12.11.2005
Libyaninvestment.com

The responsibilities:
The foreign company's branch manager should take extra care to avoid certain prohibitions regarding dealing in foreign currency in Libya as follows:

1. A prohibition exists in respect of making any kind of dealings or business transactions in foreign currency such as transfer of money, setoff undertaking, to and from Libya, except through the banks and other entities which are fully licensed by the central bank of Libya, and in accordance with the terms and condition prescribed by the said central bank of Libya.

2 . The permitted transferred foreign currency must be used strictly for the purpose specified in the transfer permit.

3. A prohibition exists in respect of the import of Libyan currency, and in respect of the export from libya of foreign currency, bills, financial papers and their coupons valued in any currency, as well as gold and silver coins, except in accordance with the terms and conditions fixed by the central bank of Libya.

4 . When the foreign company's branch maintains a foreign currency bank account, there would be an obligation to channel all transactions including local and international transfers, through the authorized banks, and other bodies licensed to deal in foreign currency.

5 . The branch manager, when abroad, must abide by the restrictions imposed on non-residents in Libya and their agents.

Thus he cannot deal in Libya currency, nor transfer or sell bills or financial papers valued in Libya currency or their coupons except through banks licensed to do so by the central bank of Libya.

6. An obligation exists to import the value of any exported goods, in foreign currency, within three months from the date of shipment, according to the terms and conditions fixed by the central bank of libya. However the central bank may extend or renew the said period, and the terms of trade agreements with other countries should always prevail in this regard.

*The liabilities:
At the outset reference must be made to article 93 of law no, 1 of 1993 as amended, which provides for the following:-
"The chief executive of any bank, company, establishment or any other juristic (artificial) person shall be responsible for any violation committed by such bank, company, establishment or other juristic (artificial) person as the case may be. In event that the violation is committed by a branch of a bank, the branch s chief executive shall be responsible.
The burden of applying the financial penalties shall not be borne by the bank, the company, the establishment or the like"

1. Each of the offences referred to in the obligations under no.1,2,3 and 5 above, if committed during a state of siege, war or even threat of war against libya, is punishable by death penalty.

2. However, any of the same offences is subject to life imprisonment in terms of paragraph 2 of article 177 of the criminal code, if committed in complicity with a foreign party with the intent of harming the exchange market or affecting the stock and bond markets.

3. Alternatively of the said offences would be subject to a term of five years imprisonment, plus a fine ranging between five hundred and one thousand dinars, when committed in other circumstances.

4. Each of the offences under obligations no.4 and no.6 carries a penalty of between one thousand and five thousand dinars.

Foreign banks may be permitted to establish branches, agencies or representative offices in Libya subject to the terms and conditions laid down by the board of directors of the central bank of Libya .To date only three banks namely a Maltese, a Jordanian, and an Egyptian, have been granted permits to establish a representative office in Libya.