LEBANON Law and Practice Contributed by: Joseph Nasrallah, Jad Skaff and Yasmina Ballout, HNS Legal
assets and liabilities to a third-party acquirer. This represents a departure from voluntary M&A, allowing the regulator to initiate takeovers to preserve financial stability. Overall, while the core corporate framework remains unchanged, the intersection of banking resolution has created a more complex and regulated takeover envi - ronment in Lebanon. 4. Stakebuilding 4.1 Principal Stakebuilding Strategies In Lebanon, stakebuilding prior to a formal offer is not common and is primarily observed in the limited number of listed companies on the BSE. For private companies (SAL or SARL), acquisitions are almost exclusively negotiated directly with major sharehold - ers, making hostile stakebuilding practically impos - sible due to the closely-held nature of Lebanese firms and the common presence of “right of first refusal” clauses in company bylaws. In the public market, a bidder may attempt to accumu - late shares through open-market purchases. However, this is constrained by low liquidity and the 5% disclo - sure threshold. Strategies typically focus on “friendly” block trades negotiated with existing institutional or family shareholders before a public announcement. 4.2 Material Shareholding Disclosure Threshold Disclosure requirements in Lebanon differ between listed and private companies. For listed companies, any person acquiring a sig - nificant participation in voting shares must notify the CMA. The notification obligation is generally triggered at or above a 5% shareholding and aims to inform the market of shareholders capable of influencing corpo - rate decisions. For private companies, transparency is addressed through beneficial ownership rules rather than mar - ket disclosure. Companies must identify and record their ultimate beneficial owners, generally defined as natural persons who directly or indirectly hold at
least 20% of the capital or voting rights or otherwise exercise effective control. This information must be filed with the Commercial Register and declared to the tax authorities, but it is not publicly disseminated to investors. In addition, following Law No 40/2026 (the “2026 Budget Law”), any transfer of shares or change in shareholders must be notified to the Tax Administra - tion at the Ministry of Finance within one month from the date of change or share transfer in order to update the company’s fiscal records. 4.3 Hurdles to Stakebuilding Statutory disclosure thresholds applicable under the capital markets framework cannot be reduced or waived by a company through its articles of incorpo - ration or bylaws. Reporting obligations imposed by law, including disclosure of significant shareholdings in listed companies (the 5% threshold under CMA reg - ulations), are mandatory and prevail over any internal corporate provisions. A company may, however, introduce additional gov - ernance mechanisms that require notification or approval at higher internal thresholds. For example, constitutional documents or shareholders’ agree - ments may require a shareholder to notify the com - pany or obtain consent once a certain percentage of shares is acquired. Such provisions operate at the contractual or corporate level and do not replace stat - utory disclosure obligations. In fact, most Lebanese SAL companies include “right of first refusal” or “prior board approval” clauses for any share transfer in their bylaws, which act as a significant barrier to hostile or uncoordinated stakebuilding. Accordingly, while companies may impose stricter internal requirements, they cannot lower or circum - vent reporting thresholds established by law. 4.4 Dealings in Derivatives Lebanese law recognises derivative instruments. Article 2 of CML includes options, futures and other structured financial products within the definition of financial instruments. Accordingly, derivatives trans - actions are legally permissible under Lebanese finan - cial regulation.
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