Practice guide

The partnership limited by shares

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

At a glance

Legal basis

The Code of Commerce governs the partnership limited by shares in articles 226 to 236. The law explicitly applies the rules of the joint stock company (SAL) to the formation and operation of the SCA (Com. Code, art. 234). The general partners follow the rules of the general partnership (Com. Code, art. 229). The limited partners follow the rules of SAL shareholders, and the capital is divided into shares (Com. Code, art. 232). The Code of Obligations and Contracts fills any gaps regarding the partnership contract provided its rules do not contradict the Code of Commerce (Com. Code, art. 42).

Before you draft

You must verify the founders' eligibility. A person cannot found an SCA if they are bankrupt and have not been rehabilitated for ten years. The same bar applies to anyone convicted in Lebanon or abroad within the last ten years. This covers convictions for fraud, embezzlement, issuing bad cheques, or harming the state's financial standing (Com. Code, art. 79). The same restrictions apply to the representatives of legal entities acting as founders (Com. Code, art. 79).

You must draft the trade name carefully. The name must include only the names of the general partners (Com. Code, art. 228). A limited partner might allow their name to appear in the trade name. If they do, they become jointly liable as a general partner towards any third party acting in good faith (Com. Code, art. 228).

You must secure evidence of the registered office. The registry requires a lease agreement, a title deed, or a legal document justifying the occupation of the premises (Com. Code, art. 26). The company must have its main centre in Lebanon, and it holds Lebanese nationality regardless of any contrary agreement (Com. Code, art. 43).

You must identify the beneficial owner. The law requires you to disclose the identity of the economic right holder at registration (Com. Code, art. 26). In practice, the Ministry of Finance strictly enforces this disclosure using Form M18. The registry will reject the formation file if you treat this as a post-incorporation step.

Formation, step by step

1. Draft and notarise the articles. The founders draft the articles of association (النظام الأساسي) and deposit them with a notary anywhere in Lebanon (Com. Code, art. 80). The articles must name the first supervisory board for a one-year term (Com. Code, art. 236). In practice, you must use an official deed rather than a private signature.
2. Deposit the capital. The founders must deposit the paid-up funds in a bank account in the company's name before final formation (Com. Code, art. 85). In practice, you must obtain a bank certificate (إفادة مصرفية) proving this deposit to include in the registry file.
3. Value in-kind contributions. If founders provide in-kind contributions, the president of the court appoints experts to value them (Com. Code, art. 86). The founders must hold a constituent assembly within one month of the expert report to approve the valuation. The founders must give ten days notice of this assembly (Com. Code, art. 90). In kind contributors cannot vote on approving their own contribution. This bar applies even if they also hold cash shares or represent other subscribers (Com. Code, art. 90). If the founders valued an in-kind contribution more than 20% above the experts' figure, any subscriber may withdraw their subscription (Com. Code, art. 87).
4. Hold the constituent assembly. The founders hold a general assembly to verify the formation procedures. They confirm which of the general partners will manage, if the articles have not already named them. They also appoint the first supervisory board and auditor if the articles did not (Com. Code, arts. 92, 93 and 226). The company is officially formed upon their acceptance (Com. Code, art. 93).
5. Retain the company's lawyer. Bar Law article 62 requires every joint stock company to retain a permanent lawyer on an annual fee. The same applies to every capital company with a paid-up capital of LBP 1,000,000 or more (Bar Law, art. 62). It does not name the SCA, but an SCA runs under the SAL rules and its shares are capital (Com. Code, arts. 232 and 234). Retain a lawyer before filing, because the registry will not register a company covered by article 62 without proof of the retainer (Bar Law, art. 62). The lawyer, not the company, notifies the Bar (Bar Law, art. 62). One lawyer may not hold this annual retainer for more than five companies (Bar Law, art. 63).
6. Register at the Commercial Registry. The legal representative files the formation dossier at the Commercial Registry in the district of the head office within one month of formation (Com. Code, art. 26). In practice, the registry asks for the judicial record extract (السجل العدلي) for the managing partners.
7. Pay the stamp duty. Deeds that state a sum of money bear proportional stamp duty at four per thousand (DL 67/1967, arts. 13 and 18). In practice, the registry collects it on the capital stated in the articles when the file is lodged. You should confirm the amount and timing with the registry desk.

Formation documents

After registration

The company must register with the Ministry of Finance within two months of starting work to obtain a tax number and declare the beneficial owner (TPL, art. 32). In practice, you use Form M18 for the beneficial owner, and the Ministry strictly enforces this deadline with fines.

The company must register for VAT within two months of the end of the quarter in which it meets the mandatory threshold (TPL, art. 32). In practice, the current VAT rate is 10%.

The employer must submit a registration request for any employee within three months of them starting work (TPL, art. 32). In practice, you must register the company and new employees with the National Social Security Fund (NSSF) within 15 days of employment.

