The Chamber of Deputies has voted, and the President of the Republic hereby promulgates the following law:
The Project of Law in Decree No. 1273 aiming at the amendment of certain provisions of Law Decree No. 5 promulgated on 31st January 1977 (Formation of the Council of Development and Reconstruction, and its amendments, as modified by the joint Parliamentary Commissions, is hereby ratified.
The present law shall be published in the Official Gazette.
Beirut, 7 December 1991
Signed: Elias HRAWI
Issued by the President of the Republic
President of the Council of Ministers
Signed: Omar KARAMI
Amendment of certain provisions of Law Decree No. 5 promulgated on 31st December 1977 (Formation of the Council of Development and Reconstruction) and its amendments.
The Project of Law set out in Decree No. 1273 aiming at the amendment of certain provisions of Law Decree No. 5 promulgated on 31st January 1977 (Institution of the Council of Development and Reconstruction) and its amendments, as modified by the Joint Parliamentary Commissions, is hereby ratified.
The present law shall be published in the Official Gazette.
Amendment of certain provisions of Law Decree No. 5 promulgated on 31st January 1977 (Formation of the Council of Development and Reconstruction) and its amendments.
The text of paragraph 6 of Article 5 of the Law Decree No. 5 promulgated on the 31st of January 1977, amended by Article 1 of Law-Decree No. 16 dated 23rd of March 1985, is hereby abrogated and replaced by the following text:
"6 - To carry out directly or through any public administration, public entity, municipality, Joint-stock or mixed company that shall be formed with the participation of the Council of Development and Reconstruction or any Real Estate Company formed in line with the provisions of Article 21 of the Law on Town Planning the execution of any project assigned to it by the Council of Ministers in any of the areas specified for in paragraph 4 of the present Article.
The Articles of Incorporation, of every Joint-Stock or Mixed Company that shall be formed with the participation of the Council of Development and Reconstruction or any Real Estate Company mentioned in the preceding paragraph, shall be subject to the approval of the Council of Ministers and to the provisions of the Code of Commerce.
The following paragraph 9 is added to Article 5 of Law-Decree No. 5 promulgated on 31st of January 1977, amended by Article 1 of Law-Decree No. 16 dated 23rd of March 1985:
"9 - Whenever the Council of Development and Reconstruction carries out the execution of the provisions referred to in paragraph 6 of this article through a Real Estate Company, such Company shall be formed and its Articles of Incorporation shall be approved by Decree adopted by the Council of Ministers.
The Articles of Incorporation shall state and define all matters related to the formation of the company, its object, the conduct of its activities, the various prerogatives of its organs and its liquidation. Such Articles of Incorporation should not violate the basic rules provided for in the laws in force and especially the provisions of the Code of Commerce.
The Articles of Incorporation of the company may include provisional stipulations allowing for the formation of the company and the conduct of its activities before final settlements of the disputes concerning the rights of the property owners and any other rights pertaining to such property that have formed the contributions in kind (in the capital of the company).
The following provisions shall apply to the Real Estate Company:
I - Object of the Company
The object of the company shall be the planning (Amenagement) and reconstruction of one or more of the areas damaged during the hostilities in Lebanon in accordance with a Master Plan and Guiding Layout duly approved and the carrying out of the works necessary for the achievement of this object. The company's object shall include, the development and reconstruction of the area in accordance with the approved Master Plan and Guiding Layout, the sale of the developed lots, the erection of buildings thereon and the sale or lease of such buildings.
Where the damaged area is adjacent to the sea, the government may enter into an agreement with the Real Estate Company to bank up part of the sea side in accordance with a duly approved Master Plan and Guiding Layout.
The reclaimed land resulting therefrom shall be developed and shared between the State and the company in accordance with an agreement to be drawn up by the Council of Development and Reconstruction and approved by Decree adopted by the Council of Ministers pursuant to a proposal presented by the Minister of Finance and the Minister of Public Works and Transport.
II- Head Office of the Company
The Head Office of the Company shall be in Beirut or in any other place in Lebanon determined by its Articles of Incorporation.
III- Duration of the Company
The Duration of the Company shall be fixed in its Articles of Incorporation.
IV - Capital of the Company
The capital of the Company shall consist of the contributions in kind (real estate properties) which fall within the boundaries of the area designated for redevelopment and reconstruction and of the contributions in cash to be subscribed to by the persons designated in paragraph V of this Article.
