The Libyan Stock Market (“LSM”) is the stock exchange of Libya, established in 2006 in Tripoli, and has its headquarters relocated in Benghazi, as per the Libyan Cabinet Decree no. 133 of 2021. It offers a platform for trading securities, including, inter alia, shares, bonds, and investment portfolio and funds’ certificates. However, the LSM has faced challenges due to the political and security situation in Libya, which affected its performance and activity.

Listing Rules

Companies looking to list on the LSM must adhere to specific listing requirements. Some of these include:

1. Minimum paid-up capital requirements.
2. Corporate governance standards.
3. Audited financial statements.
4. Disclosure of relevant information to investors

For further information, see Libyan Stock Market Law No. 134 of 2006:

D8C8C7DAC920C7E1DDC7DFD320C8DFC7E3E120C7E1D5DDCDC9

Regulatory Bodies

The Libyan Stock Market is regulated by the Libyan Capital Market Authority (“CMA”). CMA is an independent public authority established under Law No. 11 of 2010. The main mission of the CMA is to supervise and control the capital markets and all non-banking financial instruments that engage in business affairs, such as securities, bonds, funds, etc.

Takeover/Merger/Demerger Regulations

Libyan takeover, merger, and demerger regulations are governed by the Libyan Commercial Code (Law No. 23 of 2010) and the Investment Law (Law No. 9 of 2010).

Principal Legislation

• The Libyan Commercial Code (Law No. 23 of 2010)
• The Libyan Investment Law (Law No. 9 of 2010)
• The Libyan Stock Market Law (Law No. 11 of 2010)

Competition and Monopolistic acts in Libya are regulated by Law No. 23 of 2010 on Commercial Activities ("Commercial Code”). The Commercial Code applies to all commercial activities carried out either by natural or legal persons.

The Commercial Code prohibits any explicit or implicit acts or agreements that aim at or result in harming the principles of competition and market rules, even if said commercial anti-competitive acts occurred outside the Libyan territory, so long as it had an impact inside Libya, and any agreement thereto is deemed void.

• The anti-competitive acts stipulated upon under the Commercial Code include, inter alia, the following: Fixing the prices of goods or services.
• Preventing or hindering the entry or exit of other market participants.
• Dividing the markets or sources of goods or services or customers based on geographical, quantitative, or seasonal criteria.
• Refusing or restricting the sale or purchase of goods or services or imposing additional conditions or linking them to other unrelated goods and services.
• Colluding in submitting offers, tenders, bids and public auctions or setting up unfair acceptance criteria.
• Exercising exclusivity in concession contracts and commercial agencies, except in exceptional cases authorized by the competent minister after consulting the Competition Council.
• Dumping by selling imported goods (similar to locally produced goods or having the same specifications) at a price lower than their sale price in the exporting country’s market or lower than their actual cost, in a way that causes damage or threatens to cause damage or significantly hinders the production of such goods in the local market.

The Commercial Code also established the Competition Council to be responsible for overseeing and regulating the competition in the market, issuing opinions and recommendations, monitoring and investigating violations, approving or rejecting mergers and acquisitions, cooperating with other bodies, and raising awareness and education about competition and market rules.

Furthermore, and with noting the abovementioned, the Libyan market principally adopts a free price system.

The Minister of Economy has issued Decree no. 944 of 2022 ("Decree no. 944”) regulating the joint companies, branches of foreign companies, and representative offices subject to the Commercial Code and repealing the prior regulatory regime applicable to non-Libyan entities.

Decree no. 944 creates new legal forms of entities authorized to operate under the Commercial Code, including, inter alia, temporary branches, international cooperation companies, and limited liability joint companies, and sets the minimum capital, and procedures required to set up said entities, and the fields the latter may undertake activities therein.

Furthermore, Decree no. 944 sets a maximum level of foreign ownership in joint companies of 75%, and the latter may be increased up to 89% if approved by the Minister of Economy. In contrast, branches may be wholly owned by foreigners.

Decree no. 944 introduces temporary branches to the Libyan system, being a good alternative for foreign companies engaged in a limited number of projects in Libya. The establishment of a temporary branch requires the foreign company to be a party to a maximum of three contracts with Libyan entities and the duration of such contracts should not exceed 18 months.

Despite the abovementioned advantages and vesting non-Libyans with the same rights as Libyans, Decree no. 944 has prohibited foreigners from undertaking some activities, and limited the latter to nationals only. Also, it prohibits national and foreign bodies operating in Libya from contracting with foreign companies outside Libya to execute work inside Libya unless they have obtained the relevant permits., in addition to depriving foreigners of the right to own real estate.

Notwithstanding the abovementioned, Decree no. 944 does not affect the rights and obligations of foreign or Libyan investors established under the Libyan Investment Law No. 9 of 2010 (the “Investment Law”).

Moreover, A code of conduct related to corporate governance has been adopted by virtue of Decree no. 494 of 2022, which is binding on both commercial entities and their employees and applies to the entities regulated under the Commercial Code, and branches of foreign companies.

Investment Law

The Investment Law sets out the prerequisites that should be met in an investment project including, inter alia, exploiting or assisting in utilizing local raw materials, offering services required by the national economy; alternatively, a contribution towards the improvement, development, or rehabilitation thereof, and providing employment opportunities for the Libyan labor force.

