Doing business in Libya Law n°5 for Promotion of Investment of Foreign Capital November 2008 Aberdeen - London Libyan British Business Council – UK Trade & Investment Cyril Vock Energy, Transport and Infrastructure Paris

Law n° 5 : Scope Sectors open to foreign investment  Agriculture  Industry  Health  Tourism  Oil (drilling & exploration already governed by Petroleum Law)  Regional development  Any other sector approved by the NGP Sectors traditionally restricted but opening up  Telecommunications (government monopoly)  Banking & financial services (government monopoly)  Retail, wholesale and catering (restricted to Libyan nationals)

Law n°5 – The key incentives  A 5 year tax exemption from income tax  A 5 year exemption from customs duties on equipment and materials to set up a project, on raw materials, components and spare parts  Goods to be exports exempt from production tax, excise tax and fees  Exemption from stamp duty on commercial documents  Protection against nationalisation  Facilitation of foreign investment procedures  No limit on foreign participation

Law n° 5 : A balance of duties and rights  Start of project within 6 months of notification of approval  Submission of quarterly reports on the activities of the project to the FIB  Priority employment to Libyan citizens  Maintain regular books account / financial records  Prepare an annual balance sheet + a profit and loss account  Start operations within the 6 months after FIB approval  Submit a the final statement of account + general budget to FIB and the Tax department  Submit quarterly activity report  Right to own a land  Right to open a foreign currency account  Right to repatriate capital  Right to re-transfer uninvested capital abroad  Right to employ foreign manpower

Options to do business in Libya (1)  Set up a branch office / local subsidiary  Create a joint venture  Open a representation office – specific product groupings concerned

Options to do business in Libya (2) The need to register All foreign companies wishing to work in Libya must register with Ministry of Economy and Commerce You cannot operate without it What happens if you don’t What you need to register a foreign company branch

FormalitiesScopeMinimum capital DurationOther key features Branch / local subsidiary -Request to Ministry of Economy and Trade - Board approval of the branch - Information on branch (activity, address, name) - Information and documents on parent company - Negative undertakings Oil Survey and planning Environment protection Computing Technical consultations / studies Health › 150,000 LYD5 years renewable Joint Venture / joint stock company - Approval by Foreign Investment Board - « No formalities » -No publicity -Bank certificate for local remittance of funds -Board approval of the company - Information on company All fields Electricity Contracting / Civil Works Oil Services Telecommunications Industry / Agriculture / Fishing Minimum of LYD 5,000,000 (or LYD 2,000,000 if the Libyan partner has 51% or more in the project) > Minimum subscribed capital: LYD 1,000,000 Long term-Minimum Libyan participation : 51% (if outside law n°5) - Liability limited to respective shareholding