The capital of the Company may be determined in a foreign currency, whereby the contributions in cash should not be in excess of the contributions in kind. Allowance should be made for the broadest possible number of subscribers.
The cash subscriptions should be completed within six months from the date the Higher Appraisal Committee issues its appraisal decisions mentioned in this article.
The appraisal of the real estate properties and rights therein, which form part of the Real East Companies' capital, shall be appraised in accordance with the following procedure:
1 - The real estate properties falling within the boundaries of the area forming the company's domain shall be fixed by a decree adopted by the Council of Ministers pursuant to a proposal presented by the Minister of Finance and the Minister of Public Works and Transport; such decree shall be published in the Official Gazette and three local newspapers.
2 - One or more first instance appraisal committee/committees, shall be appointed by virtue of a decree adopted by the Council of Ministers pursuant to a proposal presented by the Minister of Finance and the Minister of Public Works and Transport.
Such committees shall be composed of a judge of the tenth grade, at least, who shall act as chairman, and two engineers, an economic expert, and a real estate expert as members; each of such engineers and experts should have at least fifteen years of experience.
The task of this committee shall be to determine the overall value of the various rights pertaining to the property owners, lessees, or management rights holders and any other right owner in every real estate property in the concerned area.
3 - Before starting to carry out their task, the committee/committees referred to in the preceding paragraph shall publish in the Official Gazette and three local newspapers, selected by the chairman of the committee, a notice indicating the cadastral number of all the real estate properties and inviting the property rights holders therein to submit their demands, pleas, written remarks and documents where needed, and to elect domicile in the county where the area is located, within a period of three months from the date of publication of this notice.
The committee shall issue its decisions after inspecting all the real estate properties in the relevant area and reviewing the remarks presented by the property rights holders.
4 - All decisions taken by the above mentioned committees shall be referred, upon their issuance, to a higher appraisal committee/committees, which will be appointed by a decree adopted by the Council of Ministers pursuant to a proposal presented by the Minister of Justice and the Minister of Public Works and Transport.
Such committee/committees shall be composed of a judge of the fifth grade, at least, who shall act as the chairman, two engineers, an economic expert and a real estate expert as members; each of the engineers and experts should have at least twenty years of experience.
This committee/committees shall be in charge of reconsidering the decisions referred to it and, for this purpose, should again invite the property rights holders to submit their demands, pleas and remarks regarding the decisions of the first instance committee/committees, and follow the same procedure as described in paragraph three above.
There shall be appointed a substitute chairman and substitute members for each of the first instance and higher appraisal committee/committees; such substitutes shall replace the original chairman and members in case of absence or for any reason that might prevent them from serving on their respective committees.
The necessary number of judicial clerks, shall be attached to each first or higher committee/committees by virtue of a decision of the Minister of Jutice and pursuant to a proposal presented by the Director General of the Ministry of Justice.
The meetings of the first instance and higher appraisal committee shall not be valid unless attended by all members of each committee.
The above-mentioned committees shall take their decisions by unanimous or majority vote and shall define, in details, the base of their appraisal.
The chairman of the higher and first instance committee shall, before starting the appraisal, lay down together and by a majority vote, the principles and base to be adopted in the appraisal and seek for this purpose the assistance of expert members of the different committees.
The decisions of the higher appraisal committee shall be final and are subject to no further means of recourse by any ordinary or extraordinary legal procedures, including that of power abuse.
5 - All real estate properties in all their forms and whoever their owners, as well as the business concerns, the rights of lease or management rights falling within the domain of the area concerned shall be deemed to be contributions in kind. An entry of lien shall be recorded on their respective lands and commercial registers.
Where the subscription of the cash capital is not completed for the entire issued shares within a period of six months as from the date of the decisions of the above-mentioned committee/committees, the entry of lien recorded at the Land Registry or the Commercial registry shall ipso facto be deleted and the contributions in cash shall be returned to their owners. The Real Estate Company shall, by power of law, be annulled and all the resulting decrees, decisions, provisions and measures, which were taken in association thereof shall be repealed.
Upon completion of the cash subscription in the capital of the company, the ownership of the real estate properties and business concerns, and rights of lease shall devolve to the Real Estate Company by power of law.
