Law No. 5 of 1997 on the Encouragement of Foreign Capital Investment, Amended by Law No. 7 of 2003

Law No. (5) of 1426 A.D. (1997 C.E.)
Concerning the Encouragement of Foreign Capital Investment Amended by Law No. (7) of 1371 A.H. (2003 C.E.)
General People's Conference

In implementation of the resolutions of the fundamental Popular Conferences in their second ordinary session for the year 1425 A.D., which were drafted by the General Forum of Fundamental Popular Conferences, Popular Committees, Syndicates, Unions, and Professional Associations (General People's Conference) during its ordinary session held from 25 to 30 Shawwal, corresponding to 4 to 9 Rabi' I 1426 A.D. After reviewing the Declaration of Authority of the People, The Great Green Charter for Human Rights in the Era of the Masses, Law No. (20) of 1991 C.E. regarding the enhancement of freedom, The Commercial Law and its amendments, Law No. (37) of 1968 C.E. regarding foreign capital investment, Income Tax Law No. (64) of 1973 C.E. and its amendments, Customs Law No. (67) of 1973 C.E. and its amendments, Law No. (1) of 1993 C.E. regarding banks, currency, and credit and its amendments, Law No. (1) of 1369 A.H. regarding Popular Conferences and Popular Committees.

The Law is Drafted as Follows:

Article 1
This Law aims to encourage foreign capital investment for establishing investment projects within the framework of the state's general policy and economic and social development objectives, specifically:

• Transferring modern technology.
• Building Libyan technical elements.
• Diversifying income sources.
• Contributing to the development of national products to facilitate their entry into global markets.
• Achieving spatial development.

Article 2
This Law applies to foreign capital investment owned by Libyan Arab citizens and nationals of Arab and foreign countries in investment projects.
National capital may participate with foreign capital in investment, and the Executive Regulations shall determine the principles and conditions of this participation. (Amended by Law No. 7 of 1371 A.H.)

Article 3
For the application of this Law, the following terms and expressions carry the corresponding meanings unless context indicates otherwise:
(1) The Great Jamahiriya = The Great Socialist People's Libyan Arab Jamahiriya.
(2) The Law = Foreign Capital Investment Encouragement Law.
(3) The Secretary = Secretary of the General People's Committee for Economy and Trade.
(4) The Authority = Investment Promotion Authority.
(5) Executive Regulations = Regulations issued to implement this Law's provisions.
(6) Foreign Capital = The total financial value entering the Great Jamahiriya, whether owned by Libyans or foreigners, in accordance with an investment activity. (7) National Capital = The monetary or in-kind value appraised in the local currency entering the formation of a project's capital owned by Libyan citizens or Libyan legal entities fully owned by Libyans. (Amended by Law No. 7 of 1371 A.H.) (8) Investment Project = Any economic establishment established according to the law, whose operation results in producing goods for final or intermediate consumption, investment goods, exports, services, or any other establishment approved by the Secretary of the General People's Committee. (9) Investor = Any natural or legal person, national or foreign, investing in accordance with this Law.

Article 4
This Law regulates the investment of foreign capital entering the Great Jamahiriya in one of the following forms:

• Convertible foreign currencies or their equivalent, entering through official banking channels.
• Machinery, equipment, devices, spare parts, and raw materials necessary for the investment project.
• Non-locally available means of transport.
• Intellectual property rights, such as patents, licenses, trademarks, and trade names necessary for establishing or operating the project.
• The reinvested portion of the project's profits and returns.
  The Executive Regulations shall govern how to appraise in-kind shares entering the project's capital.

Article 5
An authority named (Investment Promotion Authority) is established, possessing independent legal personality, subordinate to the General People's Committee for Economy and Trade. Its establishment is decreed by a decision of the General People's Committee upon the Secretary's proposal, specifying its legal seat, secretary, and administrative committee members. The Executive Regulations shall govern the Authority's meetings and necessary administrative procedures for establishing projects.

Article 6
The Authority works to encourage foreign capital investment and promote investment projects by various means, specifically:

1. Studying and proposing organized plans for foreign investment and supervising foreign investments in the country.
2. Receiving foreign capital investment applications, determining compliance with legal conditions, studying project economic feasibility, and submitting recommendations to the Secretary.
3. Collecting and disseminating information and preparing economic studies related to investment opportunities in projects contributing to national economic development.
4. Adopting means to attract foreign capital and promote investment opportunities by various methods.
5. Recommending exemptions, facilities, or other benefits for projects deemed important for developing the national economy, and recommending the renewal of exemptions/benefits under this Law for additional time periods, submitting recommendations to the competent authority.
6. Considering complaints, appeals, or disputes submitted by investors arising from the application of this Law, without prejudice to the investor's right to appeal and litigate.
7. Studying investment legislation, reviewing it periodically, and submitting development proposals to the competent authority.
8. Any other powers assigned by the General People's Committee.

