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Local business incentives - Legal forms of companies - Registration and licensing procedures - Legal framework - Foreign exchange control - Regulations concerning equity investment - FDI inflows - Expertise of the political risk

Local business incentives

The Libyan government does not encourage investment in all sectors: the law number 5 of 1997 was modified by law number 7 in 2003. FDI (Foreign Direct Investment) is not authorised in all sectors. Few sectors are open to involvement: there is industry, tourism, services and agriculture. All other sectors are regulated by a special law (oil sector) or reserved (financial sector, telecommunications, etc.).
To encourage FDI in the authorised sectors, the government has taken a certain number of measures:
- exemption from taxes and customs duties on machines and equipment, raw materials and spare parts required to complete a project,
- exemption from corporate taxes for a period of 5 years,
- exemption from duties and taxes on goods for export.


Legal forms of companies

Form Number of partners/shareholders Minimum and/or maximum capital Liability Registration fee Release of financial documents
Joint stock company. The law defines 4 thresholds.

Minimum number of shareholders according to the 4 thresholds:
- 13 shareholders,
- 25 shareholders,
- 50 shareholders,
- 100 shareholders.

- 1st threshold: maximum capital of 1 million LYD,
- 2nd threshold: capital of between 1 and 2 million LYD,
- 3rd threshold: capital of between 2 and 4 million LYD,
- 4th threshold: capital above 4 million LYD.
Maximum share of capital available per shareholder according to the 4 thresholds:
- 4% of capital,
- 2%
- 1%,
- 0.5%.

The Joint Stock Company is subject to law number 21/1369 dated 21st December 2001.

not communicated
The foreign company

Minimum of 2 partners. One of them must be of Libyan nationality.

The capital must be between a minimum of 5 000 LYD and a maximum of 30 000 LYD.

The Libyan partner must hold at least 51% of the capital.

Foreign companies are regulated by the clauses of law number 65 dated 20th May 1970.

not communicated

The office of representation

A minimum of 2 partners, one of whom must be of Libyan nationality.

The office of representation must open a non-resident bank account with funds supplied by the parent company. The deposit must be at least equal to 50 000 LYD.

not communicated

The office of representation is subject to decree number 8 dated 9th January 2005. It provides for the deposit of a request that includes the name, the profession and the postal address of the representative responsible for filing the request.
The company has to pay a registration tax of 25 000 euros.

not communicated

The foreign subsidiary

A minimum of 2 partners, one of whom must be of Libyan nationality.

The subsidiary must set aside a sum reserved for setup and operating that must be at least 150 000 LYD.

not communicated

The subsidiary is regulated by decree number 3 dated 3rd January 2005. The request must be filed with the General Popular Committee's Bureau of the investment Register and Commercial Register.

not communicated

Registration and licensing procedures
 The company must be registered with the Bureau of the investment Register and Commercial Register. There is a registration tax of 2% of the contract for foreign suppliers contracting with public organisations.

Legal framework
 Before being able to set up in Libya, certain documents must be presented to the Libyan Foreign Investment Board, which authorises investment projects for a period of 5 years (within the framework of an operating licence). This authorisation can be extended for 3 years.
The documents to be submitted are:
- 1 application form that includes the name of the applicant, the nationality, the legal status and headquarters, the description of the project, the investment sector, the schedule of payments, the nature and amount of capital,
- 1 feasibility study,
- 1 certificate of nationality,
- the extract of the company register in the country of origin, 1 copy of the balance sheet and a certificate of non-bankruptcy.

Foreign exchange control
Exchange control is carried out by the Exchange Control Directorate of the central bank. It is strictly prohibited to bring Libyan currency into the country or take it out. On the other hand, the introduction of foreign currency is allowed. Any exchange transaction not carried out by a Libyan bank is prohibited.

Regulations concerning equity investment
 In the authorised sectors (industry, health, tourism, services and agriculture), a majority participation in the capital of a local company is possible.  

Foreign Direct Investment inflows in Libya

FDI inflows 2003 2004 2005 World rank (*)
FDI inflows (USD million) 142 354 261 136/141
Source : UNCTAD - World Investment Report
Note : (*) World Rank = UNCTAD Inward FDI Performance Index. It is a measure of the extend to which a host country receives inward FDI relative to its economic size. It is calculated as a ratio of the country's share in global FDI inflows to its share in global GDP.


Last modified in 2006 - ongoing update
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