Practice guide

The joint venture in practice

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

At a glance

Legal basis

The Code of Commerce governs the joint venture and exempts it from publication and registration (Com. Code, arts. 247 to 251). Partners freely determine their rights, profit shares, and management rules in a private agreement (Com. Code, art. 248). Towards third parties, the existence of the joint venture can be proven by any means accepted in commercial matters (Com. Code, art. 249). Other commercial companies must instead be proven by a written contract (Com. Code, art. 43). The Code of Obligations and Contracts governs the company contract, partner contributions, management, and dissolution (COC, arts. 844 to 930). The general rules of the Code of Obligations and Contracts apply to commercial companies provided they do not contradict the Code of Commerce (Com. Code, art. 42).

Before you draft

You must verify partner eligibility before drafting. A company cannot be formed between a father and a son under his authority (COC, art. 846). You cannot form a company between a tutor and a minor until the minor reaches majority and the accounts are approved (COC, art. 846). You cannot form a company between a curator and an incapacitated person, or between a religious institution's administrator and the person whose property they manage (COC, art. 846). Allowing a minor or incapable person to trade does not automatically let them form a company with their father, guardian, or curator (COC, art. 846). The company must have a lawful object. It is void if that object breaks the law, or offends public order or morals (COC, art. 847). A company is also void if its object is something the law does not treat as property at all (COC, art. 847).

The company has no legal personality and therefore no official trade name (Com. Code, art. 251). The company is confined to the contracting parties and is not intended for third parties to know (Com. Code, art. 247). Revealing the company to a third party strips its secret nature towards that third party (Com. Code, art. 252). The venture may then be treated as a de facto company as regards that third party (Com. Code, art. 252).

The company does not register a head office lease because it is not registered at the Commercial Registry. In practice, the managing partner uses their own address for tax purposes.

The company does not file beneficial owner declarations with the registry. The tax registration request in formation must still name the beneficial owner (TPL, art. 32). In practice, the Ministry of Finance treats the venture transparently and taxes the partners directly on their respective shares of the profits.

If the agreement does not fix each partner's share, the share follows each partner's contribution to the capital (COC, art. 894). Fixing only the profit share also fixes the loss share, and the other way around (COC, art. 894). A partner who contributed only labour takes a share set by how important that labour is to the venture (COC, art. 894). A partner who contributed money and labour takes a share for each (COC, art. 894).

Formation, step by step

1. Draft the agreement. You draft the joint venture agreement (عقد شركة المحاصة) setting out the object, contributions, and profit distribution. The partners sign it. The agreement needs no special form, unless its object is real property or other mortgageable property held for more than three years (COC, art. 848). In that case, the contract must be in writing, registered in the legal form, and complete the land registry steps under Decision 188 of 1926 (COC, art. 848).
2. Legalise the signatures. The partners sign the agreement before a notary public. In practice, lawyers highly recommend this to give the document a fixed date (تاريخ ثابت) and prevent disputes over signature authenticity.
3. Pay the stamp duty. Deeds that state a sum of money carry proportional stamp duty, at a general rate of four per thousand (DL 67/1967, arts. 13 and 18). In practice, failing to cancel the stamps brings penalties, so confirm the amount with the tax office.
4. Notify the tax authority. The managing partner must ask the tax administration to register the venture's activity, within two months of starting it (TPL, art. 32).

Formation documents

After registration

The company does not register with the Commercial Registry. In practice, the managing partner notifies the Ministry of Finance and obtains a tax number for the venture's activities.

Once the mandatory VAT threshold is met, the managing partner must file the VAT registration request within two months of the end of that quarter (TPL, art. 32).

The company cannot hire employees because it lacks legal personality (Com. Code, art. 251). In practice, the managing partner hires employees in their personal name and registers them with the National Social Security Fund.

The company does not appoint a retained lawyer because it has no registry file.

The company does not use official stationery with a trade name. Revealing the company to a third party strips its secret nature towards that third party (Com. Code, art. 252). The venture may then be treated as a de facto company as regards that third party (Com. Code, art. 252).

The company cannot open a bank account in its own name. In practice, the managing partner uses a personal or dedicated account for the venture's funds.

Governance

If the agreement says nothing about management, the venture defaults to a restricted company (COC, art. 893). Removing a partner's management role then needs the grounds and unanimity that article 891 sets (COC, art. 893). Management belongs to all partners jointly unless they agree otherwise (COC, art. 876). The right to manage includes the right to represent the partners towards third parties unless specified otherwise (COC, art. 877). The contract can appoint one or more managers, who can be non-partners, by the majority required for company decisions (COC, art. 883). Managers appointed in the contract can be removed only for just cause, by unanimous decision (COC, art. 891). The contract may instead let a majority remove them, or let them be removed like an ordinary agent (COC, art. 891). Just cause includes mismanagement, serious disagreement among managers, a serious breach of duty, or an inability to serve (COC, art. 891). Managers not appointed in the contract can be removed by the same majority required to appoint them (COC, art. 892).

If partners give each other a general mandate to manage without consulting the others, it is a fiduciary company (COC, art. 878). A partner in a fiduciary company can perform all management acts alone, including selling goods, accepting pledges, and issuing bills of exchange (COC, art. 879). If the contract states all partners manage but none can act alone, it is a restricted company (COC, art. 881). In a restricted company, a partner needs the consent of the others for management acts unless there is an urgent matter (COC, art. 881).

A non-managing joint venture partner may see the books only for grave reasons and only with a judge's permission (COC, art. 890). Every partner must account for all sums taken from the company and all acts performed for the common account (COC, art. 868). Any clause that frees a partner from this duty to account is void (COC, art. 868). A partner spending money or taking on debt for the common good can claim reimbursement from the others, each in proportion to their share (COC, arts. 873 and 875). This matters because the contracting partner alone answers to outside creditors (Com. Code, art. 252).

