The Lebanese Banking Sector

12 Aprile 2017

  • Libano
  • Bancario
  • Diritto societario
In this clip I briefly introduce the main options to consider when doing business in Iran.
You can read more on this topic in my articles An introduction to Iran Corporations  and Obtaining a Foreign Investment License and browse Legalmondo’s blog for some other  posts on doing business in the region.

Brazilian legislation requires every nonresident that holds quotas, capital or shares of a Brazilian company appoints an attorney-in-fact that resides in the country, with powers to receive service of process.

Besides granting the power required by law, foreign partners usually grant other powers to their attorneys-in-fact, in order to facilitate the procedures, since all documents executed abroad must be notarized and Apostilled, and once they arrive in Brazil they must be translated by a sworn translator and registered before the Public Registry of Titles and Documents, in order to be valid in Brazil, which is time and money consuming.

Also, all foreign companies holding quotas, capital or shares of the Brazilian company, need a Taxpayer number, called CNPJ. The taxpayer number is not for tax payment purposes, but for controlling purposes only. The foreign partners / holder need to grant a power of attorney for their enrollment at CNPJ, and representation before the Federal Revenue in all matters.

By the time the company is incorporated the Power of Attorney granting the above-mentioned mandatory powers must be presented before the Board of Trade.

Moreover, all Foreign Direct Investment must be registered at the Central Bank of Brazil. This means that every time the foreign shareholder/partner transfers money to the Brazilian company as investment, the respective exchange agreement must be registered at the Central Bank. Such registration is done electronically.

The main effects of such registration are the possibility of remitting dividends and of repatriating the capital invested.

In view of the above, the documents to be presented at the incorporation of a company in Brazil are:

  • Power of Attorney granting to a Brazilian resident powers to accept service of process, for enrollment at CNPJ and representation before the Federal Revenue;
  • In case the foreign partners/shareholders/holder are/is a natural person, a copy of his/her passport;
  • In case the foreign partners/shareholders/holder are/is a legal entity:

– Copy of the passport of the legal representative of the foreign partners/shareholders/holder; and

– Updated Certificate issued by the Board of Trade of the foreign partners/shareholders/holder’s head offices attesting: (a) its existence and good standing, and (b) its legal representatives for the purposes of evidencing that the company was duly represented in the Power of Attorney granted. This document (or a separate one issued by a public authority) must also contain the head offices address, name of shareholders, capital and objectives.

Note that all documents need to be duly notarized and apostilled. Once they arrive in Brazil, they will undergo sworn translation and will be registered at the Public Registry Office in order to be valid.

We would like to point out that the Federal Revenue and commercial banks have increasingly been requesting a series of complementary documents for compliance reasons, so that the final beneficiaries (natural person) of each foreign company holding quotas, capital or shares of Brazilian entities may be identified.

At the chosen bank’s own discretion, other documents may be necessary, as balance sheets, statements and corporate documentation until the end controller (natural person) is identified. These documents must be presented for the opening of a bank account, and banks have been taking quite some time to open the account.

The purpose of this brief essay is to give an overview of company types  according to Hungarian law, along with some relevant legal standards that define their operation.

A member of the European Union since 1 May 2004, Hungary is a country in rapid growth and, as such, an attractive destination for prospective investors that wish to set up a local enterprise.

What kind of business associations can be established?

Hungarian Civil Code regulates the foundation, organization and operation of business associations with a registered seat in Hungary.

The Hungarian law complies with EU legislation and allows for foreign nationals to establish business associations in Hungary under the same terms and conditions as Hungarian citizens.

  1. General Partnership (Hungarian: “Közkereseti társaság”)

Members of the partnership shall undertake to jointly engage in business operations with unlimited, joint and several liability, and to make available the capital contribution necessary for the activities of the partnership.

  1. Limited Partnership (Hungarian: “Betéti társaság”)

Members of the partnership shall undertake to jointly engage in business operations, and the liability of at least one member (general partner) for the obligations of the partnership shall be unlimited. If there is more than one general partner, all general partners shall be jointly and severally liable. At least one other member (limited partner) shall only be obliged to provide the capital contribution undertaken in the Memorandum of Association, and, with the exceptions set out in the Hungarian Civil Code, shall not be liable for the obligations of the partnership.

  1. Limited Liability Company (Hungarian: “Korlátolt felelősségű társaság”)

This is a business association founded with an initial capital (so-called subscribed capital) consisting of capital contributions of a pre-determined amount, where the liability of members to the company is limited to the provision of the contribution to the initial capital, and possibly to other contributions established in the partnership agreement. This is the most common company form in Hungary. The minimum subscribed capital required to start a company has been recently raised to HUF 3,000,000 (approximately € 10,000).

  1. Limited (Joint-Stock) Company (Hungarian: “Részvénytársaság”)

Limited companies are business associations founded with a share capital (subscribed capital) consisting of shares of pre-determined face value, and the obligation of members (shareholders) to the company is limited to the provision of the face value or issue price of shares.

Private and public limited companies are usually founded for larger investments in terms of invested capital. The minimum subscribed capital of a private limited company (“Zrt”) is HUF 5,000,000 (approximately € 15,000), while a public limited company (“Nyrt”) requires a capital of at least HUF 20,000,000 (approximately € 60,000). Privately held companies (“Zrt”) operate similarly to public limited companies but their shares cannot be listed on the stock exchange and specific provisions apply to the sale and purchase of shares.

Pursuant to the law, nonprofit business associations can also be set up.

What is the procedure for founding a business association?

A business association can be founded by both Hungarian and foreign citizens.

The first step is signing a Memorandum of Association, which is usually drafted and countersigned by a legal practitioner or notary. The format of this document varies depending on the kind of business association established.

Since 16 March 2017, there is no administrative fee for founding an association, with the exception of privately held companies (“Zrt”), for which it amounts to HUF 50,000 (approximately € 150).

The next step is requesting the inclusion of the company in the Register of Companies, which, according to Hungarian law, shall be carried out by a lawyer.

The following documents shall be submitted with the registration request: Memorandum of Association; acceptance of mandates (executive officers, members of the supervisory board, and auditor); statement by the executive officer or certificate from the financial institution about the payment of initial contributions; special power of attorney granted to the legal representative; certificate of payment of the necessary expenses.

The registration request shall be submitted to the County Court within thirty (30) days from the foundation of the business association. Foundation of certain types of businesses may require prior authorization by relevant authorities (e.g. foundation permit in the banking sector). In that case, the request of registration shall be issued within fifteen (15) days from receipt of the foundation permit.

The Court has eight (8) days to review and approve the request and the attached documents. Within the framework of the Hungarian Civil Code and other legal regulations, members (shareholders) may freely establish the contents of the articles of association, according to their own personal and economic needs.

Once the registration is completed, the association will be listed in the Register of Companies and published in the Official Company Gazette (Hungarian: “Cégközlöny”).

What is the corporate tax rate in Hungary?

As of 1 January 2017, the Hungarian government cut the corporate tax rate to 9%, and now Hungary has the lowest level of corporate taxes in Europe, which gives the country a competitive edge to attract foreign direct investment to the country.

The economy of a country is usually supported and boosted by the Government. In Lebanon, instead, the Central Bank or Banque du Liban (BdL) has taken on the role for years now, due to the long governmental inactivity and the political impasse. The recent formation of a national unity government – after the longest presidential vacancy in the country’s history  – generated hope worldwide towards a new start for the country to get back on track both at the local and the international level. Nonetheless, BdL still plays an important role, providing critical support to the real economy, as well as acting as a backstop to the financial sector.

BdL acts according to the provisions of the Code of Money and Credit that includes, among other duties, “safeguarding economic stability” and “developing the monetary and financial market”. Over the past years, consecutive packages of subsidized loans for the private sector were issued, helping to support demand. Those actions were put in place amending the basic Decision no. 6116 of March 7, 1996 regarding “Facilities that may be granted by Banque du Liban to Banks and Financial Institutions”.

