Our Expert in Lebanon
The board of directors Lebanon framework sits at the centre of every company’s governance, and 2026 is a natural moment for in-house counsel, founders and directors to revisit the rules that govern how boards are appointed, how they must act, and where personal exposure begins. This guide brings together the statutory foundations under Lebanese company law, principally the Code of Commerce (Legislative Decree No. 304 of 24 December 1942) as substantially amended by Law No. 126 of 29 March 2019, in force since 1 July 2019, the practical mechanics of appointment and removal, the standards of care directors owe, the civil and criminal liabilities they face, and the procedural rules for calling and running board meetings. It is written as a working reference, with checklists, a comparison table and short templates, for people who need to stay compliant and manage risk rather than read theory.
Where the position depends on a company’s articles or on a regulator, this guide flags it so you know when to seek local advice. A sample governance checklist is included throughout.
Overview, Types of companies and governance regimes in Lebanon
Lebanese corporate governance is shaped principally by the Code of Commerce (Legislative Decree No. 304 of 24 December 1942), whose company-law provisions were extensively modernised by Law No. 126 of 29 March 2019, and, for limited liability companies, by Decree-Law No. 35 of 5 August 1967, which Law No. 126/2019 also rewrote in large part. The Code of Obligations and Contracts of 1932 supplies the general rules of civil liability and abuse of rights that underpin director liability, and the Penal Code (Legislative Decree No. 340 of 1 March 1943) contains the relevant criminal offences. Before examining director duties, it helps to understand that the powers, composition and formalities of a board depend heavily on which company form you are dealing with. The obligations attaching to a board of directors Lebanon company will differ markedly between a limited liability company and a joint stock company.
The two most common vehicles are the SARL (société à responsabilité limitée, the limited liability company) and the SAL (société anonyme libanaise, the joint stock company). These forms have materially different governance architectures:
The practical distinction is straightforward: a joint stock company must have a board of directors of three to twelve members (Art. 144), whereas a SARL is run by one or more managers and has no board at all unless the partners choose to create an advisory or supervisory body in the articles. This means that when advisers refer to the board of directors Lebanon regime in its fullest sense, collegiate decision-making, quorum, formal resolutions, they are usually describing the SAL. For a SARL, many of the same governance disciplines are still worth adopting voluntarily through the articles, especially where the company has multiple shareholders or external investors who expect board-level oversight.
Appointing directors of Lebanese companies must follow the procedure set out in the Code of Commerce and the company’s own articles of association. Getting the mechanics right matters: a defective appointment can invalidate board resolutions, complicate filings and expose the company to challenge. The general principle is that directors of a joint stock company are appointed by the shareholders acting through the general assembly, and the appointment must then be reflected in the company’s records and filed with the Commercial Register, which is kept at the Court of First Instance of each governorate under the supervision of the president of that court or a judge he designates (Art. 23).
The first directors are either named in the articles of association or elected by the constitutive general assembly (Arts. 146 and 147). At incorporation, the founders identify the initial board, the appointment is documented in the incorporation file, and the details are registered when the company is entered on the Commercial Register. Directors named in the articles may serve for up to five years and directors elected by an assembly for up to three years, in each case renewable (Art. 149). The first board is also responsible for the initial publication formalities within one month of incorporation (Art. 98).
After incorporation, directors are appointed by resolution of the ordinary general assembly of shareholders (Art. 146), which may choose them from among the shareholders or from outside. Persons who are undischarged bankrupts or who have been convicted of a felony or of certain misdemeanours within the preceding ten years are disqualified (Art. 148), and a natural person may not sit on more than eight boards of Lebanese joint stock companies, chair more than six or act as general manager of more than three, on pain of being deemed to have resigned after a two-month grace period (Art. 154). The typical sequence is:
Because appointments and other corporate changes must be recorded with the Commercial Register, in-house counsel should treat the registry filing as an integral part of the appointment, not an afterthought. Changes in beneficial ownership must in addition be declared to the tax authorities, an obligation tightened by the 2026 Budget Law (Law No. 40/2026), which requires ultimate beneficial owners to be reported within one month of a share transfer. An unfiled appointment can create uncertainty about who is validly authorised to bind the company.
Lebanese law does not, for ordinary private companies, mandate independent directors in the way listed-company codes do internationally. The voluntary Lebanese Corporate Governance Code of 2006 and the 2010 guidelines for listed companies recommend independent directors, banks are required to have them under Banque du Liban Basic Circular No. 118, and the G20/OECD Principles of Corporate Governance (2023 edition) treat board independence as a core best-practice benchmark, and many Lebanese companies, particularly those with institutional investors, family shareholders seeking neutrality, or ambitions to raise capital, appoint non-executive or independent directors voluntarily. Where they do, the appointment mechanics are the same, but the articles or a shareholders’ agreement should define what “independence” means and what the role entails.
