The legal framework for commercial and investment activity in Libya

Abstract

This study evaluates Libya’s 2010 economic legal framework across three pillars: commercial activity regulation (Law No. 23), investment promotion (Law No. 9), and capital market regulation (Law No. 11). Findings indicate adoption of the form-over-activity principle for companies and limited shareholder liability, coupled with corporate governance, disclosure, and external audit requirements. The Investment Law provides incentives and safeguards—including tax and customs exemptions, profit repatriation, and protection against expropriation except for public interest with fair compensation. The Capital Market Law establishes an independent regulator empowered to suspend general assembly resolutions upon a request by shareholders holding at least 5%, and to impose disclosure-related sanctions—strengthening investor protection and market confidence. In practice, implementation gaps persist due to institutional constraints and post-2011 macroeconomic volatility. Nonetheless, recent literature suggests that upgrading supervisory capacity and governance, operationalizing one-stop-shop procedures, and accelerating digitalization can enhance investment attractiveness and market trust, alongside continued reforms to the investment framework and transparency and financial-stability requirements.