As the World Bank highlighted in the report “Lebanon Economic Monitor Fall 2016”, BdL’s stimulus packages and other initiatives, in conjunction with the contributory role played by Kafalat SAL, the loan guarantee financial company, have provided significant support to the real sector, by means of subsidizing interest payments of SME borrowers, extending special guarantees to SMEs, and granting exemptions on compulsory reserves of creditors.

The latest GDP increase would have been lower without BdL’s interventions, which involve largely the tech industry and the knowledge based economy (“KBE”), but also the real estate and tourism sector.

With regard to the tech industry, to support Lebanon’s entrepreneurial ecosystem, in 2013 BdL issued Circular 331 with the dual aim of retaining local talent and attracting the expatriates to setup business in the country. The initial $400 million USD funds gave impulse to develop the technological and digital sector, encouraging the incorporation of Lebanese companies, the operations in the country without a definite time limit.

In 2016, it increased the margin of funds that banks could dedicate to the financing of this sector, by authorizing them to invest, with BdL’s guarantee, up to 4% of their own funds, compared to 3% previously.

Circular 331 has created a lively and high-standard technological environment in Lebanon, where different actors interpret essential roles to contribute to the growth and the innovation of the country.

More than 1500 companies are working in the ICT field (1500 according to the 2016 report issued by the UK Tech Hub), in addition to 8 incubators and accelerators, mentorship and business educational groups, 6 local venture capital firms and others operating in the regions.  It is a matter of time until the spill-over effect contributes to the GDP growth.

With regard to real estate, Circular 427 provides an incentive by allowing banks in Lebanon to offer credit facilities to companies, funds or special vehicles for the purpose of acquiring real estate projects. The loans are subject to certain conditions set up for a) the seller, i.e. specialized real estate companies, b) the properties, and c) the purchase itself. Credit is available up to 60 percent of the value of the purchase with the remaining 40 percent financed by the purchaser from their equity excluding debt.

The main target of the measure is to boost sales of existing new real estate stock that remains unsold. Another important outcome is the enhancement of the dialogue between the actors, creating synergies and a proactive business environment around the real estate sector.

In line with the spirit, in tourism sector the most recent Circular 465 aims to boost real estate projects related to hospitality, as well investments in the tourism like, leisure parks and medical centers, through commercial banks subsidized loans (up to $ 10 million USD) for a prolonged period.

In conclusion, on one hand, it is worth to notice that credit incentives, provided through the banking sector, have played a key role in boosting and supporting the numerous segments of the Lebanese economy. On the other hand, from a regulatory perspective, critical reforms are needed to put the country back on the right track. The Government and the Parliament are working towards this direction: new upcoming projects, new laws to approve and enact, and opportunities to invest in many other sectors, like telecommunication services, electricity and water distribution, and waste management.

The author of this post is Claudia Caluori.

Questo breve post intende fare una panoramica sulle diverse forme societarie regolate dall’ordinamento ungherese. Dal 1° maggio 2004 – data di ingresso nell’UE – l’Ungheria ha percorso un lungo cammino di sviluppo e oggi rappresenta uno dei paesi più interessanti per gli investitori stranieri.

Quali forme societarie è possibile costituire?

Il codice civile ungherese del 2013 prevede che gli stranieri – sia persone fisiche che giuridiche – possano svolgere attività d’impresa in Ungheria alle stesse condizioni dei cittadini ungheresi, quindi anche mediante la costituzione di una società di diritto ungherese. Vediamo, perciò, i quattro tipi societari più diffusi:

  1. Società in Nome Collettivo (in ungherese: “Közkereseti társaság”)

I soci si obbligano a svolgere un’attività economica assumendosi la responsabilità solidale e illimitata, oltre all’obbligo di conferimento del patrimonio per il perseguimento dell’oggetto sociale.

  1. Società in Accomandita Semplice (in ungherese: “Betéti társaság”)

In questa società è necessaria la presenza di: almeno un socio accomandatario, che risponderà illimitatamente e solidalmente con gli altri soci accomandatari per le obbligazioni della società eccedenti il patrimonio sociale; e almeno un socio accomandante, tenuto a conferire la propria quota determinata nello statuto e che non risponderà personalmente per le obbligazioni della società, salvo le eccezione previste dalla legge societaria.

  1. Società a Responsabilità Limitata (in ungherese: “Korlátolt felelősségű társaság”, di seguito: “Srl”)

Questa società è equivalente alla Srl italiana. Si costituisce, infatti, con un capitale iniziale (c.d. capitale sottoscritto) composto da conferimenti di valore predeterminato, in cui la responsabilità del socio nei confronti della società è limitata al conferimento iniziale e agli altri conferimenti patrimoniali eventualmente previsti nell’atto costitutivo. Tale forma societaria è anche la più comune e frequente. Il capitale sociale minimo è stato recentemente innalzato a 3.000.000 HUF (pari a circa 10.000 euro).

  1. Società per azioni (in ungherese: “Részvénytársaság”)

La società per azioni è una società di capitali nella quale le partecipazioni dei soci sono rappresentate da un numero di azioni aventi un valore nominale predeterminato (che costituiscono il capitale sociale). La responsabilità del socio (azionista) è limitata al valore nominale o di emissione dell’azione.

La società per azioni è quella generalmente utilizzata per gli investimenti più rilevanti.

Dal 1 luglio 2007 si possono stabilire anche società non-profit.

Quali sono le procedure per costituire una società?

Una società può esser costituita sia da cittadini ungheresi che stranieri.

Il primo passo da compiere è rappresentato dall’atto costitutivo della società, che viene redatto dai soci e controfirmato in genere da un avvocato o da un notaio. La denominazione dell’atto costitutivo varia a seconda delle diverse tipologie societarie.

In caso di soci non aventi sede o residenza in Ungheria, è necessaria la nomina di un delegato al fine di poter ricevere la corrispondenza.

A decorrere dal 16 marzo 2017, l’imposta amministrativa sulla costituzione delle società è stata cancellata, con l’esclusione delle società per azioni (chiuse), per le quali ammonta a 50.000-Huf (circa 150 euro).

Il passo successivo è la domanda di iscrizione presso il Registro delle Imprese, per la quale è obbligatoria l’assistenza di un legale.

Alla domanda vanno di norma allegati i seguenti documenti: l’atto costitutivo, le dichiarazioni di accettazione delle cariche sociali (amministratori dirigenti, i membri del consiglio di sorveglianza, revisore), la dichiarazione da parte dell’amministratore o il certificato dell’istituto finanziario inerente il pagamento dei conferimenti iniziali, la procura speciale rilasciata al rappresentante legale e la ricevuta di pagamento delle spese necessarie.

La domanda d’iscrizione al Registro delle Imprese dev’essere presentata entro trenta giorni dalla costituzione della società presso il Tribunale di Contea.

In taluni settori (es.: bancario) la domanda di registrazione dovrà essere depositata entro quindici giorni dal rilascio di un’autorizzazione amministrativa speciale per la costituzione della società.

Nel caso della procedura “tradizionale”, il Tribunale avrà otto (8) giorni per verificare il contenuto e gli allegati della domanda d’iscrizione. I soci, rimanendo entro i limiti previsti dalla legge societaria, sono liberi di determinare il contenuto dell’atto costitutivo in base alle loro specifiche esigenze personali ed economiche.

Una volta eseguita la registrazione, la stessa società verrà iscritta ed infine pubblicata all’interno della Gazzetta ufficiale (in ungherese: “Cégközlöny”).

A quanto ammonta la Tassazione sulle attività di impresa?

