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Doing business in Libya Law n°5 for Promotion of Investment of Foreign Capital

November 2008Aberdeen - London

Libyan British Business Council – UK Trade & Investment

Cyril VockEnergy, Transport and InfrastructureParis+ 33 1 53 05 16 00 cyril.vock@dentonwildesapte.com

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Law n° 5 : Scope• Sectors open to foreign investment

Agriculture

Industry

Health

Tourism

Oil (drilling & exploration already governed by Petroleum Law)

Regional development

Any other sector approved by the NGP

• Sectors traditionally restricted but opening up

Telecommunications (government monopoly)

Banking & financial services (government monopoly)

Retail, wholesale and catering (restricted to Libyan nationals)

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Law n°5 – The key incentives A 5 year tax exemption from income tax

A 5 year exemption from customs duties on equipment and materials to set up a project, on raw materials, components and spare parts

Goods to be exports exempt from production tax, excise tax and fees

Exemption from stamp duty on commercial documents

Protection against nationalisation

Facilitation of foreign investment procedures

No limit on foreign participation

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Law n° 5 : A balance of duties and rights

Start of project within 6 months of notification of approval

Submission of quarterly reports on the activities of the project to the FIB

Priority employment to Libyan citizens Maintain regular books account / financial

records Prepare an annual balance sheet + a profit and

loss account Start operations within the 6 months after FIB

approval Submit a the final statement of account +

general budget to FIB and the Tax department Submit quarterly activity report

Right to own a land

Right to open a foreign currency account

Right to repatriate capital

Right to re-transfer uninvested capital abroad

Right to employ foreign manpower

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Options to do business in Libya (1) Set up a branch office / local subsidiary

Create a joint venture

Open a representation office – specific product groupings concerned

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Options to do business in Libya (2) The need to register• All foreign companies wishing to work in Libya must register with

Ministry of Economy and Commerce• You cannot operate without it• What happens if you don’t• What you need to register a foreign company branch

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Formalities Scope Minimum capital

Duration Other key features

Branch / local subsidiary

-Request to Ministry of Economy and Trade

- Board approval of the branch

- Information on branch (activity, address, name)

- Information and documents on parent company

- Negative undertakings

Oil

Survey and planning

Environment protection

Computing

Technical consultations / studies

Health

› 150,000 LYD 5 years renewable

Joint Venture / joint stock company

- Approval by Foreign Investment Board

- « No formalities »-No publicity-Bank certificate for local remittance of funds-Board approval of the company

- Information on company

All fields

Electricity

Contracting / Civil Works

Oil Services

Telecommunications

Industry / Agriculture / Fishing

Minimum of LYD 5,000,000 (or LYD 2,000,000 if the Libyan partner has 51% or more in the project)

> Minimum subscribed capital: LYD 1,000,000

Long term -Minimum Libyan participation : 51% (if outside law n°5)

- Liability limited to respective shareholding