Key takeaways
- A shareholders’ agreement is optional in Lebanon: your statutes and the Code of Commerce govern by default, and the agreement needs no notarization or registration.
- Under Article 221 of the Code of Obligations and Contracts the agreement binds the founders who signed it, but a share transfer valid under the statutes stands even if it breached the agreement.
- In a limited liability company, Article 15 of Legislative Decree No. 35/1967, as amended by Law No. 126/2019, gives the company 15 days to claim a departing partner’s shares and the other partners 30 days after that.
- Under Article 914 of the Code of Obligations and Contracts, a founder cannot waive in advance the right to ask a court to dissolve the company over serious disagreement.
Do I need a written agreement with my co-founder?
No. Lebanese law imposes no obligation on co-founders to sign a separate agreement. The statutes — the articles of incorporation filed with the Commercial Register when you register the company — and the Code of Commerce already govern your relationship. Sign nothing and you are not in breach of anything; the default framework simply applies.
The real question is whether you want those defaults. They are silent on precisely what co-founders fall out over: who may sell shares to whom, what majority carries a major decision, whether a founder who leaves after eight months keeps the same stake as one who stays five years.
A shareholders’ agreement is the private contract that fills those gaps. Under Article 166 of the Code of Obligations and Contracts, parties may arrange their legal relationships as they see fit provided they respect public order, public morality and mandatory legal provisions — which is why you can set voting thresholds, reserved matters and transfer restrictions without a statute authorising each clause.
Does our agreement need to be notarized or registered?
No, on both counts. A shareholders’ agreement is a private document: it is not filed with the Commercial Register, and notarizing it adds no legal benefit Lebanese law requires. That confidentiality is usually the point — sensitive commercial terms stay out of the public corporate file.
This is the single fact the whole subject turns on. Because the agreement is private, it binds only the people who signed it, while the statutes are the company’s public constitutive document and govern its organs and its dealings with third parties.
If a corporate act — a share transfer, a board vote — is valid under the statutes, it is effective even where it breached your agreement. Your remedy under Article 221 of the Code of Obligations and Contracts, which makes validly formed contracts binding and requires them to be performed in good faith, is damages or specific performance against the founder who broke their word, not the unwinding of the act.
So mirror the clauses you most need in a dispute — pre-emption and transfer restrictions above all — in the statutes too.
What should our agreement include?
At a minimum:
- Number and type of shares held by each founder
- Rules for future capital increases, and what they do to each founder’s percentage
- Appointment and removal of directors or managers
- Voting rights and thresholds for major decisions
- Reserved matters requiring unanimous or special-majority approval
- Tag-along and drag-along rights, so exits are coordinated rather than unilateral
- Restrictions on selling to competitors or outsiders
- Confidentiality, loyalty and non-compete obligations that survive a founder’s departure
Keep it consistent with the statutes. Where the two documents contradict each other, you have not created a compromise — you have created an enforcement gap.
Confidentiality obligations can also be reinforced through a separate non-disclosure agreement, particularly where founders exchange sensitive business information before incorporation.
What if one of us puts in money and the other puts in work?
Both can count, but not in every company type. Under Article 849 of the Code of Obligations and Contracts, partners’ contributions may consist of cash, movable or immovable property, intangible rights, or the industry — the work and expertise — of one or all partners.
Article 852 requires each contribution to be specified and determined: anything other than cash is valued at its worth on the day it enters the company’s capital, failing which experts determine it.
Write nothing down and Article 894 fills the gap: shares of profit and loss follow each partner’s contribution to capital, and the share of a partner contributing only their industry is assessed by how important that industry is to the company — a judgment call you are handing to someone else.
The exception that catches founders out. Under Article 9 of Legislative Decree No. 35/1967, as amended by Law No. 126/2019, contributions to a limited liability company may be in cash or in kind, but the contribution of industry or service is expressly prohibited.
In-kind contributions must have their value stated in the articles of association and verified by experts appointed by the President of the Court of First Instance, and a prospective partner may withdraw if that valuation exceeds their own estimate by more than 20%.
In an LLC, then, you cannot simply issue a co-founder shares in exchange for future work.
Can we agree on a vesting schedule?
Yes, but only as a matter of contract. Lebanese company law does not regulate vesting: shares are owned outright from the moment they are subscribed, and there is no statutory cliff or earn-in. This is an area where the law has not caught up with how startups are built.
Founders achieve the same result in reverse: all shares are issued at subscription, and the agreement obliges a founder to transfer back the unvested portion, usually at nominal value, if they leave before an agreed date.
Because no statute supports the mechanism, the drafting carries the entire weight — a court will enforce the clause you wrote, not the one you meant. Have it reviewed before you rely on it.
What happens if my co-founder wants to leave?
They cannot simply walk away. A departing founder holds shares, and those shares have to go somewhere — sold or transferred to a remaining shareholder or a third party.
In a limited liability company that sale is not free. Under Article 15 of Legislative Decree No. 35/1967, as amended by Law No. 126/2019, the transfer must be proven by an official or ordinary deed and notified to the manager and all partners, stating the buyer’s name, price and terms.
The company then has a right of pre-emption over the whole block if it expresses its wish to buy within 15 days of notification and exercises it within 10 days after that.
If the company declines, any partner may buy the block within 30 days, split pro rata where several want it. Shares may not go to a foreigner without the approval of partners representing at least three-quarters of the capital, and none of this applies where there is a single partner.
A transfer made in breach risks being declared null.
What if we simply cannot agree any more?
Two routes exist, and one of them cannot be contracted away. Article 910 of the Code of Obligations and Contracts lists the causes by which a company terminates, and cause 6 is the joint will of the partners: if you all agree to close, you may.
Where you do not all agree, Article 914 applies. Any partner may seek dissolution even before the agreed term where there are legitimate reasons — serious disagreements among the partners, a partner’s failure to perform their obligations, or the impossibility of doing so — and the same article states that partners may not waive this right in advance.
No deadlock clause, however carefully drafted, removes a co-founder’s ability to go to court.
Dissolution is not the end of your obligations either: under Article 921, directors of a dissolved company may not undertake any new operation beyond winding up business already started, and are personally and jointly liable if they do.
What should I do now?
- Read your statutes before drafting anything, because the agreement’s job is to fill what they leave open.
- Write down the equity split and the reasoning behind it, including how any non-cash contribution was valued, while all founders still agree on the story.
- Check your company type against the contribution rules. In an LLC industry cannot be contributed as capital, and structuring around that is easier before incorporation.
- Mirror pre-emption and transfer restrictions in the statutes, so the clauses that matter most bind the company and not only the signatories.
- Have a lawyer review any vesting, clawback or deadlock clause, and a notary handle any resolution that must be registered.
Every answer above shifts with your company type, what your statutes already say, and how each contribution was made. Put your own facts to askLex and see which rules apply before you sign.