A partire dal 1 gennaio 2017 la tassazione sui redditi societari in Ungheria ha un’aliquota unica del 9%. Questa nuova aliquota è la più bassa in Europa e rende l’Ungheria un importante “hub” per attrarre investimenti stranieri.

This post aims to examine schematically the three most common ways of enter in the market of Slovakia: Limited Liability Companies, a Joint Stock Companies, and Branch Offices.

Limited Liability Company

Minimum registered capital

EUR 5,000 (in case of a sole shareholder the whole sum must be fully paid up at the incorporation)

Minimum reserve fund

  • optional establishment of the reserve fund at the incorporation
  • sum equal to at least 5% of net profits has to be contributed to the reserve fund in the first year when profit is made (however not exceeding 10% of the registered capital) and in each subsequent year until the amount of the reserve fund equals to at least 10% of the registered capital

Minimum number of founders

1 (either individual or legal entity, cannot be a limited liability company having only one shareholder!)

Liability

  • unlimited liability of LLC
  • liability of shareholders up to unpaid amount of their contributions to the registered capital

Representation Authority

at least one Managing Director

Required corporate bodies

General Meeting

Corporate income tax

22%

Audit

Required:

  • if at least 2 of 3 conditions are met in decisive period (2 consecutive accounting periods): a) annual turnover exceeds EUR 2 million, b) amount of net assets exceeds EUR 1 million, c) average number of employees exceeds 30
  • if company’s securities are publicly traded, or in specific regulated businesses

Registration fees

EUR 300 in paper form and EUR 150 in electronic one (excluding notarial, translation, and legal services costs)

Timeframe for incorporation (including completion of registration)

approx. 3 weeks (after receiving all required documents from the founder; timeframe depends on the scope of business activities, in case of necessity of special license such time frame may be prolonged)

Process of registration

  1. Drafting of required documents
  2. Tax Authority’s consent to be obtained for Slovak residents to verify their taxpayers’ history (not required for foreign shareholders)
  3. The share capital has to be paid
  4. Obtaining of chosen trade licenses
  5. Registration in the Commercial Register
  6. Registration as a taxpayer at the respective Tax Authority

Necessary documents (general)

  • Foundation Memorandum/Memorandum of Association
  • Declaration of the share capital administrator or bank statement
  • Agreement on performance of function of Managing Director – not mandatory but recommended
  • Necessary trade licenses
  • Tax Authority consent (if applicable)
  • Payment of the court fee
  • Power of Attorney
  • Specimen signature of Managing Director/s
  • Right for using of a legal address
  • Extract/s from criminal record

Note: Some of the documents have to be notarised. Other documents may be required in particular cases.

Joint Stock Company

Minimum registered capital

EUR 25,000 (at least 30% of cash contributions must be fully paid up at the incorporation)

Minimum reserve fund

  • obligatory establishment of the reserve fund at the incorporation,
  • sum equal to 10% of registered capital,
  • sum equal to at least 10% of net profits has to be contributed to the reserve fund every year until the amount of the reserve fond equals to at least 20% of the registered capital

Minimum number of founders

1 (must be a legal entity)

Liability

  • unlimited liability of JSC
  • no liability of shareholders (limited to the nominal value of its shares)

Representation Authority

Board of Directors (consisting of at least 1 member)

Required corporate bodies

  • General Assembly of shareholders
  • Supervisory Board (3 members at minimum)

Corporate income tax

22%

Audit

Required:

  • if at least 2 of 3 conditions are met in decisive period (2 consecutive accounting periods): a) annual turnover exceeds EUR 2 million, b) amount of net assets exceeds EUR 1 million, c) average number of employees exceeds 30
  • if company’s securities are publicly traded, or in specific regulated businesses, e.g. in the financial sector

Registration fees

EUR 750 in paper form and EUR 375 in electronic one (excluding notarial, translation, costs of legal services)

Timeframe for incorporation (including completion of registration)

approx. 3 weeks (after receiving all required documents from the founder; time frame depends on the scope of business activities, in case of necessity of special license issuance (such as concession license) such time frame may be prolonged)

Process of registration

  1. Foundation Deed, Articles of Association, and other documents should be drafted in the form of a notarial deed
  2. Tax Authority’s consent (the same rule as for LLC)
  3. Necessary trade licenses have to be obtained at responsible state authority
  4. Paying up of the share capital and reserve fund
  5. Registration in the Commercial Register
  6. Registration at the Tax Authority

Note: The process above is a simplified summary.

Necessary documents (general)

  • Foundation Deed, Articles of Association in the form of notarial deed
  • Trade licenses
  • Agreements on performance of function of Board Members
  • Permission to use legal address
  • Declaration of the share capital administrator and bank statement
  • Tax Authority consent (if applicable)
  • Specimen signature of the Chairman of the Board and other Members of the Board of Directors
  • Payment of the court fee
  • Power of Attorney
  • Extract/s from criminal record of the Chairman of the Board and other Members of the Board of Directors

Note: Some of the documents have to be notarised. Other documents may be required in particular cases.

Branch Office

Minimum registered capital

N/A

Minimum reserve fund

N/A

Minimum number of founders

N/A

Liability

unlimited liability of the founder (i.e. the parent company of which the branch forms a part)

Representation Authority

Branch Manager, in addition to the statutory representatives of the founder

Other required corporate bodies

N/A

Corporate income tax

22%

Audit

N/A

Registration fees

EUR 300 in paper form and EUR 150 in electronic one (excluding notarial, translation, and legal services costs)

Timeframe for incorporation (including completion of registration)

approx. 3 weeks (after receiving all required documents from the founder; time frame depends on the scope of business activities, in case of necessity of special license issuance (such as concession license) such time frame may be prolonged)

Process of registration

  1. Decision of the parent company on establishment a Branch Office in Slovakia
  2. Obtaining of chosen trade licenses
  3. Registration in the Commercial Register
  4. Registration at the Tax Authority

Necessary documents (general)

  • Decision of the parent company on establishment a Branch Office in Slovakia
  • Foundation Documents of the parent company
  • Parent company’s extract from relevant register in home jurisdiction
  • Trade licenses
  • Permission to use legal address of the Branch Office
  • Extract/s from criminal record for the appointed Manager of the Branch Office

Note: Some of the documents have to be notarised. Other documents may be required in particular cases.

Lebanon’s secure banking sector plays an important role in the country’s stability and economic status. High liquidity and compliance with all international regulatory standards make it one of the most profitable in the region.

Stability

The Lebanese banking sector owes its solidity primarily to the stringent policies applied by the Lebanese Central Bank (LCB). Efforts are constantly being made to fight money laundering and terrorism funding.

The Lebanese diaspora also contributes to the stability through the flux of transfers and deposits of extraterritorial income. Compared with an estimated population of 4.9 million inhabitants, about 16 million Lebanese live abroad, largely engaged in trade and finance, and mainly concentrated in South America.

The banking sector’s stability is also bolstered by the currency exchange rate, which has been stable since 1997, when the Lebanese Pound (LBP) was pegged to the United States Dollar (USD) at a rate of 1507.5 LBP to the USD.

Banking Secret and Automatic exchange of Information

The Lebanese Banking Secrecy Law of September 3, 1956 was a key aspect in the expansion of the sector. Bank secrecy is applied to any bank operating in Lebanon, local or foreign, and prohibits the disclosure of any details or information about any account or accountholder. For long time this law has increased confidence in Lebanese banking together with the amount of foreign capital coming into the country.

Before the last economic and financial global shocks, the veil of banking secrecy could be lifted only with prior approval of the accountholder, in case of bankruptcy; for the exchange of information between banks about indebted accounts; and in case of legal actions between a bank and a client or illicit enrichment.

Nowadays, banking secrecy does not apply to US citizens because of the Foreign Account Tax Compliance Act (FATCA) that requires foreign banks to report American accountholders to the tax authority of the US. Even though Lebanon has not agreed to be FATCA compliant as a whole, individual Lebanon banks have agreed to comply.