The company must state its name, its SCA status, its capital, and the paid-up portion on all printed and electronic documents (Com. Code, art. 100). It must also state its registration place and number on all correspondence and invoices (Com. Code, art. 36).

The managers withdraw the deposited capital from the bank using a certified copy of the articles and the constituent assembly minutes (Com. Code, art. 85).

Keep a register of beneficial owners and update it as changes occur (TPL, art. 29). For each owner it records the full name, nationality, date of birth, home and correspondence addresses, identity or passport number, 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).

Governance

The general partners manage the company and face the same obligations as SAL board members (Com. Code, arts. 229 and 235). A limited partner cannot intervene in management towards third parties, even with a proxy. Overseeing the managers, giving them advice, and authorising acts beyond their power do not count (Com. Code, art. 230). Violating this makes them jointly liable with the general partners for the resulting debts. The liability may cover only the acts the limited partner took part in, or all the company's debts. The scope depends on how many acts there were and how serious they were (Com. Code, art. 230). The managers cannot take loans or guarantees from the company. This ban also binds the supervisory board members and any partner holding more than five percent of the votes (Com. Code, art. 158). Any contract between the company and a manager, a supervisory board member, or such a partner needs the board's prior authorisation (Com. Code, art. 158). Ordinary arm's length deals with customers are exempt from that authorisation rule (Com. Code, art. 158). They cannot run a competing business without an annual authorisation from the ordinary general assembly (Com. Code, art. 159).

A supervisory board (مجلس المراقبة) of at least three members oversees the company (Com. Code, art. 236). The court appoints an auditor as one of these members (Com. Code, art. 236). The board members cannot be chosen from the general partners (Com. Code, art. 236). The first board serves a one-year term (Com. Code, art. 236).

The ordinary general assembly meets annually to approve the accounts and appoint the auditors (Com. Code, art. 196). The extraordinary general assembly meets to amend the articles (Com. Code, art. 200). You must register any change in the managers at the Commercial Registry (Com. Code, art. 27). Besides its accounting books, the company keeps a register of registered shares and a register of the shareholders present at each general assembly (TPL, art. 29).

Annual cycle

The annual deposit at the Commercial Registry must include the auditor's report, the managers' report, and the assembly minutes (Com. Code, art. 101). The company is explicitly exempt from providing an NSSF clearance for this specific filing (Com. Code, art. 102). The flat 17% rate applies only to the limited partners' share of the profits. The general partners' share is taxed under the progressive scale for commercial and industrial profits, from 4% to 25% (Law 10/2022, art. 28).

Changes during the company's life

Transfer of shares or interests

Limited partners can freely transfer their shares to third parties, subject to any pre-emption rights written into the articles (Com. Code, art. 118). A general partner cannot transfer their share of the profits without the consent of all partners. The transfer also needs the same publication as the articles. The constitutive deed may expressly allow the transfer without either requirement (Com. Code, art. 55). A general partner may instead assign to a third party only the rights and benefits attached to their share without that consent. This assignment binds only the assignor and the assignee, not the company or anyone else (Com. Code, art. 55). You must register changes in the shareholders or partners at the Commercial Registry (Com. Code, art. 26). Each earlier holder of the share stays jointly liable for the unpaid amount. Their liability runs two years from their own transfer, not from the latest one (Com. Code, art. 119).

• Share transfer agreement
• Updated shareholder register
• Commercial Registry application

Capital increase

The extraordinary general assembly decides the capital increase by a two-thirds majority. The quorum is two-thirds of capital at the first meeting. It drops to one-half at a second meeting, and one-third at a third (Com. Code, arts. 203 and 204). The previous capital must be fully paid up before any increase, under penalty of nullity (Com. Code, art. 205). In practice, the proportional stamp duty is paid again on the amount of the increase when you file the amendment. You should confirm the timing with the registry. You must register the increase at the Commercial Registry (Com. Code, art. 27).

• Extraordinary GA minutes
• Bank certificate for new funds
• Commercial Registry application

Capital reduction

The extraordinary general assembly decides the reduction, but it cannot harm third-party rights (Com. Code, art. 208). You must publish the decision in the Official Gazette, and creditors have three months to object before you can execute the reduction (Com. Code, art. 208). You must register the reduction at the Commercial Registry (Com. Code, art. 27).

• Extraordinary GA minutes
• Proof of publication in the Official Gazette
• Commercial Registry application

Change of managers

The general partners manage the company (Com. Code, art. 229). The articles or a later decision may confine this to one or several of them (Com. Code, art. 56). Management can never pass to someone outside the class of general partners, unlike an ordinary partnership (Com. Code, art. 226). The assembly can remove managers in the same way they were appointed (Com. Code, art. 57). You must register any change of managers at the Commercial Registry (Com. Code, art. 27).

• Decision appointing or removing the manager
• ID copy of the new manager
• Commercial Registry application

Amendment of the articles

The extraordinary general assembly amends the articles by a two-thirds majority (Com. Code, art. 204). The extraordinary assembly cannot change the company's nationality. It cannot increase shareholders' obligations, and it cannot harm the rights of third parties (Com. Code, art. 201). Changing the company's object or form requires a stricter quorum of three-quarters of the capital (Com. Code, art. 202). You must register the amendment at the Commercial Registry (Com. Code, art. 27).