Decisions require unanimity to alienate common property for free, amend the contract, or act outside the company object (COC, art. 887). Any clause authorizing the managers or a majority to make such decisions in advance is void (COC, art. 887). If the contract specifies a majority, it means a numerical majority in case of doubt (COC, art. 882). If votes are tied, the opponents prevail (COC, art. 882).

The company does not register its minutes or decisions because it is exempt from publication formalities (Com. Code, art. 250).

Annual cycle

When partners form the venture for one specific project, the final accounting and the profit distribution wait until that project ends (COC, art. 900). The yearly table below applies only to ventures with no fixed single project.

The company does not file annual financial statements with the Commercial Registry. In practice, the managing partner files the tax return for the commercial profits. The reserve allocation stops when the reserve reaches one-fifth of the capital (COC, art. 897). If the capital decreases, later profits must rebuild it before any distribution (COC, art. 897). The partners may instead decide to reduce the capital to the amount actually left (COC, art. 897).

Changes during the company's life

Transfer of a partner's share

A partner needs the consent of all other partners to bring a new partner into the company, unless the contract allows it (COC, art. 871). A partner may give a third party an interest in their own share, or transfer that share, without needing this consent (COC, art. 871). The transfer does not create a legal relationship between the company and the third party (COC, art. 871). You draft an amendment to the agreement. You do not file this with the registry. The person substituting the outgoing partner assumes all rights and obligations (COC, art. 872).

• Amended joint venture agreement

Amendment of the agreement

Amending the agreement requires the unanimous consent of the partners (COC, art. 887). Any clause authorizing the managers or a majority to make such decisions in advance is void (COC, art. 887). You draft the amendment and have the partners sign it. You do not publish or register the amendment (Com. Code, art. 250).

• Amended joint venture agreement

Change of managers

Managers appointed in the contract can be removed only for just cause, by unanimous decision (COC, art. 891). The contract may instead let a majority remove them, or let them be removed like an ordinary agent (COC, art. 891). Just cause includes mismanagement, serious disagreement among managers, a serious breach of duty, or an inability to serve (COC, art. 891). Managers not appointed in the contract can be removed by the same majority required to appoint them (COC, art. 892). You draft a resolution or an amendment. You do not file it with the registry.

• Partner resolution or amended agreement

Dissolution and liquidation

The company dissolves when its term expires, its object is completed, or the common property is lost (COC, art. 910). It also dissolves if a partner dies, goes bankrupt, or becomes incapacitated (COC, art. 910). The partners can also agree to end it (COC, art. 910). Death of a partner dissolves the company, unless the partners agreed that it continues with the heirs (COC, art. 910). That continuation clause has no effect if an heir is a minor or otherwise incapable (COC, art. 916). The competent judge may still let that heir continue in the company if they have a substantial interest (COC, art. 916). The judge can then order steps to protect the heir (COC, art. 916). A partner can request dissolution for just cause before the term expires (COC, art. 914). Partners cannot waive this right to request dissolution in advance (COC, art. 914). A partner may renounce an indefinite-term company by notifying the other partners (COC, art. 915). The renunciation must be made in good faith and not at an awkward time, or it has no effect (COC, art. 915). It takes effect only at the end of the company year (COC, art. 915). It needs three months' notice before that date, unless there are important reasons for less (COC, art. 915). If the company continues its operations after the term expires, it is tacitly extended year by year (COC, art. 912).

1. Appoint a liquidator. The contract may already name a liquidator (COC, art. 923). If not, all partners take part in the liquidation, or they unanimously appoint one (COC, art. 923). The court appoints a liquidator on any partner's request if the partners cannot agree (COC, art. 923). The court also does this if there is good reason not to use the person named in the contract (COC, art. 923). Until the liquidator is appointed, the managers act as depositaries of the company assets (COC, art. 924).
2. Draft the inventory. The liquidator and the managers jointly prepare the inventory and the balance sheet (COC, art. 927). The liquidator receives and keeps the company books and papers (COC, art. 927).
3. Settle debts and distribute assets. The liquidator collects debts, pays liabilities, and sells assets (COC, art. 928). If multiple liquidators are appointed, they cannot act separately unless expressly authorized (COC, art. 926). If a known creditor does not come forward, the liquidator may consign the sum owed, when consignment is legally required (COC, art. 929). For debts not yet due or in dispute, the liquidator must set aside enough money to pay them, in a safe place (COC, art. 929). The liquidator can call on partners only for sums the partnership type obliges them to pay, or for capital they still owe (COC, art. 930). An insolvent partner's share of that call is spread among the other partners, in proportion to their share of the losses (COC, art. 930).
4. Close the tax file. The managing partner settles final tax liabilities with the Ministry of Finance. In practice, there is no registry strike-off or social security clearance for the company itself.

Pitfalls

• Revealing the company to a third party strips its secret nature towards that third party (Com. Code, art. 252). The venture may then be treated as a de facto company as regards that third party (Com. Code, art. 252).
• The joint venture cannot issue shares or other negotiable instruments to the partners (Com. Code, art. 253).
• Allocating all profits to one partner or exempting one partner from all losses makes the company void (COC, art. 895).
• Failing to pay the proportional stamp duty on the contract triggers penalties under the tax laws in practice.
• Attempting to apostille a foreign power of attorney will fail because Lebanon only accepts consular legalisation in practice.
• Hiring employees in the company's name is impossible because it lacks legal personality (Com. Code, art. 251).

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
• Code of Obligations and Contracts of 9 March 1932, as amended
• Tax Procedures Law No. 44 of 11 November 2008, as amended
• Legislative Decree No. 67 of 5 August 1967 on fiscal stamp duty, as amended

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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