Director duties in Lebanon combine the express requirements of the Code of Commerce with the general principles of civil liability in the Code of Obligations and Contracts and the mandate-like character of the office. Lebanese law does not contain a codified list of fiduciary duties in the common-law sense; the duties described below are derived from the liability provisions of Arts. 166 to 171 of the Code of Commerce, which make directors answerable for fraud, for any breach of the law or of the articles, and for management faults measured, since Law No. 126/2019, against the standard of a diligent and active professional rather than the former, more lenient standard of a salaried agent. A director is not a passive title-holder; the role carries active obligations to the company, and breaching them can trigger personal consequences. For any board of directors Lebanon company, understanding the standard of care is the single most important governance discipline.
At their core, the duties owed by a director can be grouped under a small number of headings:
Duty to act in the company’s interest. Directors must exercise their powers for the benefit of the company as a whole, not for their personal advantage or that of a particular faction of shareholders. The board has the broadest powers to manage the company’s ordinary business (Art. 157), and using those powers for a purpose foreign to the company’s interest is a management fault.
These duties are owed primarily to the company, but not exclusively. Under Art. 166 directors are liable, even towards third parties, for fraud and for every breach of the law or of the articles; under Art. 167 they are liable to the company and its shareholders for management faults, and to third parties for such faults where the company’s bankruptcy reveals a shortfall of assets, unless they prove that they managed the company with the care of a diligent and active professional. That distinction matters when disputes arise, because it shapes who is entitled to sue and for what loss. The company brings the action in the first instance, and a shareholder may bring it in the company’s name if the company fails to act (Art. 168).
Conflicts of interest are the most common source of director liability in practice. Art. 158 of the Code of Commerce, as widened by Law No. 126/2019, subjects any agreement between the company and its chairman, a director, its general manager or deputy general manager, or a shareholder holding directly or indirectly more than 5% of the voting rights, and any agreement with a company in which one of those persons is a partner, manager, director or holder of more than 5%, to the prior authorisation of the board. The interested person must inform the board immediately, in writing and in detail, may not take part in the vote and is not counted in the quorum; the board must notify the auditors within fifteen days and report to the next general assembly, which is asked to ratify the transaction on the basis of a special auditors’ report. Disclosure and abstention are therefore not merely the safe course but a legal requirement. A director should:
Related-party transactions that are not properly disclosed and approved are a classic trigger for claims of breach of duty, particularly if the company later suffers loss or enters financial difficulty. Separately from the authorisation procedure, the Code of Commerce prohibits the company from granting loans, credit facilities, guarantees or sureties to its directors, general managers and the other persons covered by Art. 158.
Because the statutory duties are stated at a level of principle, well-run companies translate them into concrete documents. A board charter, a code of conduct and a conflicts policy give directors clear operating rules and give the company evidence of good governance if a decision is later challenged. The 2023 G20/OECD Principles and, for banks, Banque du Liban Basic Circular No. 118 (which requires banks to file their board and committee charters with the regulator) are useful reference points when drafting these instruments. Recommended core documents include a board charter defining the board’s role and reserved matters, a code of conduct, a conflicts-of-interest register, and a delegation-of-authority matrix.
Director liability exposure in Lebanon is real and, in the wrong circumstances, personal. The corporate veil protects directors from ordinary business risk, but it does not shield them from the consequences of breaching their duties, acting fraudulently, or failing in their obligations during financial distress. Understanding where the veil ends is essential for anyone serving on a board of directors Lebanon company.
Civil liability is the most frequently litigated form of director exposure. Under Arts. 166 and 167 of the Code of Commerce a director can be held liable to compensate the company, the shareholders and, in the circumstances described above, third parties for loss caused by:
The typical remedy is an award of damages measured by the loss the company suffered. Where several directors participated in the wrongful conduct they are jointly and severally liable, with the court apportioning the burden between them according to each one’s share in the fault, unless a director had his dissent recorded in the minutes (Art. 170), which is why abstention and recorded dissent are so valuable to a director who disagrees with a decision. A discharge (quitus) voted by the general assembly covers only matters of which the assembly was properly informed and never bars an action for fraud or breach of the law (Art. 169). The action is time-barred five years after the general assembly at which the directors rendered the accounts for the year in question (Art. 171). Where the chairmanship and general management are separated, each is liable for the faults committed within his own functions (Art. 167).