Moreover, in 2016 Lebanon joined the Global Forum on Transparency and the Automatic Exchange of Information (AEOI) for tax purposes, committing to implement a series of regulatory reforms to better comply with the Common Reporting Standards of OECD.

Consequently, if the requested information is protected under the Banking Secrecy Law of 1956, the request will be forwarded to the Special Investigation Commission (SIC) at the Central Bank with an opinion from the Ministry of Finance for review before it can be disclosed to the foreign tax authority based on an information exchange agreement.

The regulatory framework and supervision of the banking sector is already in compliance with international standards, such as Basel I, II, and III. Abiding by these laws does not eliminate banking secrecy. New regulations just aim to provide a more effective tool to counter the fight against tax evasion and to track suspicious operations for money laundering purposes, or self-laundering, based on tax offenses.

According to the AEOI, starting from September 2018 Lebanese Tax Authority will exchange information automatically on non-residents, and will have access to information on residents who hold assets abroad. No issues for Lebanese residents.

The new legislation will impact: banks, brokers, trusts, fiduciaries, insurance companies, although only for a few products, and certain collective investment funds.

Corporate Governance

As part of the strategy to integrate Lebanon further into the international community and the global economy, corporate governance in banks is necessary to guarantee fairness, transparency and accountability.

It is mandatory for banks while optional for other companies. In fact, an innovation took place in the banking sector on July 26, 2006 when the Governor of the Lebanese Central Bank enacted the Basic Decision No. 9382 to order to comply with the banking rules instituted by the Basel Committee.

Account freedom and flexibility

Lebanese banks are known for being open to foreign investors and have branches worldwide. Foreign individuals or companies can easily open a bank account in Lebanon in any currency and benefit from all banking advantages offered to Lebanese citizens. Further, amounts deposited in Lebanon are exempt from taxes and the interest received is subject to a tax rate of 5-percent.

The author of this post is Claudia Caluori.

The goal of this short article is to examine the annual business report, mandatory for all Swiss companies. The board of directors prepares the annual business report, which is composed of:

  • The annual financial statements;
  • The annual report, and;
  • The consolidated financial statements if such statement are required by law.

The annual financial statements comprise the following three documents: profit and loss statement (or income statement), balance sheet, and annex.

The profit and loss statement must distinguish between operating and non-operating, as well as extraordinary, income and expenses. Income must be split separately between:

  • Revenues from deliveries and services;
  • Financial income, and;
  • Profits from the disposition of capital assets.

Expense must at least show cost of goods sold, personnel expenses, financial expenses, as well as depreciation.

The balance sheet shall show the current assets and the capital assets, debts and equity. Current assets are divided into liquid assets, claims resulting from deliveries and services, other claims, as well as inventories. Capital assets are divided into financial assets, tangible and intangible assets. The outside funds are divided into debts resulting from deliveries and services, other short-term liabilities, long-term liabilities and provisions. Equity is divided into share capital, legal and other reserves, as well as a profit brought forward. Capital not paid in, the total amount of investments, the claims and liabilities against affiliates or against shareholders, accruals and deferrals, as well as losses carried forward are disclosed separately.

The Annex includes:

  • The total amount of guarantees, indemnity liabilities and pledges in favour of third part;
  • The total amount of assets pledged or assigned for the securing of own liabilities, as well as of assets with retention of title;
  • The total amount of liabilities from leasing contracts not included in the balance sheet;
  • The fire insurance value of assets;
  • Liabilities to personnel welfare institutions;
  • The amounts, interest rates and maturities of bonds issued by the company;
  • Each participation essential for assessing the company’s financial situation;
  • The total amount of dissolved hidden; reserves to the extent that such total amount that exceeds newly formed reserves of the same kind, and thereby show a considerably more favourable result;
  • Information on the object and the amount of revaluations;
  • Information on the acquisition, disposition, and number of own shares held by the company, including its shares held by another company in which it holds a majority participation; equally shown shall be the terms and conditions of such share transactions;
  • The amount of the authorized capital increase and of the capital increase subject to a condition;
  • Other information required by law.

The Annual report describes the development of the business, as well as the economic and the financial situation of the company. It reproduces the auditors’ report.

If the company, by majority vote or by another method joins one or more companies under a common control (group of companies), it is required to prepare consolidated financial statements. The company is exempted from consolidation if it, during two consecutive business years, together with the affiliates, does not exceed two of the following parameters:

  • Balance sheet total: CHF. 10’000’000
  • Revenues: CHF. 20’000’000
  • Average annual number of employees: 200

However, consolidated statements shall be prepared if:

  • the company has outstanding bond issues;
  • the company’s shares are listed on a stock exchange;
  • shareholders representing at least ten per cent of the share capital so request;
  • this is necessary for assessing as reliably as possible the company’s financial condition and profitability.

Swiss valuation principles are conservative. Assets are valued at the lower of cost or market. A full provision for all known liabilities must be made. In addition, the Code gives discretionary powers to the board to value assets at amounts lower than maximum carrying values prescribed by law, or to create hidden reserves. The maximum asset values permissible are set out in articles 664 through 670 of the Code. These are as follows:

Costs of incorporation, capital increase, and organization resulting from the establishment, expansion or reorganization of the business may be included in the balance sheet. They must be shown separately and amortized within five years. Capital assets are to be valued at a maximum of the acquisition or manufacturing costs less the necessary depreciation. Participations and other financial investments are also part of the capital assets. Participations are permanent investments in the capital of subsidiary companies; usually they give a controlling influence in the management of the affiliate. Share blocks representing at least twenty per cent of the votes are classified as participations.

Raw materials, semi-finished and finished products, as well as merchandise, shall be valued at a maximum of the acquisition or manufacturing cost. If the cost is higher than market value on the date of the balance sheet, then market value is used.

Listed securities shall be valued at a maximum of their average stock exchange price during the month preceding the date of the balance sheet. Unquoted securities shall be valued at a maximum of the acquisition cost under deduction of any necessary value adjustments.

Depreciation, value adjustments and provisions should be made to the extent required by generally accepted accounting principles. Provisions are to be established in particular to cover contingent liabilities and potential losses from pending business transactions. The board may take additional depreciation, make value adjustments and provisions and refrain from dissolving provisions, which are no longer justified. Hidden reserves exceeding the above are permitted to the extent justified in the interest of the continuing prosperity of the company or to enable the regular distribution of dividends, taking into account the interests of the shareholders. The auditors must be notified in detail of the creation and the dissolution of replacement reserves and hidden reserves exceeding the above.

If half of the sum of the share capital and legal reserves is lost, real estate property or participations whose fair market value has risen above cost may, for the purpose of eliminating the deficit, be re-valued up to a maximum of such deficit. The revaluation amount shall be shown separately as a revaluation reserve. The revaluation is only permitted if the auditors confirm in writing to the general meeting of shareholders that the legal provisions have been respected.

Companies are required to allocate five per cent of the annual profit to the legal reserve until it has reached twenty per cent of be paid-in share capital. Also, after having reached the statutory amount, the following shall be allocated to this reserve:

  • any surplus over par value upon the issue of new shares;
  • after deduction of the issue costs, to the extent such surplus is not used for depreciation or welfare purposes;
  • the excess of the amount which was paid in on cancelled shares over any reduction on the issue price of replacement shares ten per cent of the amounts which are distributed as a share of profits after payment of a dividend of five per cent.

To the extent it does not exceed half of the share capital, the legal reserve shall only be used to remove an accounting deficit, to preserve the existence of the business enterprise in bad times, to counteract unemployment, or to soften its consequences.

There are no filing requirements in Switzerland for annual financial statements except in the case of banks, finance and insurance companies.

