LEBANON Trends and Developments Contributed by: Joseph Nasrallah, Jad Skaff and Mia Chbeir, HNS Legal
allows 100% foreign ownership, although at least one- third of board members (with some exceptions) must be Lebanese nationals. Another important update is the separation of the chairman and general manager roles (previously held by one person), creating distinct leadership positions. The introduction of videoconferencing for general assembly and board meetings has further integrated technology into business practices, easing attend - ance challenges. Law No 126 of 2019 has overhauled the regulations for mergers and split-ups, drawing from French com - mercial law and case precedents. These amendments provide comprehensive guidelines on various aspects of these complex operations, including dissolution of acquired companies, effective dates, publication requirements, decision-making processes, bondhold - er rights, and applicable fees and taxes. This clarity is particularly valuable for larger companies considering acquiring SMEs, as it provides them with increased legal certainty and protection. Investors must also consider Law No 281 of 2022 (the “Competition Law”). The newly established National Competition Authority (NCA) now operates as a regu - latory gatekeeper for certain transactions. Concentra - tions leading to a dominant market position (generally exceeding 30% market share) may require prior noti - fication and clearance, introducing an antitrust review process that was previously absent from Lebanese M&A practice. Law No 163 of 2020 introduced the private invest - ment company structure, which is a limited partner - ship vehicle designed for private equity transactions. These companies can invest in unlisted financial instruments, manage private companies and funds, provide loans and guarantees (under certain own - ership thresholds), and acquire necessary assets. However, its effectiveness remains untested due to the economic crisis. Last, but not least, Law No 81 of 2018 tackling elec - tronic transactions and personal data is a crucial piece of legislation for Lebanese businesses trying to adapt to the digital age. This law provides legal clarity for
online commerce and establishes essential data pro - tection safeguards. Given the increasing importance of data privacy and cybersecurity, this law equips Leb - anese companies to protect customer information and meet international standards. Shareholder rights and corporate governance in Lebanon While Lebanon’s Code of Commerce does not explicitly address shareholder activism, it grants all sharehold - ers equal rights within the same share class (though preferential shares with enhanced rights are possible). Each share carries one vote (double voting rights have been eliminated), and shareholders have the right to receive dividends. Recent amendments (Law No 126 of 2019), show notable efforts towards strengthening corporate governance – one can note the processes of shielding shareholders from director disloyalty, and the expansion of rules governing extraordinary transactions such as mergers and splits. Disclosure and transparency have also been reinforced through greater access to information, including deeper details on beneficial owners and related-party transactions. Special reports from management and auditors, along with mandatory disclosure of risk factors in the board report (covering company performance, challenges and future outlook), further enhance transparency. Finally, the amendments emphasise auditor independ - ence and accountability and promote an objective and independent board judgement on corporate matters. In addition, Lebanon’s efforts to exit the FATF grey list have significantly increased AML and KYC scrutiny. Share transfers now commonly require disclosure of the ultimate beneficial owner (UBO) to the Commer - cial Registry and tax authorities, and banks routinely condition transaction payments on completion of enhanced compliance checks. Protecting minority shareholders in M&A deals Beyond the legal rights afforded to shareholders, established M&A practices offer further safeguards for minority interests. These protections often include management representation, granting of veto power over management composition and appointments, or even the right to nominate observers. Reserved mat - ters ensure minority input on critical decisions such as mergers, dissolutions or changes to shareholder rights,
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