasons thereof and the expected investment results. 

Article 381 

The Capital 

The fund capital shall be divided into cash investment shares of equal nominal value. The liability of holders of these shares shall be limited to the amount of their shares in the capital. The holders of these shares may not participate in investment activities of the fund monies. Each of the fund capital shares shall have a nominal value in Libyan Dinars or in any other currency. In all the cases the nominal value of the shares shall be paid all at once. The foundation shares are considered unrefundable until the end of the fund life. 

Article 382 

Issuance of Investment Documents 

The fund may issue investment documents equaling ten folds of the paid up capital. It shall not be allowed to issue investment documents for shares in kind or moral whatever their kind would be. The fund shall fix the nominal value of the investment document on issuance. It shall not be allowed to issue investment documents unless after payment of their full value in cash. 

Article 383 

Documents Holders Right 

The documents holders shall have equal rights in distribution of profits and losses resulting from fund investment each at the rate of the documents which they owned or as per stated by the Articles of Association. The Articles of Association shall show the right of the documents holders to participate in selection of the fund management.

Article 384 

Subscription to Documents 

Subscription to documents to be issued by the fund shall be in private or public subscription. The circular of subscription to investment documents to be offered by investment funds for public subscription is the following: 

1. Fund name. 
2. Fund objective. 
3. Date and number of the permission issued for fund establishment. 
4. Fund duration. 
5. Duration and nominal value of the document. 
6. Number of investment documents. 
7. Name of the authority assigned for receiving subscription applications.
8. Minimum and maximum subscription to investment documents. 
9. Period fixed for receiving subscriptions. 
10. Name of member of the Board of Directors of the fund. 
11. Names of controllers. 
12. Name of the investment manager and a brief resume of its previous works. 
13. Investment policies. 
14. Mode of distribution of annual profits and method of treating the capitalized profits. 
15. Indication of whether the document value may be reimbursed prior to expiry of its duration, cases thereof, procedures and method of reselling the same. 
16. Method of periodical disclosure of information. 
17. Fees of investment manager. 
18. Any financial burdens to be incurred by investors. 
19. Method of periodical evaluation of the fund assets. 
20. Any other data deems appropriate by the Board of Directors. 

The general authority for control and supervision over markets and non- banking financial tools should be notified of the subscription circular. 

Article 385 

Lack of Overall Subscription to Document 

If the period fixed for subscription, without subscribing to all the investment documents which have been offered, the fund may amend the value of the amounts to be invested and shall contend with subscribed documents provided that the same shall not be less than (50%) fifty percent of the total issued documents. In this case all the fundís instruments should be modified to correspond with the value of the subscribed documents.

The permission for fund establishment shall be lapsed if not amended according to the previous paragraph or if the number of the subscribed documents decreased to less than (50%) fifty percent. The authority which received amounts from subscribers shall repay these amounts in full immediately on demand thereof including the issuance fees. 

Article 386 

Increase in Subscription 

If the applications for subscription to documents are more than the number of the offered investment documents, then these documents should be distributed to the subscribers each at the rate of his subscription. The fractions which may arise out of the allocation processes shall be disposed of in the favour of junior subscribers. 

In this case, the subscriber shall submit the subscription certificate to the authority through which the subscription is effected in order to conform the number of document allocated to him and the amount of the sums which he paid therefor and the remaining of what he has paid during subscription shall be reimbursed to him. 

Article 387 

Board of Directors 

The Articles of Association of the fund shall define the method of nomination of the Board of Directors and the investment manager, it shall show also the method of participation of holders of investment documents in selection of those members, provided that the Board of Directors shall be constituted within three months from the date of completion of subscription to the investment documents within a period not exceeding one year from the date of the fund establishment. During such period the fund shall be managed by an interim Board of Directors which the method of its selection shall be defined by the Fundís Articles of Association. 

Article 388 

Investment Manager 

It is stipulated that the members of the Board of Directors and general managers should not have been subject to issuance of a disciplinary action against them for dismissal from service or issuance of a felony punishment or indecent offense or dishonesty or penalty in any crimes provided for in the companies or trade or capital market laws or a bankruptcy declaration judgment.

