Commercial Enterprise
Explanation
Commercial companies (les sociétés commerciales) are subject to the rules stipulated in the Code of Obligations and Contracts regarding the company contract. This law applies provided that its rules do not expressly or implicitly contradict the provisions of the Code of Commerce. As for the rights to exploit the commercial establishment (le fonds de commerce), they are determined according to their specific laws or the general principles of law.
The law requires that all commercial companies be proven by a written contract (un contrat écrit). Joint venture companies are exempted from this condition as they do not require written proof. However, third parties (les tiers) have the right to prove the existence of the company or any provision related to it by all means of evidence when necessary.
The incorporation deeds of all commercial companies, excluding joint venture companies, must be published according to the procedures specified by law. If these deeds are not published, they are considered void (nulles) and have no legal effect.
The law obliges all companies incorporated in Lebanon to establish a head office (le siège social) within Lebanese territory. These companies are legally deemed to hold Lebanese nationality (la nationalité libanaise), and any provision or agreement contrary to this principle is disregarded.
If the number of partners in the company falls below the minimum required by law, the remaining partners are given a three-month period to correct the situation. If the correction is not made, they must declare the dissolution of the company (la dissolution). This procedure aims to protect the rights of third parties acting in good faith.
In the event that the three-month period expires without correcting the defect in the number of partners, the court intervenes. Any interested party has the right to request the court to declare the dissolution of the company, and the court is obliged to declare this dissolution.
Official legal articles
replace · 1967-07-17: Open the official text
replace · 2019-04-01: Open the official text
replace · 2019-04-01: Open the official text
Think deeper
How does the law balance between imposing written proof for commercial companies on the one hand, and allowing third parties to prove their existence by all means on the other hand?
Flashcards
What law applies to the commercial company contract in the absence of a provision in the Code of Commerce?
The rules of the Code of Obligations and Contracts apply, provided they do not expressly or implicitly contradict the Code of Commerce.
What is the legal time limit to correct the company's situation if the number of partners falls below the required limit?
A period of three months from the occurrence of the cause.
Who has the right to request the dissolution of the company from the court after the expiration of the correction period?
Any interested party has this right.
Which type of commercial company is exempt from the obligation of proof by a written contract?
Joint venture companies.
How can third parties prove the existence of a commercial company?
Third parties may prove the existence of the company by all means of evidence when necessary.
What is the nationality of a commercial company incorporated in Lebanon?
It is considered of Lebanese nationality despite any contrary provision.
What is the penalty for not publishing the incorporation deeds of commercial companies other than joint ventures?
The incorporation deeds are considered void.
Practice questions
Which of the following companies is not required to be proven by a written contract?
All commercial companies must be proven by a written contract except joint venture companies (Article 43).
What happens if the number of partners falls below the legal limit and is not corrected within three months?
The dissolution of the company must be declared by a decision of the remaining partners within three months from the occurrence of the cause unless corrected (Article 42).
Where must the head office of companies incorporated in Lebanon be located?
All companies incorporated in Lebanon must have a head office therein (Article 43).
Is it valid for partners to agree to grant a foreign nationality to a company incorporated in Lebanon?
Companies incorporated in Lebanon are considered of Lebanese nationality despite any contrary provision (Article 43).
What is the fate of the incorporation deeds of a general partnership if they are not published?
The incorporation deeds of all commercial companies except joint ventures must be published, otherwise they are void (Article 44).
When do the rules of the Code of Obligations and Contracts apply to commercial companies?
The rules of the Code of Obligations and Contracts apply provided they do not expressly or implicitly contradict the rules of the Code of Commerce (Article 42).
Case problems
A commercial company was incorporated in Lebanon. The partners agreed in the incorporation contract that its head office would be in Paris and that it would hold French nationality. The partners also neglected to publish the incorporation deeds. What is the legal status of this company in terms of its head office, nationality, and the validity of its incorporation?
Model answer
First, regarding the head office and nationality, all companies incorporated in Lebanon must have a head office therein (Article 43).
These companies are also considered of Lebanese nationality despite any contrary provision.
Therefore, the agreement to set the head office in Paris and grant the company French nationality is considered void, and the company is considered Lebanese with its head office in Lebanon.
Second, regarding the non-publication, the incorporation deeds of all commercial companies excluding joint venture companies must be published, otherwise they are void (Article 44).
Since the partners did not publish the incorporation deeds, these deeds are legally considered void.
Self-grading rubric
A commercial company's number of partners fell below the legally required number. Five months elapsed, and the remaining partners did not correct the situation or declare the dissolution of the company. A creditor submitted a request to the court to declare the dissolution of the company. Does the creditor have the right to do so? And what is the required procedure for the court?
Model answer
Yes, the creditor has the right to submit this request.
If the number of partners falls below the legally required number, the partners are given a three-month period to correct the situation (Article 42).
If the correction is not made within this period, any interested party has the right to request the court to declare the dissolution of the company.
Since the creditor is considered an interested party, and since the three-month period has expired, their request is legal.
The court must declare the dissolution of the company based on this request while preserving the rights of third parties acting in good faith.