The issuance of the decree authorizing the formation of the company shall lead without the need for any further procedure, to the transfer of public properties falling within the Company domain to the category of private properties of the State.
Any real estate property or business concerns in the area concerned, encumbered with rights of lien, mortgage, or seizure shall be discharged therefrom and such rights shall be ipso facto attached to the shares issued against the contributions in kind, to the owner of such real estate property or business concerns;
The contributions in kind to the capital of the Real Estate Company shall be exempted from the verifications procedures provided for in the article 86 of the Code of Commerce.
6 - The appraisal files pertaining to the real estate properties listed on the schedule published with the decree authorizing the formation of the Real Estate Company shall be referred to committees formed in conformity with the provisions of the Law on Expropriation.
These committees shall be in charge of the distribution of the appraised value of each real estate property between the proprietors, lease-holders and other rights holders in such real estate property; the aggregate of all the shares allocated to these persons shall not exceed in each real estate property the total amount for such property as estimated by the higher appraisal committee/committees mentioned above.
In case of delay in settling the distribution of the property values for whatever reason, the committee in charge of the matter shall, at the request of any interested party, appoint a representative for the shares in question.
Such representative will attend on their behalf all types of general meetings held by the Real Estate Company.
The parties concerned shall be notified at the domicile elected by each of them in accordance with paragraph 2 above; in absence of such domicile they shall be notified at the office of the committee.
The decisions of these committees shall be subject to the procedures and terms provided for in the Law on Expropriation concerning the decisions of the expropriation committees.
Whenever any interested party resorts to any of the means of recourse, the case of the distribution of the appraised value shall be reconsidered by the proper courts, for all the right holders in the property concerned.
However, under no circumstances should the total amount of shares pertaining to the right holders in any real estate property exceed the valuation of the higher appraisal committee of this real estate property.
In case of dispute regarding the obligation, the right to decide on the dispute lies with the court having jurisdiction. For this purpose additional courts wholly devoted to such matters may be set up by decree adopted pursuant to a recommendation by the Minister of Justice to rule these disputes and work during and outside office hours against remuneration to be determined in the same decree.
1 - Share holding in the Company
Priority to subscription in the cash component of the capital of the company shall be given to subscribers in the following order:
a - Owners of real estate properties and right holders therein.
b - Lebanese nationals and purely Lebanese Companies in the sense of the Law on the Acquisition of Property by non-Lebanese nationals .
c - The State and the Public Institutions and Municipalities concerned .
d - Persons of Lebanese Origin, Official and Semi Official Arab Institutions and Nationals of Arab Countries.
2 - The shareholder in the Company
Pursuant to the provisions of Clause V of Article 3, and subject to the provisions of paragraph 2 of Clause IV of the present Article, in case of increase of the company's capital, the former shareholders shall have a right of preference to subscribe in all the new shares in the proportion of the shares they are holding and should exercise this right within a period of one month from the date of offering the new shares for subscription.
Whenever it finds it necessary to bring in new shareholders, the extraordinary general meeting of the shareholders of the Real Estate Company, may decide that the right of subscription shall not be reserved to the former shareholders, or shall only be reserved to them partially.
VI- The Shares
1 - All the company's shares shall be and shall remain in registered form.
The shares of the Real Estate Company shall become immediately negotiable in the Beirut Stock Exchange. The company may buy up to 10% of its shares notwithstanding the absence of reserve, provided that it shall resell these shares within a period not exceeding eighteen months from their date of purchase.
2 - The holders of shares issued in representation of contributions in kind shall have a right of preference to use them for the settlement in full, or in part, of the price of properties or part of properties or rights pertaining thereto that they might purchase in the area concerned.
In this eventuality, the price of the share as well as the price of the real estate property will have to be set according to their respective prevailing market price at the time of the purchase.
3 - The Articles of Incorporation of the Company should provide that the holders of shares representing contributions in kind shall have a number of seats on the Board of Directors in prorata to their contribution in the capital of the company.
VII - Rights and Obligations of the Company
1 - The Real Estate Company shall be exempted from the provisions of Article 1 of the Law on the acquisitions by non-Lebanese of real estate property and from securing the governmental authorization provided that:
a - Two thirds al least of its Board members shall be Lebanese nationals.
b - Its Articles of Incorporation shall prohibit any shareholder from holding directly or indirectly more than 10% of the Company's capital.
