Practice guide

The sole trader and the business

By Gracia Hobeich, lawyer, Beirut Bar Association Updated 29 September 2026

At a glance

Legal basis

The Code of Commerce governs merchants, commercial books, and the commercial register (Com. Code, arts. 8 to 39). Legislative Decree 11/1967 governs the business itself (المؤسسة التجارية) as an asset, covering its sale, pledge, and lease-management. By default, the business includes the trade name, the trade sign, the lease right, customers and location (DL 11/1967, art. 1). The contract can list different elements instead (DL 11/1967, art. 1). A sale of the business does not include its debts or its books unless the sale contract says so (DL 11/1967, art. 6). Tax Procedures Law 44/2008 sets out tax registration, bookkeeping, and invoicing rules. Where commercial law lacks a specific text, you apply general civil law if it aligns with commercial principles (Com. Code, art. 2). You then look to jurisprudence and commercial custom (Com. Code, arts. 3 and 4).

Before you draft

The trader must have commercial capacity (Com. Code, art. 9). Married women have full capacity to trade and can perform any act the business requires (Com. Code, arts. 11 and 12). Individuals doing small trades with low overheads are exempt from registration and bookkeeping rules (Com. Code, art. 10).

If a foreign married woman's personal status law requires her husband's permission to trade, she must state this authorization (Com. Code, art. 24). Any separation of property judged abroad for foreign spouses must be registered to bind third parties (Com. Code, art. 15).

You must prove the right to occupy the premises. In practice, the registry requires a lease agreement or title deed. If the property is leased, you need a real estate certificate to prove the landlord's ownership.

The trader must declare the beneficial owner (صاحب الحق الاقتصادي) to the tax administration (TPL, art. 32).

Formation, step by step

1. Prepare the declaration. The trader or their representative completes a declaration in duplicate (Com. Code, art. 24). The form must state all eleven particulars article 24 lists. These are the trader's name, trade name, birth date and place, and nationality. They also include a foreign married woman's authorization to trade, and the marriage contract regime. The rest are the trade object, branch locations, and the establishment's address. They also include any authorized agents and other establishments the trader runs (Com. Code, art. 24). In practice, you attach an ID copy, a statistics form, and property documents. If a representative applies, you need a notarised power of attorney, which requires consular legalization if signed abroad.
2. File at the Commercial Registry. You submit the documents to the clerk of the Court of First Instance where the main establishment sits (Com. Code, art. 24). You must file within one month of opening or buying the business (Com. Code, art. 24). In practice, physical filing remains the norm despite laws envisioning electronic registration.
3. Pay the fees. You pay the required government fees at the registry. In practice, official texts list a 750,000 LBP license fee and a 375,000 LBP mutual fund fee. Actual costs vary due to currency fluctuations.
4. Obtain the registration certificate. The clerk transcribes the declaration into the register (Com. Code, art. 24). The clerk returns one copy of the declaration certified as true to the original (Com. Code, art. 24).

Formation documents

After registration

You must submit a declaration of commencement of work to the Ministry of Finance within two months of starting work (TPL, art. 32). In practice, you file Form M10 and Form M11, and declare the beneficial owner. You must obtain an e-Pin to file tax declarations online.

Keep a register of beneficial owners and update it as changes occur (TPL, art. 29). For each owner it records the full name, nationality, and date of birth (TPL, art. 29). It also records the home and correspondence addresses, and the identity or passport number (TPL, art. 29). It must also state the tax residence, tax number, and share (TPL, art. 29). Keep the documents that show who owns and controls the business for ten years, even after someone stops being a beneficial owner (TPL, art. 29).

You must register for VAT within two months of the end of the quarter when the business meets the mandatory VAT threshold (TPL, art. 32).

You must register any employee with the tax administration within three months of them starting work (TPL, art. 32). In practice, you must also register employees with the National Social Security Fund.

The trader must state the place of registration and the registration number on all correspondence, invoices, order notes, and printed materials (Com. Code, art. 36).

In practice, an individual establishment does not need to appoint a retained lawyer under the Bar Law. The business does not require a bank certificate of capital deposit.

Governance

The owner manages and binds the business personally. The owner may appoint authorized signatories or managers (Com. Code, art. 24). You must register their names, dates of birth, and nationalities in the commercial register (Com. Code, art. 24).

The owner can lease the business to a manager who runs it for their own account (DL 11/1967, art. 38). The manager becomes a merchant and must state their status as a lease-manager on all documents (DL 11/1967, arts. 43 and 44). The owner stays jointly liable with the manager only for debts the manager contracts while operating the business (DL 11/1967, art. 41). This liability ends once the lease-management contract is published (DL 11/1967, art. 41).