• Extraordinary GA minutes
• Amended articles of association
• Commercial Registry application

Merger

A merger transfers the company's assets to an existing or new company, dissolving the merged company without liquidation (Com. Code, arts. 210 and 212). The extraordinary general assembly approves the merger based on a board report and an auditor's report (Com. Code, art. 213 bis 3). A merger might increase the obligations of the partners or shareholders of any company involved. If so, it needs their unanimous consent rather than the ordinary majority (Com. Code, art. 213 bis 1). Within one month after that approval, the company deposits the merger project at the registry and publishes a summary in the Official Gazette and a local paper (Com. Code, art. 213 bis 2). The auditors' joint and special reports must sit at the company's seat for at least one month before that assembly. This allows shareholders to consult them (Com. Code, art. 213 bis 4). Creditors have one month from publication to object (Com. Code, art. 213 bis 9).

• Merger project
• Auditor's report
• Extraordinary GA minutes

Dissolution and liquidation

The company dissolves upon the expiry of its term, the completion of its object, or the impossibility of completing it (Com. Code, art. 216). An SCA needs at least one general partner and one limited partner (Com. Code, art. 226). If either class disappears, the remaining partners must declare the company dissolved. They have three months from the shortfall to fix it instead (Com. Code, art. 42). If they do not fix it, the court declares the dissolution when any interested party asks (Com. Code, art. 42). If the company loses three-quarters of its capital, the managers must call an extraordinary general assembly to decide whether to dissolve (Com. Code, art. 216). The general partners are subject to the general partnership regime. A general partner's own wish to withdraw is a ground for dissolution only if the company has no fixed term and the withdrawal does not harm the company's legitimate interests. Loss of legal capacity or bankruptcy of a general partner is always a ground for dissolution (Com. Code, arts. 65 and 229). The company avoids dissolution if the other partners unanimously decide to continue without that partner (Com. Code, art. 65). On a general partner's death, the company continues among the surviving partners. If the deceased leaves a spouse or descendant who inherits the rights, they join the company as limited partners. This applies unless the company's own rules provide otherwise (Com. Code, arts. 66 and 229).

1. Decide the dissolution. The extraordinary general assembly votes to dissolve the company and appoints a liquidator (Com. Code, arts. 216 and 220).
2. Publish the decision. You must publish the dissolution decision and the liquidator's appointment (Com. Code, arts. 71, 218 and 219).
3. Liquidate the assets. The liquidator collects debts, pays creditors, and sells the assets (Com. Code, arts. 73 and 219). The supervisory board and the auditor remain in place to oversee the liquidation (Com. Code, art. 221).
4. Close the liquidation. The liquidator drafts a final balance sheet, and the ordinary general assembly approves the accounts and discharges the liquidator (Com. Code, arts. 224 and 225).
5. Strike off the company. The registry strikes the company off the Commercial Registry (Com. Code, art. 30). In practice, you need clearance certificates from the Ministry of Finance and the NSSF to complete the strike-off.

Dormant companies can also be struck off by the Ministry of Finance without a liquidation (Decision 208/2020, art. 2). This covers a company that never operated (Decision 208/2020, art. 2). It also covers one that stopped with no assets and no employees (Decision 208/2020, art. 2). It must owe nothing to third parties, having paid all taxes and NSSF dues (Decision 208/2020, art. 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 company, public bodies and creditors may object to the Ministry within three months of the last publication (Decision 208/2020, art. 5). A company 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 company.

Pitfalls

• Including a limited partner's name in the trade name makes them jointly liable for company debts towards third parties (Com. Code, art. 228).
• A limited partner who intervenes in management becomes jointly liable with the general partners for the resulting obligations (Com. Code, art. 230).
• The founders, the in kind contributors, the first managers, and the experts stay jointly liable for five years. This applies once a large overvaluation of an in kind contribution comes to light after formation (Com. Code, art. 91).
• Missing the one month deadline to deposit and register at the Commercial Registry draws a fine. The judge supervising the register sets it, between LBP 500,000 and LBP 1,000,000 (Com. Code, art. 98).
• Failing to deposit the annual financial statements incurs a fine of LBP 100,000 per missing document, charged every year the document stays missing (Com. Code, art. 102).
• Failing to disclose the beneficial owner during formation will cause the registry to reject the file in practice.
• Foreign documents lacking full consular legalisation are rejected in practice, because Lebanon does not apply the Apostille convention.

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
• Law No. 8 of 11 March 1970 on the organisation of the legal profession, as amended
• Tax Procedures Law No. 44 of 11 November 2008, as amended
• Budget Law No. 10 of 15 November 2022
• Legislative Decree No. 67 of 5 August 1967 on fiscal stamp duty, as amended
• 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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