American University of Science &Technology

Faculty of Business & Economics

Fall 2018 - 2019

Business Law I
MGT 330 B

Instructor: Ms. Maryline Kalaydjian

Name:
Dima Abboud

Date: 11/12/2018
Sami would like to incorporate a joint stock company in Lebanon to undertake commercial
trading activities. Two other shareholders would like to join him in his venture.

The contributions of the partners is as follows:

o Sami will contribute: USD 50,000 in cash

o Layal will contribute: a land of a value of USD 100,000
o Rita will contribute: USD 50,000 in cash

1. Please complete the below:

a) Name of the company: REFLECT S.A.L.

b) Share capital amount = USD 50,000 + USD 100,000 + USD 50,000 = USD 200,000
c) Total number of shares: 1,000 shares
d) Value of each share: USD 200
e) Ownership percentage of each shareholder:
𝟓𝟎,𝟎𝟎𝟎
 Sami’s contribution = 𝟐𝟎𝟎,𝟎𝟎𝟎 = 0.25  25%
𝟏𝟎𝟎,𝟎𝟎𝟎
 Layal’s contribution = 𝟐𝟎𝟎,𝟎𝟎𝟎 = 0.5  50%
𝟓𝟎,𝟎𝟎𝟎
 Rita’s contribution = 𝟐𝟎𝟎,𝟎𝟎𝟎 = 0.25  25%
f) Total contribution in kind = USD 100,000 (contribution of the land)

g) Total contribution in cash = USD 100,000 (contributions of Sami and Rita)

h) Object of the company:

Reflect S.A.L. sells a state-of-the-art smart mirror that allows its users to virtually try on
clothes without the need of getting undressed. It also facilitates the choosing of outfits
and the purchase of clothing from retailers by digitizing the process.

i) Registration process
 STEP 1: Completion of Preliminary Legal Tasks
o Preparation of the company’s Articles of Association.
o Signing by the founders (Sami, Layal, and Rita) of the Articles of Association before a
Public Notary (in whose district the company’s registered office is located).

 STEP 2: Subscription and Payment

o Signing by the subscribers (future shareholders) of the subscription deeds (subscription
in full, in the capital);
o Signing by the founders (Sami, Layal, and Rita) of the request letter addressed to the
bank to open a bank account (a company under incorporation) in which the capital will
be deposited;
o Deposit by the subscribers of their respective subscription amount in the bank account.
o Issuance by the bank of a certificate evidencing the subscription by the subscribers/
shareholders in full in the capital.

 STEP 3: Constitutive General Assembly and First Board of Directors Meetings

o Hold a Constitutive General Assembly meeting to, mainly: elect a Board of Directors,
Appoint a Principal Auditor and a Lawyer.
o Hold a of Board of Directors meeting to elect the Chairman General Manager.
o Signing of the Commercial Circular by the Chairman and any other empowered
signatories.
o Complete the registration request to be signed by the company’s lawyer.
 STEP 4: Registration at the Commercial Register
o Submit all the following documents at the Commercial Register, located in the same
district (or Muhafaza) as the company’s registered office:
 The registration request
 The company’s articles of association
 Minutes of the Constitutive General Assembly Meeting
 Minutes of the first Board Meeting
 The Commercial Circular
 The Bank certificate
 Copies of legal IDs or passports of all shareholders
 Domiciliation documents: title deed, lease agreement or permit of occupancy
letter
 Post registration, the company shall request from the Court of Commerce to
appoint a complimentary auditor for the company

 STEP 5: Registration at the Bar Association

o Payment of lawyer’s duties at the Beirut Bar Association

 STEP 6: Registration of The Company at the Ministry of Finance

o The Company should apply for the commencement of activities at the Ministry of
Finance within two months from the date of its registration at the commercial register
failing which a LBP 2,000,000 fine will apply.
o A Tax Identification Number will be attributed to the company.

 STEP 7: Release of Capital

o Submit a capital release request along with the following documents to the bank:
 Minutes of the Constitutive General Assembly meeting
 Minutes of the first Board Meeting
 A certified copy of the Certificate of Incorporation
 A certified copy of the articles of association
 A certified copy of the Commercial Circular
 j) Documents required

 Company’s articles of association (AOA/MOA)

 Subscription deed

 Letter to the bank requesting the opening of a bank account (a company under
incorporation) in which the capital will be deposited

 A confirmation letter issued by the bank confirming the subscription in full, by the
shareholders in the company’s capital

 Minutes of the constitutive General Assembly meeting

 Minutes of the first board of directors meeting

 Registration request

 Commercial circular

 Domiciliation documents: title deed, lease agreement or permit of occupancy letter

k) Management structure
The management of the Company (REFLECT S.A.L.) is entrusted with the Board of
Directors. Since the board of directors must be composed of a minimum of three
shareholders, then Sami, Layal, and Rita will all be in the BOD. Then they would elect
from amongst themselves a chairman-general manager who will be generally in charge of
the Company’s day-to-day business.

2. Will the company be valid and legal in case Layal and Rita are both French nationals? Please
elaborate.

Even if Layal and Rita were both French, the company remains valid because by law, a joint
stock company formed and duly registered in Lebanon is considered Lebanese even if the
majority of the shareholders are not Lebanese nationals. But, although in principle, all
shareholders of a Joint Stock Company can be non-Lebanese nationals, the majority of the
members of the board of directors should be Lebanese. Hence, since directors must
necessarily be shareholders, a Joint Stock Company is required to have a certain number of
Lebanese nationals as shareholders so that said shareholder can be elected on, and hold the
majority in, the board of directors in compliance with the law.

In the case of REFLECT S.A.L. they would have to add 2 Lebanese shareholders where the
BOD would be formed of 3 Lebanese nationals. Or they can add 1 Lebanese shareholder
were the BOD will be composed of 2 Lebanese shareholders (Sami and the added
shareholder) and 1 French national (Either Layal or Rita). Moreover, if both Rita and Layal
demanded to be part of the board, then 3 Lebanese shareholders need to be added for the
majority to remain Lebanese.

BOD

2 Lebanese & 1French 3 Lebanese 3 Lebanese & 2 French