Article 7
The project must achieve one or more of the following:

• Producing goods for export, contributing to increasing exports, or resulting in eliminating imports (fully or partially).
• Providing employment opportunities for Libyan labor and working to train them, acquiring technical skills and expertise. (Executive Regulations determine national employment conditions.)
• Using modern technology, trademarks, or technical expertise.
• Providing a service needed by the national economy, contributing to its improvement or development.
• Supporting links and integration between existing economic activities/projects or reducing production costs, contributing to providing operational materials and supplies.
• Exploiting or assisting in exploiting local raw materials.
• Contributing to the development and improvement of remote or economically backward areas.

Article 8
Investment is permitted in the following sectors:

• Industry.
• Health.
• Tourism.
• Services.
• Agriculture.
• Any other sector determined by a decision of the General People's Committee upon the Secretary's proposal.

Article 9
An investment license for foreign capital is granted by the Authority after the Secretary's approval decision on the investment.

Article 10
Projects established under this Law enjoy the following benefits:
a) Exemption of machinery, equipment, and devices necessary for project implementation from all customs duties and taxes. b) Exemption of equipment, spare parts, and raw materials necessary for project operation from all customs duties on imports and taxes with similar effect for five years. c) Exemption of the project from income tax on its activity for five years from the start of production or work, depending on the project's nature. This period may be extended by an additional three years by a decision of the General People's Committee upon the Secretary's proposal. Profits resulting from project activity are also exempt if reinvested, and investors have the right to carry forward losses incurred during exemption years to subsequent years. d) Exemption of export-bound goods from production tax, and exemption from duties/taxes on exports when shipped. e) Exemption of the project from stamp duty imposed on commercial documents and instruments used. The exemptions in paragraphs (a) through (e) include fees for services such as port, storage, and handling charges.

Article 11
Imported machinery, equipment, devices, spare parts, and raw materials for the project may be disposed of by sale or transfer, subject to the Authority's approval and after paying applicable customs duties/taxes. They may not be used for purposes other than those for which the license was granted.

Article 12
The investor has the following rights:

• Re-exporting invested capital in the following cases:
  1. Project expiration.
  2. Project liquidation.
  3. Total or partial sale of the project.
  4. Passage of at least five years from the investment license issuance date.
• Re-converting foreign capital abroad in the same form it entered, after four months from its entry if difficulties or force majeure conditions prevent its investment.
• Annual conversion of net distributed profits and project interest abroad.
• The investor has the right to use foreigners when national alternatives are available.
• Imported foreign employees have the right to convert a portion of their salaries, wages, and other benefits granted within the project abroad.
  The Executive Regulations shall govern the conditions for implementing this Article's provisions.

Article 13
The investment project complies with forms stipulated in prevailing legislation and is exempt from registration procedures in the Commercial Register, Industrial Register, and Importers/Exporters Registers. The Executive Regulations determine legal forms for investment projects, establishment conditions, and registration procedures in the Investment Register. The project gains independent legal personality and financial status upon registration in said register. (Amended by Law No. 7 of 1371 A.H.)

Article 14
Projects located in spatial development areas, or projects contributing to food security, or using equipment achieving energy/water savings, or protecting the environment, enjoy exemptions under paragraphs (b) and (c) of Article 10 for an additional period by decision of the General People's Committee upon the Secretary's proposal. Executive Regulations determine project qualification conditions.

Article 15
Exception to prevailing property legislation, the investor has the right to own land for usufruct, lease it, or construct buildings upon it. The investor may also own/lease properties necessary for establishing or operating the project, subject to Executive Regulations.

Article 16
The investor has the right to open a convertible currency account for his project at a commercial bank or the Libyan Arab Foreign Bank.

Article 17
Project ownership may be transferred wholly or partially to another investor with the Authority's approval. The new owner assumes the previous owner's rights, obligations, and liabilities under this Law and other legislation. Executive Regulations govern transfer conditions.

Article 18
If the investor violates any provision of this Law or Executive Regulations, the Authority notifies him to rectify the violation within a specified period. If he fails to comply, the Secretary may, upon the Authority's recommendation:

• Deprive the project of certain benefits under this Law.
• Oblige the investor to pay double the exempted amount.

Article 19
The investment license may be withdrawn or the project finally liquidated in the following cases:

• Failure to start implementation or complete it according to Executive Regulations.
• Violation of general provisions in this Law or its regulations.
• Repeated violations.
  All subject to Executive Regulations procedures. (Amended by Law No. 7 of 1371 A.H.)

Article 20
The investor may appeal in writing against any decision issued under Articles (18) or (19), or disputes arising from applying this Law, within thirty days of notification. Executive Regulations determine the appeal authority and procedures.