The spouses and minor descendants of the shareholders shall be considered as one person.
Any contract or act contrary to the provisions of paragraphs (a) and (b) of this clause shall be null and void, and non existent even between the contracting parties, and the contravener shall be punishable by temporary hard labor and by a fine ranging between one fold and threefold of the right value.
These provisions shall apply to any legal act concluded through a fictitious person (prête-nom) in an attempt to elude these provisions.
No amendment may be made to the Company's Articles of Incorporation which might violate the proportions set out in paragraph (a) and (b) of this clause.
2 - This Company shall be exempted from the Notary Public duties pertaining to the State, the registration duties at the Commercial Registry and the stamp duty on the capital. Its contributions in kind shall be exempted from all transfer duties from the original owners to the Company.
The Company shall be exempted from income tax for a period of ten years from the date of its formation; its shares and shareholders shall be exempted in this capacity from the tax provided for in chapter three of the Income Tax Law for this same period.
3 - The Company shall finance and ensure the execution of the construction of roads, squares and public gardens at the expense and for the account of the State by virtue of an agreement to be concluded between the Company and the Council of Development and Reconstruction in accordance with the laws and regulations in force and in compliance with the Master Plan and Detailed Guiding Layout prepared and duly approved for the area.
The areas developed in this manner shall become public domain and shall be the replacing counterpart of the original unbuilt public domain in the area concerned. Such original public domain will be automatically forfeited from the public domain.
The new areas shall not be less than that of the original ones, and shall not in any event be less than one fourth of the surface of the properties of the area concerned.
The Real Estate Company shall acquire without counter-part those parts of the unbuilt domain which do not fall within the new public domain, subject to the development provided for herein.
The built public properties, which according to the Plan and Layout of the concerned area is to be kept in the same location, shall remain the property of the public department concerned.
4 - By virtue of an agreement to be concluded between the Real Estate Company and the Council of Development and Reconstruction and in conformity wilh the laws an regulations in force, the Company shall, for the account and at the expense of the State, finance and ensure the execution of the infrastructure works, such as the water system, electricity, sewage and drainage systems, roads, sidewalks, lightning poles, garages, telecommunications network and all other public facilities and installations in the area concerned.
5 - By virtue of an agreement to be concluded between the Company and the Council of Development and Reconstruction and after approval of the Council of Ministers, the Company shall be reimbursed for all or part of the cost of works provided for in the two preceding clauses 3 and 4 of this Article, as well as for the infrastructure works of the lands reclaimed as a result of the banking up of the seaside in cash and/or by giving it a part of the said reclaimed lands and/or lands owned by the State in the area concerned and/or by giving it the right to exploit certain services resulting from the infrastructure in both areas and, in this latter case, such exploitation shall be made by virtue of laws to be promulgated in this respect.
6 - The Company shall earmark a certain percentage of its available funds received from the cash subscriptions for restoring the buildings which are not intended to be demolished and for the construction of new buildings in the area concerned.
7 - The Company shall appoint a principal auditor for a period of three years, and shall be exempted from appointing a complimentary auditor.
VIII - The decree authorizing the establishment of the Real Estate Company shall be published in the Official Gazette and three local newspapers.
The Company shall draw up within six months from the date of its incorporation a time schedule for the execution of the project and file such schedule with the government departments concerned.
IX - Upon dissolution of the Company for any reason whatsoever, the real estate rights cannot be divided and distributed in kind to non-Lebanese nationals except in accordance with the Law on the Acquisition of Real Estate Rights by non-Lebanese.
Notwithstanding the legal provisions governing the contracts of lease, and with consideration to the private agreements concluded between the proprietors and the tenants before the enforcement of the present law, the contracts of lease concerning the buildings that were damaged during the hostilities that took place between 16 February 1975 and the effective date of the enforcement of this law shall remain in force with all their effects between the Lessors and the tenants in spite of the destruction, defections or changes of the leased premises and the impossibility to use them in full or in part by the tenants.
All legal provisions contrary to those of the present law or inconsistent with the context thereof shall be abrogated.
The present law shall be published in the Official Gazette.
89.Riyad El Solh Street, Industry and Labour Bank Building, P O.Box 119493 Beirut, Lebanon.
Fourth Edition, May 1995