Beyond civil claims, directors can face criminal exposure for the most serious conduct, for example, fraud, misuse of company assets, falsifying accounts, or offences connected with insolvency and bankruptcy. Criminal liability is fact-specific and depends on the relevant statutory provisions of the Code of Commerce and the Penal Code. The offences most often invoked against directors are fraud (Penal Code Art. 655), breach of trust (Penal Code Arts. 670 and 671), fraudulent and negligent bankruptcy (Penal Code Arts. 689 to 691, which Arts. 692 and 693 extend expressly to the managers, directors and representatives of a bankrupt company), and the company-law offences in the Code of Commerce itself, such as procuring a false majority at a general assembly (Art. 215), which attracts the penalties for fraud. The practical point for directors is that dishonesty and deliberate concealment move a matter from the civil to the criminal sphere. The 2019 reform also widened the bankruptcy provisions so that the liability that follows a company’s bankruptcy can reach directors, general managers and any person who in fact directed or controlled the company, unless they prove that they acted with professional diligence.
Directors and companies manage this exposure through a combination of tools:
Common fact patterns that generate director claims include continuing to trade when the company is plainly insolvent or failing to file for bankruptcy within the statutory period after cessation of payments, approving a related-party transaction without disclosure that later causes loss, failing to hold or minute board meetings so that decisions cannot be evidenced, and neglecting statutory filings. In each case the practical defence is the same: act in good faith, take informed decisions, disclose interests, and keep records. A director who can show a properly documented, informed decision-making process is in a far stronger position than one who cannot.
Board meeting procedure in Lebanon is where governance theory becomes daily practice. The validity of the board’s decisions depends on following the rules for calling meetings, achieving quorum, voting correctly and recording what was decided. For any board of directors Lebanon company, defective meeting procedure is one of the easiest ways to have a decision challenged, and one of the easiest risks to eliminate with discipline.
Board meetings are convened by the chairman, as often as the articles provide and whenever the company’s interest requires; the Code of Commerce does not prescribe a minimum notice period for board meetings, so the articles will specify who may call a meeting, how much notice is required, and how notice is delivered. As a practical minimum, notice should:
Quorum and voting thresholds for board meetings are set by Art. 156 of the Code of Commerce, which the articles may tighten but not relax. The board validly deliberates only if at least half of its members are present or represented; a director may be represented by another director, but no director may hold more than one proxy. Resolutions pass by a majority of the votes of the members present or represented, unless the articles require a higher majority for particular decisions. The chairman’s role, any casting vote and higher thresholds for particular decisions should all be checked against the articles before a contentious matter is put to the board.
| Company type | Board size | Quorum for board meeting | Resolution for appointment/removal |
|---|---|---|---|
| SARL (limited liability) | No board; one or more managers (gérants), partners or non-partners (Art. 16 of Decree-Law 35/1967) | Not applicable; if the articles create an advisory board, its rules are purely contractual | Appointment and removal by the partners; removal without legitimate cause exposes the company to damages (Art. 16 of Decree-Law 35/1967) |
| SAL / joint stock company | Three to twelve directors, at least one third Lebanese (Art. 144) | At least half of the directors present or represented, one proxy per director (Art. 156) | Ordinary general assembly; removal ad nutum at any time without cause (Arts. 146 and 150) |
| Public / listed joint stock | As for the SAL, plus regulator requirements (for banks: independent directors and audit and risk committees under BDL Circular 118) | As for the SAL; banks must hold at least four board meetings a year, two of them in Lebanon (BDL Circular 118) | As for the SAL, subject to regulator fit-and-proper vetting and CMA disclosure rules |
Because these requirements depend on the individual company’s articles, and, for regulated entities, on the supervisor, the table is a starting point rather than a substitute for reviewing the specific articles and the current text of the Code of Commerce.
Minutes are the primary evidence that a board acted properly. Good minutes protect directors, and thin or missing minutes expose them. Each set of minutes should record the date and place, those present and absent, confirmation that quorum was met, the matters discussed, any conflicts disclosed and abstentions, the resolutions passed with the voting outcome, and the actions and responsibilities agreed. Minutes should be signed by the chairman and the directors present, as the Code and the articles require, and kept in a dedicated minute book with the company’s statutory records so they can be produced if a decision is later questioned. A director who wishes to escape joint liability for a decision must have his dissent recorded in the minutes (Art. 170), which is the single most important reason to keep them carefully. Where a meeting was held with remote participation, the recording forms part of the minutes (Art. 156).