The Company financial statements in Switzerland

29 Marzo 2017

  • Svizzera
  • Diritto societario
In this clip I briefly introduce the main options to consider when doing business in Iran.
You can read more on this topic in my articles An introduction to Iran Corporations  and Obtaining a Foreign Investment License and browse Legalmondo’s blog for some other  posts on doing business in the region.

Brazilian legislation requires every nonresident that holds quotas, capital or shares of a Brazilian company appoints an attorney-in-fact that resides in the country, with powers to receive service of process.

Besides granting the power required by law, foreign partners usually grant other powers to their attorneys-in-fact, in order to facilitate the procedures, since all documents executed abroad must be notarized and Apostilled, and once they arrive in Brazil they must be translated by a sworn translator and registered before the Public Registry of Titles and Documents, in order to be valid in Brazil, which is time and money consuming.

Also, all foreign companies holding quotas, capital or shares of the Brazilian company, need a Taxpayer number, called CNPJ. The taxpayer number is not for tax payment purposes, but for controlling purposes only. The foreign partners / holder need to grant a power of attorney for their enrollment at CNPJ, and representation before the Federal Revenue in all matters.

By the time the company is incorporated the Power of Attorney granting the above-mentioned mandatory powers must be presented before the Board of Trade.

Moreover, all Foreign Direct Investment must be registered at the Central Bank of Brazil. This means that every time the foreign shareholder/partner transfers money to the Brazilian company as investment, the respective exchange agreement must be registered at the Central Bank. Such registration is done electronically.

The main effects of such registration are the possibility of remitting dividends and of repatriating the capital invested.

In view of the above, the documents to be presented at the incorporation of a company in Brazil are:

  • Power of Attorney granting to a Brazilian resident powers to accept service of process, for enrollment at CNPJ and representation before the Federal Revenue;
  • In case the foreign partners/shareholders/holder are/is a natural person, a copy of his/her passport;
  • In case the foreign partners/shareholders/holder are/is a legal entity:

– Copy of the passport of the legal representative of the foreign partners/shareholders/holder; and

– Updated Certificate issued by the Board of Trade of the foreign partners/shareholders/holder’s head offices attesting: (a) its existence and good standing, and (b) its legal representatives for the purposes of evidencing that the company was duly represented in the Power of Attorney granted. This document (or a separate one issued by a public authority) must also contain the head offices address, name of shareholders, capital and objectives.

Note that all documents need to be duly notarized and apostilled. Once they arrive in Brazil, they will undergo sworn translation and will be registered at the Public Registry Office in order to be valid.

We would like to point out that the Federal Revenue and commercial banks have increasingly been requesting a series of complementary documents for compliance reasons, so that the final beneficiaries (natural person) of each foreign company holding quotas, capital or shares of Brazilian entities may be identified.

At the chosen bank’s own discretion, other documents may be necessary, as balance sheets, statements and corporate documentation until the end controller (natural person) is identified. These documents must be presented for the opening of a bank account, and banks have been taking quite some time to open the account.

The purpose of this brief essay is to give an overview of company types  according to Hungarian law, along with some relevant legal standards that define their operation.

A member of the European Union since 1 May 2004, Hungary is a country in rapid growth and, as such, an attractive destination for prospective investors that wish to set up a local enterprise.

What kind of business associations can be established?

Hungarian Civil Code regulates the foundation, organization and operation of business associations with a registered seat in Hungary.

The Hungarian law complies with EU legislation and allows for foreign nationals to establish business associations in Hungary under the same terms and conditions as Hungarian citizens.

  1. General Partnership (Hungarian: “Közkereseti társaság”)

Members of the partnership shall undertake to jointly engage in business operations with unlimited, joint and several liability, and to make available the capital contribution necessary for the activities of the partnership.

  1. Limited Partnership (Hungarian: “Betéti társaság”)

Members of the partnership shall undertake to jointly engage in business operations, and the liability of at least one member (general partner) for the obligations of the partnership shall be unlimited. If there is more than one general partner, all general partners shall be jointly and severally liable. At least one other member (limited partner) shall only be obliged to provide the capital contribution undertaken in the Memorandum of Association, and, with the exceptions set out in the Hungarian Civil Code, shall not be liable for the obligations of the partnership.

  1. Limited Liability Company (Hungarian: “Korlátolt felelősségű társaság”)

This is a business association founded with an initial capital (so-called subscribed capital) consisting of capital contributions of a pre-determined amount, where the liability of members to the company is limited to the provision of the contribution to the initial capital, and possibly to other contributions established in the partnership agreement. This is the most common company form in Hungary. The minimum subscribed capital required to start a company has been recently raised to HUF 3,000,000 (approximately € 10,000).

  1. Limited (Joint-Stock) Company (Hungarian: “Részvénytársaság”)

Limited companies are business associations founded with a share capital (subscribed capital) consisting of shares of pre-determined face value, and the obligation of members (shareholders) to the company is limited to the provision of the face value or issue price of shares.

Private and public limited companies are usually founded for larger investments in terms of invested capital. The minimum subscribed capital of a private limited company (“Zrt”) is HUF 5,000,000 (approximately € 15,000), while a public limited company (“Nyrt”) requires a capital of at least HUF 20,000,000 (approximately € 60,000). Privately held companies (“Zrt”) operate similarly to public limited companies but their shares cannot be listed on the stock exchange and specific provisions apply to the sale and purchase of shares.

Pursuant to the law, nonprofit business associations can also be set up.

What is the procedure for founding a business association?

A business association can be founded by both Hungarian and foreign citizens.

The first step is signing a Memorandum of Association, which is usually drafted and countersigned by a legal practitioner or notary. The format of this document varies depending on the kind of business association established.

Since 16 March 2017, there is no administrative fee for founding an association, with the exception of privately held companies (“Zrt”), for which it amounts to HUF 50,000 (approximately € 150).

The next step is requesting the inclusion of the company in the Register of Companies, which, according to Hungarian law, shall be carried out by a lawyer.

The following documents shall be submitted with the registration request: Memorandum of Association; acceptance of mandates (executive officers, members of the supervisory board, and auditor); statement by the executive officer or certificate from the financial institution about the payment of initial contributions; special power of attorney granted to the legal representative; certificate of payment of the necessary expenses.

The registration request shall be submitted to the County Court within thirty (30) days from the foundation of the business association. Foundation of certain types of businesses may require prior authorization by relevant authorities (e.g. foundation permit in the banking sector). In that case, the request of registration shall be issued within fifteen (15) days from receipt of the foundation permit.

The Court has eight (8) days to review and approve the request and the attached documents. Within the framework of the Hungarian Civil Code and other legal regulations, members (shareholders) may freely establish the contents of the articles of association, according to their own personal and economic needs.

Once the registration is completed, the association will be listed in the Register of Companies and published in the Official Company Gazette (Hungarian: “Cégközlöny”).

What is the corporate tax rate in Hungary?

As of 1 January 2017, the Hungarian government cut the corporate tax rate to 9%, and now Hungary has the lowest level of corporate taxes in Europe, which gives the country a competitive edge to attract foreign direct investment to the country.

The economy of a country is usually supported and boosted by the Government. In Lebanon, instead, the Central Bank or Banque du Liban (BdL) has taken on the role for years now, due to the long governmental inactivity and the political impasse. The recent formation of a national unity government – after the longest presidential vacancy in the country’s history  – generated hope worldwide towards a new start for the country to get back on track both at the local and the international level. Nonetheless, BdL still plays an important role, providing critical support to the real economy, as well as acting as a backstop to the financial sector.

BdL acts according to the provisions of the Code of Money and Credit that includes, among other duties, “safeguarding economic stability” and “developing the monetary and financial market”. Over the past years, consecutive packages of subsidized loans for the private sector were issued, helping to support demand. Those actions were put in place amending the basic Decision no. 6116 of March 7, 1996 regarding “Facilities that may be granted by Banque du Liban to Banks and Financial Institutions”.

