Whether be it for financial and economic reasons or linked to a struggle in coping with the fluctuating overall situation in Libya, some companies take the decision of ceasing the operations of their branch in the country and de-register their company branch.

It is very important to properly have the company branch de-registered legally in order to avoid any liabilities as the entity will remain liable to all its financial obligations including tax and social security even if it remained dormant for a long time or after the expiry of its license.

As such, the mother company (Parent Company) under which the branch was registered in Libya shall need to consider the following steps summarized below:

Firstly, the company board of directors should issue a decree confirming the will of having the branch in Libya de-registered. Such decree should also include the appointment of the person who will be taking charge of the de-registration process, also known as the liquidator.

The liquidator will be the one handling the process before all government entities and will interact with any creditors or debtors on behalf of the company, he shall also have the authority to perform all necessary activities for de-registration like the sale of the company assets, appointing a chartered accountant to conclude and prepare the de-registration budget (Final Budget).

In order to emphasize the authorities previously mentioned for the liquidator, the Ministry of Economy upon receiving the de-registration request submitted by the liquidator will instruct the commercial registrar to issue a new commercial extract namely “company under liquidation extract” for the company branch with the name of the liquidator appointed.

With the assistance of a chartered accountant, the liquidator shall initiate the arrangements by settling any dues the company may have with the Tax or Social Security Fund in order to obtain a clearance statement from the previously mentioned authorities and close the company branch file before these authorities.

It goes without saying that if the company branch was active, the termination of the employees, if any, should be concluded before proceeding with the Tax and Social Fund approach, such step is very critical and it is always important for the foreign entity to correctly conclude the terminations according to the local legislation in order to avoid the unnecessary time and cost that could be involved due to common mistakes done by the employer in that process.

After finalizing all the arrangements with creditors, debtors as per the correct legal steps, getting the final budget approved, and concluding the dues with the tax, and social security fund. An application is submitted by the liquidator to the commercial registry requesting to strike the company branch off from the commercial registry and remove it permanently, such application should be accompanied by the clearance obtained from the Tax and Social Security Fund.

At this stage, the company branch is considered duly de-registered and the only step remaining will be to close the bank account and transfer any amounts therein to the account specified by the parent company.

In conclusion, foreign company branches who wish to stop their business in Libya should take into consideration the continued liabilities accrued by social security and tax, and those who wish to de-register their legal presence should essentially seek the assistance of experts supporting them throughout this process both legally and administratively to minimize the risks and avoid complications and unnecessary costs that may arise during the process.

At Fares Group, we have combined the knowledge of the local legislation along with the practical experience on the ground of all the steps, up-to-date knowledge procedures in such matters, with our extensive experience in the incorporation matters and the Libyan commercial law we can fully support you legally and furthermore be your one-stop shop to conclude any arrangements needed for accountancy and administrative services required throughout the process and would be happy to provide our utmost support to fully achieve your goals.