LEBANON Law and Practice Contributed by: Joseph Nasrallah, Jad Skaff and Yasmina Ballout, HNS Legal
third parties. The Commercial Register plays a con - stitutive and publicity role rather than a regulatory one, but it acts as the central authority through which changes of control become legally enforceable. In regulated sectors, supervisory authorities exercise substantive oversight. Transactions involving banks and financial institutions fall under the supervision of the Central Bank of Lebanon (BDL) pursuant to the Code of Money and Credit. Mergers between banks require prior approval from the Central Council of the BDL, following consultation with the Banking Control Commission of Lebanon (BCCL). In addition, under the Banking Reform Law, the HBC is vested with authority to determine bank restructuring and man - datory mergers as part of the financial sector recovery framework. For public companies and securities-related trans - actions, the Capital Markets Authority (CMA), estab - lished by Law No 161/2011, supervises significant share acquisitions and public acquisition offers. Listed companies are also subject to the rules of the Beirut Stock Exchange (BSE), particularly regarding disclo - sure obligations, trading transparency and market conduct. In the insurance sector, the Insurance Control Com - mission (ICC) serves as the primary regulator and oversees mergers, acquisitions and recapitalisation measures aimed at maintaining solvency and protect - ing policyholders. As a result, M&A transactions in Lebanon involve a combination of corporate formalities, competition review and sector-specific approvals, depending on the nature of the target’s activity. 2.3 Restrictions on Foreign Investments Foreign investment is generally permitted without a local partner. A foreign individual or company may incorporate a Lebanese company or acquire shares in an existing company without prior governmental approval, subject mainly to sector-specific licensing requirements. Foreign investors may also participate in commercial activities and public tenders, subject only to sector-specific licensing requirements. Howev - er, it is important to note that, for companies engaged
in exclusive commercial representation, Legislative Decree No 34/1967 still requires Lebanese citizens to hold the majority of the capital and the manager be a Lebanese national. Lebanese law recognises the principle of free capi - tal movement. Under the Code of Money and Credit and the Capital Markets Law (CML), foreign investors may hold and trade financial instruments and transfer funds in foreign currency. That said, since the finan - cial crisis, the banking system has imposed practical transfer limitations. Restrictions exist, but they are specific, rather than general. The most important relates to real estate. Under Legislative Decree No 11614/1969 (as amend - ed by Law No 296/2001), a foreign person or entity generally needs a decree from the Council of Minis - ters to acquire real property in Lebanon, except for relatively small surface areas of up to 3,000 m². In addition, foreign ownership cannot exceed 3% of the Lebanese territory and, within Beirut, 10% of the city’s area. Long-term leases exceeding ten years are treated similarly. Some regulated sectors such as banking, insurance, media, transportation, and defence-related activities require licences from the relevant authorities. Finally, Law No 360/2001 created the Investment Development Authority of Lebanon (IDAL), which grants incentives and facilitation measures for quali - fying projects. Its approval is not required to invest; it is an optional incentive regime. In practice, foreign investment restrictions rarely pre - vent acquisitions of operating companies. The princi - pal transaction risk arises only where the target holds significant real estate assets or operates in a regulated sector, in which case governmental approvals may become a timing condition to closing rather than a
prohibition on the transaction. 2.4 Antitrust Regulations
The Competition Law introduced, for the first time in Lebanon, a formal merger control regime. Prior to its adoption, business combinations were not subject to a dedicated competition review, and transactions
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