Article 21
The project owner must:

• Maintain systematic books and accounts.
• Prepare an annual balance sheet and profit/loss statement certified by a statutory auditor according to Commercial Law conditions.

Article 22
Authority employees designated by the Secretary have the status of judicial police officers to monitor Law implementation, record/verify violations, and refer them to competent authorities. They may inspect projects and examine related books/documents.

Article 23
The project may be nationalized, expropriated, compulsorily seized, confiscated, placed under receivership, preserved, frozen, or subjected to equivalent procedures by law or court order, against immediate and fair compensation. Compensation is calculated based on the project's fair market value at the time of the measure, and its convertible currency value may be transferred within a period exceeding one year at prevailing exchange rates.

Article 24
Disputes between the foreign investor and the State (due to investor actions or state measures) are submitted to competent courts in the Great Jamahiriya, unless a bilateral treaty between Libya and the investor's state, or multilateral treaties where both are parties, contain arbitration/settlement clauses, or a special agreement between the investor and state stipulates arbitration.

Article 25
Existing foreign investments under previous legislation enjoy the benefits and exemptions stipulated in this Law upon its issuance.

Article 26
This Law does not apply to foreign capital invested in oil projects according to Law No. (25) of 1955 C.E. and its amendments.

Article 27
The Executive Regulations for this Law are issued by a decision of the General People's Committee upon the Secretary's proposal.

Article 28
Law No. 37 of 1968 C.E. regarding foreign capital investment in Libya is repealed, along with any conflicting provisions.

Article 29
This Law is published in the Official Gazette and various media, and takes effect from its publication date.

General People's Conference
Issued in: Sirte
Corresponding to 9 / Rabi' I 1426 A.H. (March 10, 2004)

General People's Committee Resolution No. (138) of 1372 A.H. (2004 C.E.)
Issuing the Executive Regulations for Law No. (5) of 1426 A.D.
Concerning the Encouragement of Foreign Capital Investment

The General People's Committee...

• After reviewing the Commercial Law,
• Law No. (5) of 1426 A.D. concerning foreign capital investment, amended by Law No. (7) of 1371 A.H.,
• Law No. (1) of 1369 A.H. regarding Popular Conferences and Committees and its Executive Regulations,
• General People's Committee Resolution No. (1005) of 1991 C.E., forming a committee for integrated development planning,
• Resolution No. (94) of 1370 A.H., transferring supervision of productive public companies to the Local Industry Support Fund,
• Resolution No. (20) of 1370 A.H., reorganizing the Investment Promotion Authority,
• Resolution No. (9) of 1372 A.H., concerning the Executive Regulations for Law No. (5),
• Based on the Secretary's letter No. (1387/1/5) dated 13/05/1372 A.H.,
• On the minutes of the second ordinary session of 1369 A.H.,
• And what was decided by the General People's Committee Secretariat in its 22nd ordinary session of 1372 A.H.,
  Decided:

Article (1): The provisions of the Executive Regulations for Law No. (5) of 1426 A.D., amended by Law No. (7) of 1371 A.H., concerning foreign capital investment, attached to this Resolution, shall apply.
Article (2): General People's Committee Resolution No. (9) of 1372 A.H., referenced herein, is repealed, along with any conflicting provisions.
Article (3): This Resolution takes effect from its issuance date and is published in the Legislation Codex.

Date: 15 Jumada al-Akhirah
Corresponding: 01 / 08 / 1372 A.H. (August 1, 2004 C.E.)

Executive Regulations for Law No. (5) of 1426 A.D.
Amended by Law No. (7) of 1371 A.H.
Concerning the Encouragement of Foreign Capital Investment

Chapter One: Investment Sectors and Application Review
Article (1): Determination of Investment Sectors and Conditions
Foreign capital investment owned by Libyan Arab citizens and nationals of Arab and foreign countries is permitted in industry, health, tourism, agriculture, services (all types), and other sectors approved by the General People's Committee. National capital owned by natural or legal persons may participate with foreign capital in one of the following forms:

1. Monetary contribution.
2. In-kind contribution.
3. The reinvested portion of project profits and returns.
   The minimum value for an investment project's capital is (5,000,000) five million Libyan Dinars, with foreign capital's monetary contribution in one of the convertible currencies. If national capital participates at 50% or more, the minimum project capital value is (2,000,000) two million Libyan Dinars. The minimum capital condition is exempted for national and foreign capital owned by Libyans. (Amended by GPC Resolution No. 86 of 1374 A.H.)

Article (2): Appraisal of In-Kind Shares
If invested capital contains an in-kind share, its monetary value is appraised by agreement of the project parties.