As the World Bank highlighted in the report “Lebanon Economic Monitor Fall 2016”, BdL’s stimulus packages and other initiatives, in conjunction with the contributory role played by Kafalat SAL, the loan guarantee financial company, have provided significant support to the real sector, by means of subsidizing interest payments of SME borrowers, extending special guarantees to SMEs, and granting exemptions on compulsory reserves of creditors.

The latest GDP increase would have been lower without BdL’s interventions, which involve largely the tech industry and the knowledge based economy (“KBE”), but also the real estate and tourism sector.

With regard to the tech industry, to support Lebanon’s entrepreneurial ecosystem, in 2013 BdL issued Circular 331 with the dual aim of retaining local talent and attracting the expatriates to setup business in the country. The initial $400 million USD funds gave impulse to develop the technological and digital sector, encouraging the incorporation of Lebanese companies, the operations in the country without a definite time limit.

In 2016, it increased the margin of funds that banks could dedicate to the financing of this sector, by authorizing them to invest, with BdL’s guarantee, up to 4% of their own funds, compared to 3% previously.

Circular 331 has created a lively and high-standard technological environment in Lebanon, where different actors interpret essential roles to contribute to the growth and the innovation of the country.

More than 1500 companies are working in the ICT field (1500 according to the 2016 report issued by the UK Tech Hub), in addition to 8 incubators and accelerators, mentorship and business educational groups, 6 local venture capital firms and others operating in the regions.  It is a matter of time until the spill-over effect contributes to the GDP growth.

With regard to real estate, Circular 427 provides an incentive by allowing banks in Lebanon to offer credit facilities to companies, funds or special vehicles for the purpose of acquiring real estate projects. The loans are subject to certain conditions set up for a) the seller, i.e. specialized real estate companies, b) the properties, and c) the purchase itself. Credit is available up to 60 percent of the value of the purchase with the remaining 40 percent financed by the purchaser from their equity excluding debt.

The main target of the measure is to boost sales of existing new real estate stock that remains unsold. Another important outcome is the enhancement of the dialogue between the actors, creating synergies and a proactive business environment around the real estate sector.

In line with the spirit, in tourism sector the most recent Circular 465 aims to boost real estate projects related to hospitality, as well investments in the tourism like, leisure parks and medical centers, through commercial banks subsidized loans (up to $ 10 million USD) for a prolonged period.

In conclusion, on one hand, it is worth to notice that credit incentives, provided through the banking sector, have played a key role in boosting and supporting the numerous segments of the Lebanese economy. On the other hand, from a regulatory perspective, critical reforms are needed to put the country back on the right track. The Government and the Parliament are working towards this direction: new upcoming projects, new laws to approve and enact, and opportunities to invest in many other sectors, like telecommunication services, electricity and water distribution, and waste management.

The author of this post is Claudia Caluori.

Questo breve post intende fare una panoramica sulle diverse forme societarie regolate dall’ordinamento ungherese. Dal 1° maggio 2004 – data di ingresso nell’UE – l’Ungheria ha percorso un lungo cammino di sviluppo e oggi rappresenta uno dei paesi più interessanti per gli investitori stranieri.

Quali forme societarie è possibile costituire?

Il codice civile ungherese del 2013 prevede che gli stranieri – sia persone fisiche che giuridiche – possano svolgere attività d’impresa in Ungheria alle stesse condizioni dei cittadini ungheresi, quindi anche mediante la costituzione di una società di diritto ungherese. Vediamo, perciò, i quattro tipi societari più diffusi:

  1. Società in Nome Collettivo (in ungherese: “Közkereseti társaság”)

I soci si obbligano a svolgere un’attività economica assumendosi la responsabilità solidale e illimitata, oltre all’obbligo di conferimento del patrimonio per il perseguimento dell’oggetto sociale.

  1. Società in Accomandita Semplice (in ungherese: “Betéti társaság”)

In questa società è necessaria la presenza di: almeno un socio accomandatario, che risponderà illimitatamente e solidalmente con gli altri soci accomandatari per le obbligazioni della società eccedenti il patrimonio sociale; e almeno un socio accomandante, tenuto a conferire la propria quota determinata nello statuto e che non risponderà personalmente per le obbligazioni della società, salvo le eccezione previste dalla legge societaria.

  1. Società a Responsabilità Limitata (in ungherese: “Korlátolt felelősségű társaság”, di seguito: “Srl”)

Questa società è equivalente alla Srl italiana. Si costituisce, infatti, con un capitale iniziale (c.d. capitale sottoscritto) composto da conferimenti di valore predeterminato, in cui la responsabilità del socio nei confronti della società è limitata al conferimento iniziale e agli altri conferimenti patrimoniali eventualmente previsti nell’atto costitutivo. Tale forma societaria è anche la più comune e frequente. Il capitale sociale minimo è stato recentemente innalzato a 3.000.000 HUF (pari a circa 10.000 euro).

  1. Società per azioni (in ungherese: “Részvénytársaság”)

La società per azioni è una società di capitali nella quale le partecipazioni dei soci sono rappresentate da un numero di azioni aventi un valore nominale predeterminato (che costituiscono il capitale sociale). La responsabilità del socio (azionista) è limitata al valore nominale o di emissione dell’azione.

La società per azioni è quella generalmente utilizzata per gli investimenti più rilevanti.

Dal 1 luglio 2007 si possono stabilire anche società non-profit.

Quali sono le procedure per costituire una società?

Una società può esser costituita sia da cittadini ungheresi che stranieri.

Il primo passo da compiere è rappresentato dall’atto costitutivo della società, che viene redatto dai soci e controfirmato in genere da un avvocato o da un notaio. La denominazione dell’atto costitutivo varia a seconda delle diverse tipologie societarie.

In caso di soci non aventi sede o residenza in Ungheria, è necessaria la nomina di un delegato al fine di poter ricevere la corrispondenza.

A decorrere dal 16 marzo 2017, l’imposta amministrativa sulla costituzione delle società è stata cancellata, con l’esclusione delle società per azioni (chiuse), per le quali ammonta a 50.000-Huf (circa 150 euro).

Il passo successivo è la domanda di iscrizione presso il Registro delle Imprese, per la quale è obbligatoria l’assistenza di un legale.

Alla domanda vanno di norma allegati i seguenti documenti: l’atto costitutivo, le dichiarazioni di accettazione delle cariche sociali (amministratori dirigenti, i membri del consiglio di sorveglianza, revisore), la dichiarazione da parte dell’amministratore o il certificato dell’istituto finanziario inerente il pagamento dei conferimenti iniziali, la procura speciale rilasciata al rappresentante legale e la ricevuta di pagamento delle spese necessarie.

La domanda d’iscrizione al Registro delle Imprese dev’essere presentata entro trenta giorni dalla costituzione della società presso il Tribunale di Contea.

In taluni settori (es.: bancario) la domanda di registrazione dovrà essere depositata entro quindici giorni dal rilascio di un’autorizzazione amministrativa speciale per la costituzione della società.

Nel caso della procedura “tradizionale”, il Tribunale avrà otto (8) giorni per verificare il contenuto e gli allegati della domanda d’iscrizione. I soci, rimanendo entro i limiti previsti dalla legge societaria, sono liberi di determinare il contenuto dell’atto costitutivo in base alle loro specifiche esigenze personali ed economiche.

Una volta eseguita la registrazione, la stessa società verrà iscritta ed infine pubblicata all’interno della Gazzetta ufficiale (in ungherese: “Cégközlöny”).

A quanto ammonta la Tassazione sulle attività di impresa?

A partire dal 1 gennaio 2017 la tassazione sui redditi societari in Ungheria ha un’aliquota unica del 9%. Questa nuova aliquota è la più bassa in Europa e rende l’Ungheria un importante “hub” per attrarre investimenti stranieri.