In addition to the conditions shown in the previous paragraph, it is stipulated that the investment manager should be a company licensed to practice the activity of investment funds management or a specialized foreign entity. The responsible for company management should have experience and capability necessary for managing the investment funds activity and shall submit a security which it value, rules and measures organizing deduction therefrom, the completion, management of its collection and method of its repayment shall be defined by a resolution of the Board. 

Article 389 

Contract of the Fund Management 

The contract of the fund management must include particularly the following data: 

1. Rights and obligation of both parties to the contract. 
2. Compensation for the management to be received by the investment manager. 
3. Assignment of the fund representative in Board of Directors and General Assembly of the companies in which the fund invests its money in purchasing some of their shares. 
4. Cases of termination and cancellation of the contract. 
5. Indication of relation of the investment manager with the bank with which it keeps the paper money in which the fund invests its amounts as related to those paper. 

Article 390 

Prohibited Practices 

The company which is licensed to practice the activity of management of investment funds and the acting managers are prohibited to perform the following operations: 

1. Use of fundís amounts in establishment of new companies under liquidation or in case of bankruptcy. 
2. Achieving an interest or a gain or an advantage from the operation to be conducted in favour of the fund.
3. Purchasing of the investment documents of the fund which it manages. 
4. Borrowing from third party to the fundís credit. 
5. Purchasing shares not registered on Libyan paper money market or abroad or registered on a market not subject to supervision of a controlling authority similar to the money market bodies. 
6. Invest of the fundís money in documents of another fund which it manages. 
7. Revealing or disclosing incorrect or incomplete data or information or withdraw important information or data. 

Article 391 

Obligations or Responsibilities of the Manager 

The Investment Manager should keep with it separate accounts for each fund it assumes management of its activity and should keep the books and records necessary for practicing its activity, in addition to books and records to be defined by the General Authority for control and supervision over markets and non-banking financial tools and it should provide them with documents and data to be required by them. 

The Investment Manager must pay the attention of the desirous person in managing the fund monies and to protect the fund interests in any disposition or action, diversification of investment aspects, avoidance of conflict of interest between documents holders and shareholders in the fund and its dealers. Any condition exempts the Investment Manager from responsibility or reducing thereof shall be considered null and void. 

Article 392 

Auditing 

The Fund shall have one or more auditors to be nominated by the Fund founders. 

Article 393 

Expiry of the Fund 

The Fund shall expire if the number of the investment documents reduces to (50%) fifty percent of the total number of the subscribed documents unless the majority of the document holders decides continuation of its activity in a meeting to be convened by the company within one week from the date on which the number of the document was reduced to the referred minimum, otherwise the General Authority for control and supervision over the markets and non-banking financial tool shall convene that meeting. 

In all the cases, the Fund shall expire if the number of the documents reduces to (25%) twenty-five percent of the subscribed number. 

Article 394 

General Authority for Control and Supervision over Markets and Non-Banking Financial Tools 

A General Authority for Control and Supervision over Markets and Non- Banking Financial Tools shall be established. It shall have legal personality and independent financial obligation, belongs to the concerned sector, its management shall be assumed by a Management Committee to be chaired by the Secretary of the Sector and membership of six experienced and specialized persons to be nominated by a resolution to be issued by the General Peopleís Committee upon proposal of the concerned Secretary. The Authority shall assume supervision and performance of all the necessary to ensure transparency, credibility and stability of works of the market and non- banking financial tools. 

Article 395 

The Executive Regulation 

Upon proposal of the concerned Secretary of General Peopleís Committee shall issue an executive regulation containing the organizational chart, the internal system, financial resources of the Control Authority and supervision over markets and non-banking financial tools. It contains also conditions and procedures of getting permission for establishment, participation in and subscription to investment Fund and complaint against resolution of rejection of its foundation, rights and obligations of the responsible for its management, nomination and removal of controllers, method of replacement or circulation of investment documents and indication of the subscription circular and conditions ought to be met in subscription, rules, provisions and procedures to be followed on liquidation of the Fund and other procedures related to its activities.

Article 396 

Penalties 

Without prejudice to any stricter penalty provided for by other law, a fine not less than (LD 10,000) ten thousand Libyan Dinars shall be imposed on anyone who has established a Fund without getting permission from the General Authority for Control and Supervision over markets and non-banking financial tools. The dissenting party shall be obliged to liquidate the Fund, repay the subscribers amounts and bear the liquidation expenses. 

