I

BRIEF ANALYSIS OF LIBYA’S COMMERCIAL LAW NO 23 OF 2010

The law applies to all economic and commercial activity, covering individuals, family enterprises, partnerships, companies, financial instruments, contracts, trademarks, trade names, competition, bankruptcy, and more. Civil law supplements commercial law where gaps exist, while judicial precedent and trade custom guide interpretation. While implementation is challenged by institutional and political factors, it remains the main legal foundation for commercial activity in Libya.

Origins, Purpose & Structure

Officially titled the Law on Commercial Activity, Law No. 23 was adopted on January 28, 2010, and came into force on August 21, 2010. Its core objective is to modernize Libya’s commercial regime, replacing outdated 1953 legislation and aligning it with international practices and Islamic civil-law principles.

Comprehensive Scope

The law applies to all economic and commercial activity, covering individuals, family enterprises, partnerships, companies, financial instruments, contracts, trademarks, trade names, competition, bankruptcy, and more. Civil law supplements commercial law where gaps exist, while judicial precedent and trade custom guide interpretation.

Organizational Layout

The Law is structured into thematic “Books,” each addressing a distinct area of commercial regulation:
 
1. General provisions for practicing economic activity  
2. Economic activities  
3. Commercial contracts and obligations 
4. Bank operations  
5. Financial instruments (e.g., bonds) 
6. Commercial papers  
7. Bankruptcy and protective reconciliation  
8. Import/export rules  
9. Trademarks and commercial indications  
 
KEY PROVISIONS AND HIGHLIGHTS

Defining and Regulating Market Participants

A merchant is defined as anyone conducting commercial activity as a regular profession. Individuals under 18 must be court-approved to operate commercially. Female practitioners are permitted, with registration regulated by marital status rules.

Corporate and Partnership Structure

Company types include general and limited partnerships, joint-stock companies, and branches of foreign firms. A formal memorandum of association is required, declaring legal form, name, address, duration, objectives, and capital. Boards may combine CEO and chair roles.

Contracts, Obligations, and Custom

Contracts are governed by codified law, civil law, and trade customs. Judges may rely on commercial integrity when interpreting contracts.

Banking and Financial Instruments

Covers bank operations, negotiable instruments, bonds, and financial guarantees. Islamic commercial banks follow the same structure, subject to additional banking regulations.

Bankruptcy and Reconciliation

Recognizes bankruptcy and protective reconciliation, offering legal paths for debt restructuring and liquidation, with exemptions for small-scale merchants.

Trader Customs & Civil Law Integration

Civil Code provisions supplements commercial law. Trade custom takes precedence over general custom unless contradicted by contract terms or legal norms.

Trademarks & Commercial Identity

Articles 1228–1281 provide elaborate provisions on trademark protection, registration, enforcement, and remedies.

Competition Provisions

Competition regulation is included and was strengthened in 2024 via Executive Regulation No. 6, enhancing enforcement powers.

Registering and Licensing

Commercial Register – Mandatory for all commercial actors, including foreign firms. Specialty sub-registers exist for importers/exporters.

Licensing – Runs via specialized registers and licensing fees set by Commerce Ministry regulations, in line with Law No. 23 and regulatory decisions.

Governance, Transparency & Corporate Reform

Board Structures and Transparency
 
Law permits combined executive and non-executive roles. Transparency and audits are encouraged but not always mandated. Banking sector mandates higher transparency supported by Central Bank guidelines.

Corporate Governance Evolution
 
Institutional frameworks introduced by the Central Bank and Stock Market were given statutory force by Law No. 23. However, adoption is inconsistent due to political instability and decentralized authority.

Foreign Investment & Joint Ventures

Joint ventures with foreign capital must comply with Law No. 23 and the Investment Promotion Law (Law No. 9 of 2010). Foreign ownership is capped at 49% in most sectors. Licensing and registration are mandatory for foreign firms.

Amendments & Implementation Framework

Notably amended by Law No. 10 of 2016 and Law No. 7 of 2023. Executive Regulation No. 6 of 2024 strengthens competition law. Adjustments are managed through decisions by the Council of Ministers and the Ministry of Commerce.

Practical Significance & Challenges

Modernization vs. Complexity
 
Introduced a modern code-style framework. Blends statutory law, civil principles, and trade custom.

Governance & Transparency
 
Encourages oversight and disclosure. Effective structures vary due to institutional challenges.

Foreign Participation
 
Supports foreign investment through JVs and registered entities, but caps and sector restrictions apply.
 
Institutional Capacity
 
The legal system continues to evolve. Legislative accessibility is improving, but enforcement is hampered by instability.

Conclusion

Law No. 23 of 2010 is a cornerstone of Libya’s commercial legal landscape. It consolidates outdated provisions into a coherent framework and promotes foreign investment, governance, and economic reform. While implementation is challenged by institutional and political factors, it remains the main legal foundation for commercial activity in Libya.