This post aims to examine schematically the three most common ways of enter in the market of Slovakia: Limited Liability Companies, a Joint Stock Companies, and Branch Offices.

Limited Liability Company

Minimum registered capital

EUR 5,000 (in case of a sole shareholder the whole sum must be fully paid up at the incorporation)

Minimum reserve fund

  • optional establishment of the reserve fund at the incorporation
  • sum equal to at least 5% of net profits has to be contributed to the reserve fund in the first year when profit is made (however not exceeding 10% of the registered capital) and in each subsequent year until the amount of the reserve fund equals to at least 10% of the registered capital

Minimum number of founders

1 (either individual or legal entity, cannot be a limited liability company having only one shareholder!)

Liability

  • unlimited liability of LLC
  • liability of shareholders up to unpaid amount of their contributions to the registered capital

Representation Authority

at least one Managing Director

Required corporate bodies

General Meeting

Corporate income tax

22%

Audit

Required:

  • if at least 2 of 3 conditions are met in decisive period (2 consecutive accounting periods): a) annual turnover exceeds EUR 2 million, b) amount of net assets exceeds EUR 1 million, c) average number of employees exceeds 30
  • if company’s securities are publicly traded, or in specific regulated businesses

Registration fees

EUR 300 in paper form and EUR 150 in electronic one (excluding notarial, translation, and legal services costs)

Timeframe for incorporation (including completion of registration)

approx. 3 weeks (after receiving all required documents from the founder; timeframe depends on the scope of business activities, in case of necessity of special license such time frame may be prolonged)

Process of registration

  1. Drafting of required documents
  2. Tax Authority’s consent to be obtained for Slovak residents to verify their taxpayers’ history (not required for foreign shareholders)
  3. The share capital has to be paid
  4. Obtaining of chosen trade licenses
  5. Registration in the Commercial Register
  6. Registration as a taxpayer at the respective Tax Authority

Necessary documents (general)

  • Foundation Memorandum/Memorandum of Association
  • Declaration of the share capital administrator or bank statement
  • Agreement on performance of function of Managing Director – not mandatory but recommended
  • Necessary trade licenses
  • Tax Authority consent (if applicable)
  • Payment of the court fee
  • Power of Attorney
  • Specimen signature of Managing Director/s
  • Right for using of a legal address
  • Extract/s from criminal record

Note: Some of the documents have to be notarised. Other documents may be required in particular cases.

Joint Stock Company

Minimum registered capital

EUR 25,000 (at least 30% of cash contributions must be fully paid up at the incorporation)

Minimum reserve fund

  • obligatory establishment of the reserve fund at the incorporation,
  • sum equal to 10% of registered capital,
  • sum equal to at least 10% of net profits has to be contributed to the reserve fund every year until the amount of the reserve fond equals to at least 20% of the registered capital

Minimum number of founders

1 (must be a legal entity)

Liability

  • unlimited liability of JSC
  • no liability of shareholders (limited to the nominal value of its shares)

Representation Authority

Board of Directors (consisting of at least 1 member)

Required corporate bodies

  • General Assembly of shareholders
  • Supervisory Board (3 members at minimum)

Corporate income tax

22%

Audit

Required:

  • if at least 2 of 3 conditions are met in decisive period (2 consecutive accounting periods): a) annual turnover exceeds EUR 2 million, b) amount of net assets exceeds EUR 1 million, c) average number of employees exceeds 30
  • if company’s securities are publicly traded, or in specific regulated businesses, e.g. in the financial sector

Registration fees

EUR 750 in paper form and EUR 375 in electronic one (excluding notarial, translation, costs of legal services)

Timeframe for incorporation (including completion of registration)

approx. 3 weeks (after receiving all required documents from the founder; time frame depends on the scope of business activities, in case of necessity of special license issuance (such as concession license) such time frame may be prolonged)

Process of registration

  1. Foundation Deed, Articles of Association, and other documents should be drafted in the form of a notarial deed
  2. Tax Authority’s consent (the same rule as for LLC)
  3. Necessary trade licenses have to be obtained at responsible state authority
  4. Paying up of the share capital and reserve fund
  5. Registration in the Commercial Register
  6. Registration at the Tax Authority

Note: The process above is a simplified summary.

Necessary documents (general)

  • Foundation Deed, Articles of Association in the form of notarial deed
  • Trade licenses
  • Agreements on performance of function of Board Members
  • Permission to use legal address
  • Declaration of the share capital administrator and bank statement
  • Tax Authority consent (if applicable)
  • Specimen signature of the Chairman of the Board and other Members of the Board of Directors
  • Payment of the court fee
  • Power of Attorney
  • Extract/s from criminal record of the Chairman of the Board and other Members of the Board of Directors

Note: Some of the documents have to be notarised. Other documents may be required in particular cases.

Branch Office

Minimum registered capital

N/A

Minimum reserve fund

N/A

Minimum number of founders

N/A

Liability

unlimited liability of the founder (i.e. the parent company of which the branch forms a part)

Representation Authority

Branch Manager, in addition to the statutory representatives of the founder

Other required corporate bodies

N/A

Corporate income tax

22%

Audit

N/A

Registration fees

EUR 300 in paper form and EUR 150 in electronic one (excluding notarial, translation, and legal services costs)

Timeframe for incorporation (including completion of registration)

approx. 3 weeks (after receiving all required documents from the founder; time frame depends on the scope of business activities, in case of necessity of special license issuance (such as concession license) such time frame may be prolonged)

Process of registration

  1. Decision of the parent company on establishment a Branch Office in Slovakia
  2. Obtaining of chosen trade licenses
  3. Registration in the Commercial Register
  4. Registration at the Tax Authority

Necessary documents (general)

  • Decision of the parent company on establishment a Branch Office in Slovakia
  • Foundation Documents of the parent company
  • Parent company’s extract from relevant register in home jurisdiction
  • Trade licenses
  • Permission to use legal address of the Branch Office
  • Extract/s from criminal record for the appointed Manager of the Branch Office

Note: Some of the documents have to be notarised. Other documents may be required in particular cases.

Lebanon’s secure banking sector plays an important role in the country’s stability and economic status. High liquidity and compliance with all international regulatory standards make it one of the most profitable in the region.

Stability

The Lebanese banking sector owes its solidity primarily to the stringent policies applied by the Lebanese Central Bank (LCB). Efforts are constantly being made to fight money laundering and terrorism funding.

The Lebanese diaspora also contributes to the stability through the flux of transfers and deposits of extraterritorial income. Compared with an estimated population of 4.9 million inhabitants, about 16 million Lebanese live abroad, largely engaged in trade and finance, and mainly concentrated in South America.

The banking sector’s stability is also bolstered by the currency exchange rate, which has been stable since 1997, when the Lebanese Pound (LBP) was pegged to the United States Dollar (USD) at a rate of 1507.5 LBP to the USD.

Banking Secret and Automatic exchange of Information

The Lebanese Banking Secrecy Law of September 3, 1956 was a key aspect in the expansion of the sector. Bank secrecy is applied to any bank operating in Lebanon, local or foreign, and prohibits the disclosure of any details or information about any account or accountholder. For long time this law has increased confidence in Lebanese banking together with the amount of foreign capital coming into the country.

Before the last economic and financial global shocks, the veil of banking secrecy could be lifted only with prior approval of the accountholder, in case of bankruptcy; for the exchange of information between banks about indebted accounts; and in case of legal actions between a bank and a client or illicit enrichment.

Nowadays, banking secrecy does not apply to US citizens because of the Foreign Account Tax Compliance Act (FATCA) that requires foreign banks to report American accountholders to the tax authority of the US. Even though Lebanon has not agreed to be FATCA compliant as a whole, individual Lebanon banks have agreed to comply.

