Form of Companies:

In addition to the important partnership and commandite companies, other entities (Joint Stock, Limited Liablity and Holding Companies) have been attracting new businesses in Syria during recent years.

Joint Stock Company

The New companies Act defines the Joint Stock Company as “consisting of at least five people, its capital divided into equal value shares that can be tradable and listed in the Stock market”. Responsibility of shareholders is limited to the value of the shares in the company.

Important changes in the new law:

Limited Liability Company

The new law removed the restriction on the number of partners, (from a maximum of 25). Partners’ responsibilities are proportionally limited to share ownership.

The section concerning Limited Liability Companies, details the steps required to set up such companies, procedures for transferring ownership of shares and withdrawal from the company. There may be sole management of the company or up to five managers from the partners or outside. If there are more than 25 partners in the company a maximum of seven managers is permitted.

Holding Company

During recent years several major Holding Companies have been established. The importance of this type of corporation is reflected in the need for optimal regulation.

The new law defines the subsidiary clearly, by stating that any corporation, where the holding company owns more than 50% of its capital, is to be considered a subsidiary of the Holding.

The new law prohibits holding companies from participating in the joint partnership form of companies and commandite companies, in addition prohibiting the subsidiary from owning any share in the holding company.

The law referred holding company regulation to the law pertaining to joint stock companies.

Business activities confined to Syrian nationals

Some very powerful Syrian holding companies are now major players in the development of the country. Cham Holding, was established in 2006 with a capital of US$350 million by 70 of the country’s top businessmen. One year later another group announced the formation of Souria Holdings (with an US$80 million capitalization).

Agents

Foreign companies wishing to contract with the Syrian public sector must have an agent. There are some exceptions but generally a foreign company that does not have a branch office would require the services of an agent registered at the Ministry of Economy. courts.

Stamp Duty

Stamp Duty was reduced in 2005 when it stood at 1.5 per cent at incorporation and 3.12 per cent for any subsequent increases. There is now a standard 0.5 per cent rate of Stamp duty in effect. Companies that offer in excess of 51 per cent of their shares to the public are exempt from the payment of Stamp Duty and subject to different corporate tax rates.

Corporate Taxation

Limited Liability and Joint Stock Companies are subject to a flat rate of 22 per cent on their profits. This rate may be reduced depending on the number of employees, the strategic importance of the project and its location. Accordingly the rate may drop to 20-21 per cent of profits. In the event of a public offering of 51 per cent or more, the rate is reduced to 14 per cent. There government is considering of offering further investment incentives for projects that are located in the Eastern Province, perhaps reducing the basic tax rate to 20 per cent.

Customs

Customs tariffs have been reduced several timed during the past few years. The list of goods affected is changing regularly, there is a unification of customs items and liberalization process continues.

Review of License Applications

The Ministry of Economy and Trade provide the main review of business set up applications while the Ministry of Finance Register deals with Stamp Duty. The final step for applicants is the Commercial Register.

Registering with the Local Chamber of Commerce

It is possible for a company to be in business without registering with the Chamber of Commerce but at some stage investors will need an attestation service, documentation for tenders and import/export etc. So it is best to register immediately. Sometimes bidders are required to provide a Chamber of Commerce certificate.

Arbitration

Local or international arbitration is available depending on the process of enforcement.

Legal Advice

If an investor enters Syria without a partner or agent he should certainly contract for good legal advice. As well as the laws of the land to consider there are many internal regulations, processes and amendments that need to be taken into account. . The investor can manage but needs qualified assistance. Syria is a virgin territory in many respects with immense opportunities. The newcomer can manage easily and happily once he understands the system but needs help to gain a full understanding.

PAPERWORK

Documents required to start up a business:

First time applicants who wish to be included in the Commercial Register are required to submit a written application outlining the activity they intend to pursue. The authorities need to see a title deed, leasing contract or any proof of occupation. A certificate must be obtained to confirm that the applicant is not a government employee and photocopy ID is required. In case the applicant is the owner of an industrial or handicrafts enterprise a copy of the industrial license should be included.

Current procedures to register Associations of Capital:

The founding partners or their legal agent should submit a licensing application and provide a copy of the Company’s Articles of Association to the Internal Trade Directorate. Following review and after any required amendments are made the Articles of Association will be registered according to Commercial Law. The Company’s Licensing Application will then be submitted to the Minister. Once a licensing decision is made this will be issued and the Articles of Association attached. A copy of this documentation goes to the Civil Court of First Instance to follow up the foundation and start process. The documents are then delivered to the appropriate specialized Financial Department. Next the stamp duty on the company’s capital should be paid and the place of incorporation established (with regard to property leasing). Once the financial procedures are concluded the Articles of Association should be sent to the Court of First Instance.

The founders or their attorney should register at the Court of First Instance Registry Office. The Articles are then certified and then forwarded to the specialized Internal Trade Department (Commercial register Secretariat). Next the company’s capital should be deposited at a bank. The Commercial Secretariat issues the Company’s Commercial Register after verifying the relevant documents, payment of stamp duty, capital deposition and notification to publish in the Gazettes, without having a legal article concerning this issue.

Registration Costs at the Civil Register:

Contract registration and photocopying duties at the Specialised Court of First Instance: SYP15,000 Stamp Duty according to Legislative Decree No. 44 (2005) at rates mentioned above with a minimum duty on foundation contracts of SYP25,000. Institutions and individual enterprises licensed by the Investment Law pay a charge of SYP5000.