Article (3): Submission of Applications
Investment applications are submitted by the applicant or his representative to the Secretary of the General People's Committee for the Investment Promotion Authority, on a form containing:

• Applicant's name, nationality, legal form, and main seat.
• General project description specifying the investment sector, implementation timeframe, nature/value/units of invested capital.
  Applications may be submitted through Commercial Attachés at embassies and consulates abroad or their equivalents, who forward them immediately to the Authority.

Article (4): Required Documents for Investment
The applicant must attach:

1. Project memorandum containing:
   • Capital value to be invested, appraised in a convertible currency or equivalent in Libyan Dinars at submission.
   • Imported and local materials to be used.
   • Technical specifications.
   • Time schedule for implementation.
   • Estimates of national and foreign workforce.
2. Certificate of investor's nationality issued by the competent authority in his country (for natural persons).
3. Recent official extract from the commercial register in the home country (for legal entities).
   Documents must be original and accompanied by Arabic translations. (Amended by GPC Resolution No. 86 of 1374 A.H.)

Article (5): Details Required in the Receipt
The applicant receives a receipt confirming submission, containing:

1. Application number and submission date.
2. Applicant's name, surname, nationality, and title.
3. Name and signature of the receiving officer.
4. List of attached documents.
5. Desired investment sector.

Article (6): Registration of Applications
Applications are registered in a special register with sequential numbers by receipt date. Each application is kept in a dedicated file containing all documents, papers, and correspondence. The file cover displays the application number, applicant's name/address/nationality, project name, and sector. The inside cover lists deposited documents with sequential numbers, page counts, and deposit dates.

Article (7): Adjudication of Applications
The Authority's General People's Committee studies applications, prepares necessary recommendations and technical/administrative reports (including project opinion and national economic benefit) within a maximum of sixty days from complete document submission. The Authority forwards proposals to the Secretary for Economy and Trade to issue the necessary decision.

Article (8): Notification of Applicant
The Secretary notifies the applicant in writing (direct delivery or registered mail) of approval, rejection, or conditional approval within ten days of receiving the Authority's decision. If conditionally approved, the Secretary notifies the applicant to fulfill requirements within thirty days of application submission. Upon approval, the Authority issues necessary licenses in coordination with competent authorities, such that Authority licenses supersede other statutory licenses.

Article (9): Project Form
The investment project takes one of the following forms:

1. Joint stock companies.
2. Limited liability companies.
3. Foreign company branches.
4. Individual projects.
   (Registered with the Authority according to these Regulations.)

Article (10): Establishment of Investment Register
A special register named (Investment Register) is established, recording all licensed projects. Each project has a dedicated sheet containing:

1. Project name, investment sector/activity, location, and main seat.
2. Capital value and paid-up amount.
3. Investors' names, nationalities, capital values, and contribution percentages.
4. Legal representative's name, title, and nationality.
5. Investment authorization decision number/date.
6. Implementation license and activity license numbers/dates.
7. Investment costs and funding sources.
8. Granted exemptions, duration, other facilities, violations, and penalties.
9. In-kind and monetary shares forming capital.
10. Any other project-related data.

Article (11): Registration in Investment Register
The license holder submits a registration request to the Investment Register Office with:

1. Establishment contract and statutes (taking forms in Article 9), or parent company contract/branch establishment decision appointing the general manager and legal representative. For natural persons, submitted application data suffices.
2. Power of attorney/management authorization for the project manager/legal representative, specifying powers and validity period.
3. Form signed by the project manager or legal representative in Libya.
4. Certificate from competent authorities confirming capital entry into Libya.
   Registration confers all legal effects of commercial register registration, including independent legal personality. Upon completing data/documents, the Office issues a certificate confirming registration per the Authority's form. (Amended by GPC Resolution No. 29 of 1373 A.H.)

Article (12): Issuance of Certificates and Extracts
The Authority issues requested certificates or extracts from the Investment Register upon payment of prescribed fees.

Chapter Two: Benefits and Exemptions
Article (13): Import Right and Customs Duty/Tax Exemption
Licensed investment projects have the right to import:

• All project needs/supplies from abroad (building materials, furniture, machinery, equipment, vehicles, devices) exempt from customs duties and taxes with similar effect.
• Equipment, spare parts, and raw materials for operation, exempt from customs duties/taxes with similar effect for five years. This period may be extended by an additional three years by GPC decision upon the Secretary's proposal.
  Projects enjoy exemptions under paragraphs (a) and (b) subject to:

1. Imported in the project's name for its benefit.
2. Quantities/types match the licensed investment sector.
3. Investment license is valid at import time.
4. Materials are used in the project and not disposed of to other parties without written Authority approval.
   If approved for sale to non-exempted persons, the investor must pay applicable customs duties previously exempted.

Article (14): Export Right and Customs Duty/Tax Exemption
The investor may export products abroad as desired, whether raw, intermediate, or ready for direct consumption.
Export-bound goods are exempt from production tax and all customs duties/taxes during export.