On 13 October 2022, the Libyan Minister of Economy issued Decree No. 944 of 2022 (“Decree No. 944”), which has repealed the prior regulatory regime applicable to the so-called “Commercial Law Regime” for doing business in Libya and provides some significant advantages for non-Libyan entities. For example, it raises the permissible level of foreign ownership in joint companies to 75-89% (from 49% previously) and gives foreigners the right to establish limited liability companies in Libya.
Article 375 of Law No. 23 of 2010 on Commercial Activity (the Commercial Law) authorises the Minister of Economy to issue regulatory decrees to determine the permissible levels of foreign ownership and the permissible areas of activity for non-Libyan legal and natural persons in the Libyan economy. To date, these matters were regulated by Minister of Economy Decree No. 207 of 2012 (as amended by Minister of Economy Decree No. 22 of 2013), both of which have been repealed and replaced as of 13 October 2022 by Decree No. 944.
Decree No. 944 regulates the participation of non-Libyan entities in activities under the Commercial Law only (i.e., the commercial licence regime). Therefore, it does not affect the rights and obligations of foreign or Libyan investors established under Investment Promotion Law No. 9 of 2010 (i.e., the investment licence regime). Further, the provisions of Decree No. 944 do not apply to entities that were established before its date of issuance.
Set out below is a summary of the most significant provisions of Decree No. 944:
Compared to the prior Decree No. 207 regime (now repealed), Decree No. 944 provides some significant advantages for non-Libyan entities. For example, it raises the permissible level of foreign ownership in joint companies to 75-89% (from 49% previously) and gives foreigners the right to establish limited liability companies in Libya. In addition, Decree No. 944 establishes new types of legal entities, such as “temporary branches” and “international cooperation company,” which may be of interest to non-Libyan entities.
As a cautionary note, Itkan Law believes that certain aspects of Decree No. 944 may have exceeded the authority delegated to the Minister of Economy by Article 375 of the Commercial Law – which only authorizes the Minister to regulate levels of permissible foreign ownership and to determine the commercial activities open to non-Libyan entities acting through the entities established in the Commercial Law. Accordingly, clients should be aware that the provisions of Decree No. 944 establishing a new type of legal entity (i.e., international cooperation companies) and may be subject to challenge before the Libyan administrative courts and to the issuance of an adverse legal opinion by the Law Department of the Ministry of Justice.
"Itkan Law operates in a genuine niche as a law firm providing international law firm levels of support and responsiveness in connection with the Libyan jurisdiction"
Founded almost two decades ago, Itkan Law Firm has accomplished significant achievements, regardless of the hardships its unstable environment procured.