The trader must keep a journal and a ledger manually or via a secure digital application (Com. Code, art. 16). The trader must conduct an annual inventory to prepare a balance sheet and income statement (Com. Code, art. 16). Manual books must be numbered and signed by the president of the Court of First Instance (Com. Code, art. 18). Books must be kept in date order, without blank spaces, gaps, marginal entries or erasures (Com. Code, art. 17). Books must be kept for ten years (Com. Code, art. 19).

Annual cycle

Tax rates on commercial profits are progressive (Law 10/2022, art. 28). The rate is 4% for the first 27,000,000 LBP (Law 10/2022, art. 28). It rises to 7% up to 72,000,000 LBP, and 12% up to 162,000,000 LBP (Law 10/2022, art. 28). The rate reaches 16% up to 312,000,000 LBP, and 21% up to 675,000,000 LBP (Law 10/2022, art. 28). Profits above 675,000,000 LBP face a 25% tax rate (Law 10/2022, art. 28).

Changes during the company's life

Change of particulars

You must register any change to the particulars listed in article 24. This includes the trader's name, nationality, marital authorization, object, branches and agents (Com. Code, art. 25). You must also register any patent or trademark the trader uses. You must also register the transfer of the business (Com. Code, art. 25). You must request this registration within one month of the act triggering the change (Com. Code, art. 31). You must also notify the tax administration of any change to the trade name, address, main activity, or beneficial owner within two months (TPL, art. 32). Failing to request mandatory commercial registry updates within the deadline incurs a fine of 50 to 1,000 LBP (Com. Code, art. 37).

• Declaration of change
• Supporting documents

Sale of the business

Contracts concerning the business must be in writing, and they do not bind third parties unless registered (DL 11/1967, art. 3). The deed must state the turnover and profits for the last three years (DL 11/1967, art. 11). The seller warrants that this statement is accurate (DL 11/1967, art. 11). If it proves false, the court may cancel the sale or award damages (DL 11/1967, art. 11). You must register the sale in the commercial register and publish a summary in the Official Gazette and a local newspaper within 15 days (DL 11/1967, art. 12). The buyer must withhold the purchase price until 10 days after the final publication, during which creditors can object (DL 11/1967, arts. 13 and 14). If a creditor objects, the seller may ask the judge to authorise collecting the price (DL 11/1967, art. 15). The seller must first deposit enough funds to secure the objecting creditor's claim (DL 11/1967, art. 15). The lease of the premises transfers to the buyer with the business even if the lease contract says otherwise (DL 11/1967, art. 9). The buyer must keep using the premises for the same purpose and meet the lease terms. The landlord may ask the court to set a fair rent if conditions changed (DL 11/1967, art. 9). If the sale includes the lease, you must notify the landlord within 15 days (DL 11/1967, art. 12). The landlord then has 10 days to exercise a right of pre-emption and must offer a bank guarantee for the price (DL 11/1967, art. 10).

• Sale agreement
• Statement of turnover and profits
• Proof of publication
• Notification to the landlord

Pledge of the business

You can pledge the business without dispossessing the owner (DL 11/1967, art. 22). By default, the pledge covers only the trade name, the trade sign, the lease right, customers and location (DL 11/1967, art. 23). The parties may also pledge fixtures, equipment, patents, licenses, trademarks and designs used in the business (DL 11/1967, art. 23). If the business has branches, the pledge covers a branch only if the agreement names it (DL 11/1967, art. 23). You must register the pledge in a special register at the Court of First Instance where the business operates (DL 11/1967, art. 24). If a covered branch sits in another court's district, register the pledge there too (DL 11/1967, art. 24). Pledgees rank by registration date, and same day registrants rank equally (DL 11/1967, art. 25). The secured creditor applies using a petition and must attach the pledge agreement (DL 11/1967, art. 24). If the owner moves the business centre, they must notify all secured creditors by registered mail 15 days beforehand (DL 11/1967, art. 26). Failing this, the secured debts become immediately due (DL 11/1967, art. 26). The owner must register the new address within 10 days of the move, under penalty of a 1,000 LBP fine (DL 11/1967, art. 26).