A fine not less than (LD 5,000) five thousand Libyan Dinars and not more than (LD 20,000) twenty thousand Libyan Dinars shall be imposed on anyone who contradicts the provisions of Articles (380, 382, 388) of this section. 

Chapter Six Penalties regarding Companies 

Branch One General Provisions 

Article 397 

False Data and Distribution of Erroneous Profits 

Unless other law provided for stricter penalty an imprisonment of not less than six months duration and a fine not less than (LD 5,000) five thousand Libyan Dinars and not more than (LD 20,000) twenty thousand Libyan Dinars, one of these two penalties shall be inflicted on each of: 

1. The founder partners, chairman and members of Board of Directors, General Managers, Chief and member of Control Authority, External Auditors and Liquidators if they provided, in bad faith, in their report or balance sheets or in their other data related to the company, facts not corresponding to the truth in respect of company foundation, economic situation or concealed all or some of facts regarding those matters. 
2. Chairman and member of Board of Directors and General Managers if they have obtained, in any way, erroneous profits or they paid or distributed undistributable profits without existence of an approved balance sheet or one the basis of untrue balance sheet.

Article 398 

Disclosure of Company Secrets 

An imprisonment of not less than three months and no more than one year duration and a fine not less than (LD 3,000) three thousand Libyan Dinars and not more than (LD 20,000) twenty thousand Libyan Dinars, one of these two penalties shall be inflicted on each of Chairman and Members of Board of Directors, General Manager, Directors, Chief and Members of the Control 

Authority, External Auditors and Liquidators if any of them has used without permission, for his own benefit or for the benefit of other party, information related to the company which he obtained ex-officio or communicated to him, if his act damaged the company and not action shall be brought except upon company complaint. 

Article 399 

Contradiction of Directors to their Duties 

The Chairman and members of Board of Directors, General Managers and Directors shall be amerced by imprisonment for not less than six months period or a fine not less than (LD 5,000) five thousand Libyan Dinars and not more than (LD 20,000) twenty thousand Libyan Dinars, one of these two penalties in the following cases: 

1. If they breached the provisions of the Law by deciding reduction of the company capital or merged it with another company. 
2. If they repaid to partners directly or indirectly what they have paid of the capital or exempted them from payment of their obligations in cases other than those in which the reduction of the company capital shall be decided. 
3. If they prevented establishment of the Control Authority or the external auditors entrusted to control the company work progress fromperformance of their functions or prevented the partners from control in cases where they are entrusted to do so by the law. 
4. If they abuse company money and credits, such as the disposal shall not be aimed at company interest, but to their personal interest or companyís interest or other projects in which they have direct or indirect interest. The same penalty shall be applied if the conditions set out in Article (251) of this Law is not respected.

Article 400 

Borrowing an Account of the company and its Guarantees 

An imprisonment of not less than six months and a fine not less than (LD 5,000) five thousand Libyan Dinars and not more than (LD 20,000) twenty thousand Libyan Dinars, one of these two penalties shall be inflicted on each of Chairman and Members of Board of Directors, General Manager, Directors, and Liquidators if they borrow in any way, either directly or indirectly or through another person of the company which they are entrusted to manage or a company subject to its control or from a company controlled by their company or obtained from those companies guarantees regarding their personal debts, unless the company purpose is lending and performance of credit operations for the public. 

Article 401 

Breach of Liquidators to their Duties 

Imprisonment of not less than three months and a fine not less than (LD 5,000) five thousand Libyan Dinars and not more than (LD 20,000) twenty thousand Libyan Dinars, one of these two penalties shall be imposed on company liquidator if he distributed the company assets prior to payment of creditors rights or prior to allocation and maintenance of amounts necessary therefor. 

Article 402 

Negligence of what is ought to be Communicated or Lodgment 

A fine not less than (LD 5,000) five thousand Libyan Dinars and not more than (LD 20,000) twenty thousand Libyan Dinars, one of these two penalties shall be imposed on each of Chairman and Members of Board of Directors, General Manager, Directors, Control Authority and Liquidators. If neglected to perform what is incumbent on him by law as to notification to the Commercial Register Office during the dates prescribed in notices or data or they did not lodge with the same office which is ought to be lodged or they did so in a manner not satisfying the conditions. 