Additionally, the investment projects enjoy a number of exemptions under the Investment Law including the following:

i-    Exempting the commodities produced for export from production tax, customs duties and such charges imposed on exports;

ii-    Exempting the investment project from income tax for any activity, for a duration of 5 years starting from the date of permission for licensing the engagement in the activity; and

iii-    Exemption of interest arising from the project’s activity if re-invested.
Further, the investor under the Investment Law is entitled to the following rights:

i-    Opening a bank account in favor of its/her/his project, in the local currency or foreign currency with one of the banks operating in Libya;

ii-    Receiving financial loans from local and foreign banks and financial institutions, according to the legislation in effect;

iii-    Re-exporting the invested foreign capital, if the project’s duration has ended, or in case of liquidation or sale of the project, either in part or in whole;

iv-    Should difficulties or circumstances, beyond the control of the investor, prevent the foreign capital’s investment after the lapse of 6 months from the date of importing said capital, the latter may be transferred abroad in the same manner as it was originally imported in Libya;

v-    Transferring distributable annual net interests and revenues achieved by the foreign capital invested in the project;

vi-    Recruiting foreign manpower in the case that national manpower is not available; and

vii-    Issuing residence visas for 5 years renewable subject to the duration of the project, and multiple exit/re-entry visas.

Employment and labor relations are regulated under the law no. 12 of 2010 (the "Labor Law”). The Labor Law grants the right to work in Libya to all male and female citizens on equality principles with other resident foreigners in Libya provided that they hold the required legal permits. The Labor Law prohibits categorically forbidden forced labor and manifestation of injustice and exploitation.

Pursuant to the Labor Law, the percentage of foreigners that may be employed by local corporate entities may not exceed 25% of the total labor force of a Libyan company, unless otherwise permitted by the competent authority for public interest purposes.

Furthermore, the Labor Law outlines, inter alia, the statutory leaves to which an employee is entitled, the grounds for terminating definite and indefinite term contracts, the employee’s rights upon termination, and the disciplinary measures that may be taken vis-à-vis the employees.

According to Transparency International, Libya ranked 171 out of 180 countries in 2022, and on a scale of 0-100, it has a score of 17, indicating a high level of corruption in its public sector.
Corruption in Libya is defined as the abuse of power or responsibilities in the public or private sector for personal or other gains. This includes political corruption at the high level and administrative corruption at the lower level, as well as corruption in private businesses, political parties, associations, and non-governmental organizations.

One of the main sources of corruption in Libya is its oil industry, which accounts for 95% of its exports and is vital for its government and economy. The lack of transparency and accountability in the distribution of oil revenues among the provinces and the management of oil contracts creates opportunities for corruption and misuse of public funds.

Despite adopting several legislations against corruption, Libya faces challenges in implementing and enforcing its anti-corruption laws and regulations, including the relevant provisions of the Penal Code, the Law on Economic Crimes, the Law on Purification, the Law on Criminalizing Mediation and Nepotism, and the Law on Abuse of Public Authority.

There are three main bodies responsible for fighting corruption in Libya: Audit Bureau, Administrative Control Authority, and Anti-Corruption Commission. The Audit Bureau is an independent body that audits public finances and reports to the parliament. The Administrative Control Authority is a body that monitors and evaluates the performance of public administration and reports to the prime minister. The Anti-Corruption Commission is a body that investigates and prosecutes corruption cases and reports to the president.

The contracting parties may generally agree to resort to arbitration in case a dispute arises. However, the Code of Civil and Commercial Procedures of year 1953 (the “Code of Civil and Commercial Procedures”) outlines the non-arbitrable disputes, including but not limited to, disputes relating to the public order, disputes between employers and employees regarding social insurance, work injuries, and nationality and personal status disputes.

Law No. 6 of 2006 on the Justice System, as amended by Law No. 4 of 2011 and Law No. 14 of 2013, among others, establishes the structure and organization of the judiciary in Libya. The law defines the Judicial Body as comprising several key components, each with its own specific jurisdiction and responsibilities:

1. Judicial Body Inspection Department: This department is responsible for overseeing and ensuring the proper functioning of the judiciary. It is vested with the authority of monitoring the performance of judges and other judicial personnel, as well as investigate any allegations of misconduct or violations of law.
2. Courts: The courts in Libya include the Supreme Court, Courts of Appeal, First Instance Courts, and Summary Courts.
3. Public Prosecution: The Public Prosecution is responsible for investigating and prosecuting criminal cases on behalf of the state. It works closely with law enforcement bodies to gather evidence, conduct investigations, and initiate legal proceedings against those suspected of committing criminal offenses.
4. Litigation Department: This department is responsible for representing the state in civil and administrative litigation, both as a plaintiff and a defendant. The Litigation Department also provides legal advice to various government agencies and bodies.
5. Public Legal Defence Department: The Public Legal Defence Department is responsible for providing legal representation to those who cannot afford a private attorney. The department assigns public defenders to represent defendants in criminal cases and may also provide legal representation in civil matters.
6. Law Department: The Law Department is responsible for drafting legislation and providing legal advice to the government. It works closely with various government ministries and agencies to ensure that proposed laws and regulations are in line with the constitution and existing legal framework.