Moreover, in 2016 Lebanon joined the Global Forum on Transparency and the Automatic Exchange of Information (AEOI) for tax purposes, committing to implement a series of regulatory reforms to better comply with the Common Reporting Standards of OECD.

Consequently, if the requested information is protected under the Banking Secrecy Law of 1956, the request will be forwarded to the Special Investigation Commission (SIC) at the Central Bank with an opinion from the Ministry of Finance for review before it can be disclosed to the foreign tax authority based on an information exchange agreement.

The regulatory framework and supervision of the banking sector is already in compliance with international standards, such as Basel I, II, and III. Abiding by these laws does not eliminate banking secrecy. New regulations just aim to provide a more effective tool to counter the fight against tax evasion and to track suspicious operations for money laundering purposes, or self-laundering, based on tax offenses.

According to the AEOI, starting from September 2018 Lebanese Tax Authority will exchange information automatically on non-residents, and will have access to information on residents who hold assets abroad. No issues for Lebanese residents.

The new legislation will impact: banks, brokers, trusts, fiduciaries, insurance companies, although only for a few products, and certain collective investment funds.

Corporate Governance

As part of the strategy to integrate Lebanon further into the international community and the global economy, corporate governance in banks is necessary to guarantee fairness, transparency and accountability.

It is mandatory for banks while optional for other companies. In fact, an innovation took place in the banking sector on July 26, 2006 when the Governor of the Lebanese Central Bank enacted the Basic Decision No. 9382 to order to comply with the banking rules instituted by the Basel Committee.

Account freedom and flexibility

Lebanese banks are known for being open to foreign investors and have branches worldwide. Foreign individuals or companies can easily open a bank account in Lebanon in any currency and benefit from all banking advantages offered to Lebanese citizens. Further, amounts deposited in Lebanon are exempt from taxes and the interest received is subject to a tax rate of 5-percent.

The author of this post is Claudia Caluori.

The goal of this short article is to examine the annual business report, mandatory for all Swiss companies. The board of directors prepares the annual business report, which is composed of:

  • The annual financial statements;
  • The annual report, and;
  • The consolidated financial statements if such statement are required by law.

The annual financial statements comprise the following three documents: profit and loss statement (or income statement), balance sheet, and annex.

The profit and loss statement must distinguish between operating and non-operating, as well as extraordinary, income and expenses. Income must be split separately between:

  • Revenues from deliveries and services;
  • Financial income, and;
  • Profits from the disposition of capital assets.

Expense must at least show cost of goods sold, personnel expenses, financial expenses, as well as depreciation.

The balance sheet shall show the current assets and the capital assets, debts and equity. Current assets are divided into liquid assets, claims resulting from deliveries and services, other claims, as well as inventories. Capital assets are divided into financial assets, tangible and intangible assets. The outside funds are divided into debts resulting from deliveries and services, other short-term liabilities, long-term liabilities and provisions. Equity is divided into share capital, legal and other reserves, as well as a profit brought forward. Capital not paid in, the total amount of investments, the claims and liabilities against affiliates or against shareholders, accruals and deferrals, as well as losses carried forward are disclosed separately.

The Annex includes:

  • The total amount of guarantees, indemnity liabilities and pledges in favour of third part;
  • The total amount of assets pledged or assigned for the securing of own liabilities, as well as of assets with retention of title;
  • The total amount of liabilities from leasing contracts not included in the balance sheet;
  • The fire insurance value of assets;
  • Liabilities to personnel welfare institutions;
  • The amounts, interest rates and maturities of bonds issued by the company;
  • Each participation essential for assessing the company’s financial situation;
  • The total amount of dissolved hidden; reserves to the extent that such total amount that exceeds newly formed reserves of the same kind, and thereby show a considerably more favourable result;
  • Information on the object and the amount of revaluations;
  • Information on the acquisition, disposition, and number of own shares held by the company, including its shares held by another company in which it holds a majority participation; equally shown shall be the terms and conditions of such share transactions;
  • The amount of the authorized capital increase and of the capital increase subject to a condition;
  • Other information required by law.

The Annual report describes the development of the business, as well as the economic and the financial situation of the company. It reproduces the auditors’ report.

If the company, by majority vote or by another method joins one or more companies under a common control (group of companies), it is required to prepare consolidated financial statements. The company is exempted from consolidation if it, during two consecutive business years, together with the affiliates, does not exceed two of the following parameters:

  • Balance sheet total: CHF. 10’000’000
  • Revenues: CHF. 20’000’000
  • Average annual number of employees: 200

However, consolidated statements shall be prepared if:

  • the company has outstanding bond issues;
  • the company’s shares are listed on a stock exchange;
  • shareholders representing at least ten per cent of the share capital so request;
  • this is necessary for assessing as reliably as possible the company’s financial condition and profitability.

Swiss valuation principles are conservative. Assets are valued at the lower of cost or market. A full provision for all known liabilities must be made. In addition, the Code gives discretionary powers to the board to value assets at amounts lower than maximum carrying values prescribed by law, or to create hidden reserves. The maximum asset values permissible are set out in articles 664 through 670 of the Code. These are as follows:

Costs of incorporation, capital increase, and organization resulting from the establishment, expansion or reorganization of the business may be included in the balance sheet. They must be shown separately and amortized within five years. Capital assets are to be valued at a maximum of the acquisition or manufacturing costs less the necessary depreciation. Participations and other financial investments are also part of the capital assets. Participations are permanent investments in the capital of subsidiary companies; usually they give a controlling influence in the management of the affiliate. Share blocks representing at least twenty per cent of the votes are classified as participations.

Raw materials, semi-finished and finished products, as well as merchandise, shall be valued at a maximum of the acquisition or manufacturing cost. If the cost is higher than market value on the date of the balance sheet, then market value is used.

Listed securities shall be valued at a maximum of their average stock exchange price during the month preceding the date of the balance sheet. Unquoted securities shall be valued at a maximum of the acquisition cost under deduction of any necessary value adjustments.

Depreciation, value adjustments and provisions should be made to the extent required by generally accepted accounting principles. Provisions are to be established in particular to cover contingent liabilities and potential losses from pending business transactions. The board may take additional depreciation, make value adjustments and provisions and refrain from dissolving provisions, which are no longer justified. Hidden reserves exceeding the above are permitted to the extent justified in the interest of the continuing prosperity of the company or to enable the regular distribution of dividends, taking into account the interests of the shareholders. The auditors must be notified in detail of the creation and the dissolution of replacement reserves and hidden reserves exceeding the above.

If half of the sum of the share capital and legal reserves is lost, real estate property or participations whose fair market value has risen above cost may, for the purpose of eliminating the deficit, be re-valued up to a maximum of such deficit. The revaluation amount shall be shown separately as a revaluation reserve. The revaluation is only permitted if the auditors confirm in writing to the general meeting of shareholders that the legal provisions have been respected.

Companies are required to allocate five per cent of the annual profit to the legal reserve until it has reached twenty per cent of be paid-in share capital. Also, after having reached the statutory amount, the following shall be allocated to this reserve:

  • any surplus over par value upon the issue of new shares;
  • after deduction of the issue costs, to the extent such surplus is not used for depreciation or welfare purposes;
  • the excess of the amount which was paid in on cancelled shares over any reduction on the issue price of replacement shares ten per cent of the amounts which are distributed as a share of profits after payment of a dividend of five per cent.

To the extent it does not exceed half of the share capital, the legal reserve shall only be used to remove an accounting deficit, to preserve the existence of the business enterprise in bad times, to counteract unemployment, or to soften its consequences.

There are no filing requirements in Switzerland for annual financial statements except in the case of banks, finance and insurance companies.

Nicola Gianoli

Aree di attività

  • Diritto societario
  • Fisco e tasse
  • Immigrazione
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