The same penalty shall be applied to the Notary Public in cases where the law places on his shoulder the duty of communication of the data or information or performs the lodgment.

Article 403 

Non-Mentioning of the Compulsory Data 

A fine not less than (LD 500) five hundred Libyan Dinars and not more than (LD 5,000) five thousand Libyan Dinars shall be imposed on each of the Chairman and Members of Board of Directors, General Manager, Directors, Control Authority and Liquidators if they neglected to write down the data which ought to be mentioned legally on company documents and correspondence. 

Branch Two Provisions of Money Companies 

Article 404 

Fraudulent Acts in respect of Shares and Securities of the Company 

Each of the Chairman and Members of Board of Directors, General Manager, Chief and members, Control Authority, External Auditors and Liquidators of the Joint-Stock Companies and Companies Limited by Shares shall be amerced by imprisonment of not less than six months period and a fine not less than (LD 5,000) five thousand Libyan Dinars and not more than (LD 20,000) twenty thousand Libyan Dinars or one of these two penalties. If they promoted false rumors or resorted to one of the methods of fraud in a manner leading to rise of value of the company shears and securities on stock and commercial market. 

Article 405 

Exaggeration in Estimation of Premises in Kind 

The founder partners shall be amerced by imprisonment of not less than six months period and a fine not less than (LD 5,000) five thousand Libyan Dinars and not more than (LD 20,000) twenty thousand Libyan Dinars or one of these two penalties if they estimated in deceitfully and fraudulent manner the premises in kind at exaggerated value in the Memorandum of Association. 

In case of increase of the capital the same penalty shall be applied to each of the Chairman and Members of Board of Directors, Directors and partners holder of the shares in kind for the deceit and fraud which they committed in exaggerating estimation of those shares.

In case of change of the company type the same penalty shall be applied to each of the Chairman and Members of Board of Directors and General Manager if they exaggerated in deceitfully and fraudulent manner estimation of the company component intended to be changed. 

Article 406 

Breach of Duties Imposed on Directors 

Each of the Chairman and Members of Board of Directors, Directors and General Manager shall be amerced by imprisonment of not less than six months period and a fine not less than (LD 5,000) five thousand Libyan Dinars and not more than (LD 20,000) twenty thousand Libyan Dinars or one of these two penalties, if they committed one of the following acts:

1. If they issued shares or allocated allotments at a price less than their nominal value. Also if they issued new shares or allocated new allotment prior to payment of the value of the first shears or allotments in full cases other than allowed by the Law. 
2. If they infringed what is provided for by the Law in Article (119, 121, 122, 134, 339). 
3. If they used their power to form majorities in the General Assembly either by making good use of the shares or allotments not yet allocated or by enabling a third party to practice the right of selection entrusted to the under their shares or allotments in the capacity as holders thereof, as well as if the resorted to any other fraudulent manner. 

Article 407 

Acceptance of Undue Remuneration and Conflict of Interests 

Each of the Chairman and Members of Board of Directors and General Manager shall be amerced by a fine not less than (LD 5,000) five thousand Libyan Dinars and not more than (LD 20,000) twenty thousand Libyan Dinars with reimbursement of what is wrongly paid if they committed one of these acts: 

1. If they received remunerations or allocations contrary to provisions of Article (163). 
2. If they did not convene the General Assembly within the dates established in the Law in the cases provided for in Articles (152, 154).
3. If they participated on account of the company in other commercial projects which in their nature to introduce radical change in company purposes set out in the Memorandum of Association. 
4. If they contradicted provisions of the Articles (181, 182, 183). 

If a damage resulted to the company in these cases, imprisonment for not less than six months may be imposed.

Article 408 

Infringement of Duties Imposed on Control Authority and External Auditor 

An imprisonment for not less than six months period and a fine not less than (LD 5,000) five thousand Libyan Dinars and not more than (LD 20,000) twenty thousand Libyan Dinars or one of these two penalties shall be imposed on Chief and members of Control Authority if they do not abide by provisions of Articles (200, 203, 205, 206). 

The same penalty shall be applied to the External Auditor if he does not abide by provision of Article (209).