LEBANON Law and Practice Contributed by: Joseph Nasrallah, Jad Skaff and Yasmina Ballout, HNS Legal
However, professional dealing in derivatives is a regu - lated activity. Entities carrying out brokerage, port - folio management or intermediation in such instru - ments must be licensed and supervised by the CMA in accordance with the capital markets regulatory framework. The regulatory regime therefore governs the intermediaries and the activity, rather than prohib - iting the instruments themselves. Lebanon does not currently have an organised deriv - atives trading market. The BSE operates essentially as a cash market limited to shares and bonds, and derivatives transactions are typically concluded over- the-counter with banks or licensed financial institu - tions rather than traded on an exchange. From a legal perspective, derivatives are contracts whose value is linked to an underlying asset, such as shares, but they do not themselves constitute own - ership of that asset. The contract creates financial rights and obligations between the parties without transferring the underlying securities. Consequently, derivatives are treated as financial contracts rather Lebanese law does not provide a separate disclosure regime specifically applicable to derivatives positions. Reporting obligations arise primarily through securi - ties transparency rules. Under the capital markets framework, disclosure is linked to ownership of shares and voting rights rather than purely economic exposure. Because derivative instruments such as options or swaps generally do not transfer legal title to shares, entering into a deriva - tives contract does not, by itself, trigger a notification obligation to the regulator or the market. A filing obli - gation arises only where the arrangement results in the acquisition of shares, or settlement in shares, or oth - erwise grants the investor voting rights or the ability to exercise shareholder powers. In that situation, the investor is treated as a shareholder and must disclose the participation once the relevant thresholds are met. From a competition law perspective, the analysis focuses on control rather than ownership. In the uncommon event that a derivative arrangement grants than corporate ownership interests. 4.5 Filing/Reporting Obligations
a party decisive influence over the company’s man - agement or strategy, it could be characterised as an economic concentration and require prior notification to the NCA under Competition Law. Accordingly, derivatives themselves are generally outside disclosure requirements, but regulatory fil - ings may arise if they lead to voting rights or effective control. 4.6 Transparency Lebanese law does not require a shareholder to dis- close the purpose of an investment or its intentions regarding control of the company. A person may acquire shares and remain silent as to strategy, gov - ernance plans or future influence. The capital markets framework is primarily concerned with transparency of ownership, identifying who holds voting power, rather than the motives behind the investment. The situation changes where an acquisition indicates a possible change of control in a listed company. Under the BSE bylaws, a person seeking to acquire more than 10% of the voting rights in a company listed on the official or secondary market, or a participa - tion than can lead to effective control, must proceed through a public tender offer procedure. The threshold functions as an early-warning mechanism rather than a determination of legal control, as even a minority block may allow a shareholder to exercise material influence in a company with dispersed ownership. Once a tender offer is launched, the bidder is no long - er treated as a passive investor. The offer documenta - tion (“Prospectus”) must include a statement of the bidder’s intentions regarding the company, including its future management and governance. This disclo - sure allows shareholders and the market to assess the consequences of the proposed acquisition and decide whether to retain or dispose of their shares. Separately, Lebanese corporate law imposes trans - parency obligations within the context of mergers and demergers. Under the merger provisions of the Code of Commerce, the companies involved must prepare a merger plan, deposit it with the Commercial Reg - ister and publish a summary in the Official Gazette and a local newspaper. The document must state,
740 CHAMBERS.COM
Powered by FlippingBook