• Pledge agreement
• Petition for registration

Contribution to a company

Contributing a business to a company requires the same publication as a sale (DL 11/1967, art. 37). A contribution also triggers the landlord's pre-emption right and the seller's warranted turnover and profit statement (DL 11/1967, arts. 10, 11 and 37). You must publish the contribution in the Official Gazette and a local newspaper. Creditors of the contributor have 10 days after the second publication to declare their debts to the court clerk (DL 11/1967, art. 37). Only creditors of the contributing partner without a registered pledge on the business may use this procedure (DL 11/1967, art. 37). Any partner other than the contributing partner can request the annulment of the company or the contribution within 15 days after this period ends (DL 11/1967, art. 37). The contributing partner cannot request this annulment (DL 11/1967, art. 37).

• Contribution agreement
• Proof of publication

Lease-management

You must publish a lease-management contract in the Official Gazette and a local newspaper within 15 days of its date (DL 11/1967, art. 39). You must also register it in the commercial register within the same 15-day period (DL 11/1967, art. 40). Failure to register incurs a fine between 500 and 1,000 LBP (DL 11/1967, art. 40). Creditors of the owner have 15 days after publication to ask the court to declare their debts immediately due (DL 11/1967, art. 39). When the lease ends, you must publish and register its termination following the same rules (DL 11/1967, art. 42). The manager then stays jointly liable with the owner for business debts until 15 days after that publication (DL 11/1967, art. 42).

• Lease-management contract
• Proof of publication

Dissolution and liquidation

Registration must be struck off if the trader dies without transferring the business to anyone. It must also be struck off if the trader stops trading (Com. Code, art. 30).

1. Obtain clearances. In practice, you must first obtain valid clearance certificates from the National Social Security Fund, the Ministry of Finance, and the Municipality.
2. Notify the tax administration. You must notify the tax administration of the final cessation of work within two months (TPL, art. 33). Filing the notice does not cancel tax liability for the working period, and this applies even if the tax is assessed later (TPL, art. 33). In practice, you file Form M6 and settle all pending taxes.
3. Apply for striking off. You submit an application to the commercial registry to strike off the establishment (Com. Code, art. 30).
4. Publish the decision. In practice, the judge issues a striking-off decision. You must publish this decision in the Official Gazette and two local newspapers, triggering a 10-day objection period.
5. Finalise the strike-off. The judge orders the direct striking off of the registration from the commercial register (Com. Code, art. 30).

Dormant establishments can also be struck off by the Ministry of Finance without a liquidation (Decision 208/2020, art. 2). This covers an establishment that never operated, or one that stopped with no assets and no employees. The establishment must owe nothing to third parties. It must also have paid all taxes and NSSF dues (Decision 208/2020, arts. 2 and 3). The Ministry prepares and publishes the list within three months of the start of every year (Decision 208/2020, arts. 4 and 7). The establishment, public bodies and creditors may object to the Ministry within three months of the last publication (Decision 208/2020, art. 5). An establishment that does not object is struck from the tax rolls, the registers and the NSSF (Decision 208/2020, art. 6). Check the Ministry's list before filing anything for a dormant client establishment.

Pitfalls

• Failing to clear all tax, social security, and municipal liabilities will cause the registry to reject a striking-off application in practice.
• Failing to register the business within one month incurs a fine, which doubles if you ignore a court order to register within 15 days (Com. Code, art. 37).
• Bad faith false statements to the registry draw a fine of 250 to 5,000 LBP. They also draw one to six months in prison. The court may instead impose only one of these two penalties (Com. Code, art. 38).
• Failing to state the registration place and number on business correspondence breaches the law (Com. Code, art. 36).
• If a buyer pays the purchase price of a business before the 10-day objection period ends, the payment is invalid against objecting creditors (DL 11/1967, art. 13).
• Moving a pledged business without notifying secured creditors 15 days in advance makes the secured debts immediately due (DL 11/1967, art. 26).

Questions lawyers ask

Sources

• Code of Commerce, Legislative Decree No. 304 of 24 December 1942, as amended, notably by Law No. 126 of 29 March 2019
• Legislative Decree No. 11 of 11 July 1967 on the business (fonds de commerce)
• Tax Procedures Law No. 44 of 11 November 2008, as amended
• Budget Law No. 10 of 15 November 2022
• Decision No. 208 of 15 June 2020 of the Ministers of Finance and Justice on striking off dormant companies

Statutory text as published by the Lebanese University Centre for Research and Studies in Legal Informatics, read in Arabic. Citations give the article as amended to date. Registry and tax office practice changes without notice, so confirm the desk’s current requirements before filing.

General information, not legal advice. Current as at 29 September 2026.

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