Remote and hybrid board meetings have become far more common, and many companies conduct them by video or telephone. Since Law No. 126/2019 the Code of Commerce expressly allows it, but only where the articles so provide: under Art. 156 directors who take part by videoconference or other means of telecommunication that allow them to be identified and to take part effectively are deemed present for quorum and majority purposes, the proceedings must be recorded and the recording forms part of the minutes, and remote participation is not permitted for the meetings that prepare and approve the annual financial statements. The same regime applies to general assemblies under Art. 181, except that the chairman and secretary of the assembly must attend in person (Art. 183). Where the articles are silent or require physical presence, the articles must be amended before relying on remote meetings; a decision taken remotely without such a clause is open to challenge. Electronic signatures and records are recognised under the Electronic Transactions and Personal Data Law No. 81 of 10 October 2018, whose implementing Decree No. 14115 was issued in 2024. In all cases, the minutes should record how directors participated and confirm that quorum and identification requirements were satisfied.
Lebanese rules on the removal of directors give shareholders very significant power: directors of a joint stock company are removable ad nutum, that is at any time and without cause, by the ordinary general assembly, and neither the articles nor any agreement can validly restrict that right (Art. 150). That power nonetheless interacts with contractual protections a director may hold in another capacity. Handling removal correctly reduces the risk of a claim for abusive removal and ensures continuity of authority for the board concerned.
Directors are removed by resolution of the ordinary general assembly (Art. 150). Because removal is a matter of a personal character, the vote must be taken by secret ballot if a single shareholder so requests (Art. 189), and where removal was not on the agenda the decision must be confirmed by a second assembly held within two months (Art. 151). The steps mirror appointment in reverse:
Removal from office and the underlying contractual relationship are distinct. A director holds office at the pleasure of the shareholders and, because removal ad nutum is a right conferred by law, its exercise gives no right to compensation as such. Two qualifications apply. First, the general prohibition of abuse of rights in Art. 124 of the Code of Obligations and Contracts means that a removal carried out in vexatious or injurious circumstances, for instance with public accusations that are not substantiated or without giving the director any opportunity to be heard, can found a claim for damages, on the same abuse-of-rights analysis that the French courts apply to révocation ad nutum. Second, a director, and in particular a chairman-general manager or general manager, may also hold a service or employment agreement; removing the director from the board does not automatically extinguish rights under that agreement, and terminating it without cause may give rise to a claim under the agreement or under the Labour Law. Boards should therefore assess both the corporate step (removal from office) and the contractual step (termination of any agreement) together.
To manage removal risk on both sides, companies and directors commonly rely on clearly drafted service agreements defining notice and severance (bearing in mind that no clause can fetter the assembly’s right to remove a director, Art. 150), shareholders’ agreements addressing board composition and protected seats, and handover obligations covering the return of property, confidentiality and cooperation. Well-drafted documents reduce the scope for disputes when a director departs.
A director may resign at any time, but should do so in writing, have the resignation recorded by the board and ensure that the change is filed with the Commercial Register, since third parties may continue to treat the director as in office until the register is updated. A director who exceeds the cumulation limits of Art. 154 and does not regularise the position within two months is deemed to have resigned. Where resignations or deaths bring the board below the statutory minimum of three members, or below the one-third Lebanese quota, a general assembly must be convened without delay to fill the vacancies, and until then the board should confine itself to conservatory acts.
Managers of a SARL are in a different position. They may be removed by the partners or by the court for a legitimate cause, and a manager removed without legitimate cause is entitled to damages (Art. 16 of Decree-Law 35/1967), the reverse of the rule applicable to directors of a joint stock company.
The following checklist consolidates the compliance points above into an actionable list for in-house counsel and founders. It is designed to be adopted as a standing governance routine for any board of directors Lebanon company.
Short working templates that most companies should keep on hand include:
Certain situations materially raise the stakes for directors and should trigger legal review before the board acts. Watch for these red flags:
In a transaction, buyers routinely examine board minutes, appointment files and registry records during due diligence. Gaps discovered at that stage can delay a deal or reduce value, so the governance discipline described in this guide has direct transactional benefits.
A well-run board of directors Lebanon company treats governance as an operating discipline, not a formality. The essentials are consistent across company types: appoint directors properly and file the appointment; understand and document the duties of care, loyalty and good faith; manage conflicts through disclosure and abstention; run meetings with proper notice, quorum and minutes; and handle removal in a way that respects both corporate procedure and contractual rights. Directors who follow these steps materially reduce their personal exposure and give the company a defensible record.
As 2026 governance expectations continue to rise, and with the banking sector now subject to the resolution framework of Law No. 23/2025, in-house counsel and founders should review their articles, appointment files, board charter and minutes against the checklist above, and take specialist advice whenever insolvency, conflicts, deadlock or a transaction is in prospect. Strengthening these foundations now is the most efficient way to keep a board of directors Lebanon company compliant and resilient.
This article was produced by Global Law Experts. For specialist advice on this topic, contact Cyrille Naffah at The Edge Law Firm, a member of the Global Law Experts network.
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