In Lebanon’s corporate landscape, shareholder agreements have become an essential tool for defining relationships among partners, especially in closely held or family-owned companies. These agreements often cover matters that company bylaws (statutes) leave unaddressed, such as management rights, share transfers, exit mechanisms, or dispute resolution procedures.
While these agreements offer flexibility and clarity, they also carry significant hidden risks. Too often, they are drafted without sufficient attention to the Lebanese Code of Commerce or local court practice, relying instead on foreign templates that are not always enforceable under Lebanese law. The result can be unexpected disputes, invalid clauses, and financial losses when conflicts arise.
Unlike some jurisdictions, Lebanese law does not provide a detailed statutory framework for shareholder agreements. The Code of Commerce governs companies such as the Société Anonyme Libanaise (SAL) and the Société à Responsabilité Limitée (SARL), but it makes little reference to private agreements between shareholders.
This means such agreements exist in a legal gray area: they are valid as civil contracts among the parties but cannot override mandatory company law provisions or the company’s registered bylaws. When contradictions occur, Lebanese courts typically uphold the bylaws over any private arrangement, often nullifying parts of the shareholder agreement.
One of the most frequent problems is non-enforceability. Clauses that contradict Lebanese law, particularly those related to board composition, voting rights, or transfer restrictions, may simply be void.
Another area of concern involves foreign governing law or arbitration clauses. While Lebanese courts generally respect arbitration and foreign law, they will not enforce them if doing so breaches Lebanese public order.
Minority rights also present recurring challenges. Lebanese corporate law provides certain mandatory protections for minority shareholders, especially in SAL structures. If a shareholder agreement attempts to limit or bypass these rights, such clauses may be declared invalid.
For these reasons, Lebanese companies and investors should approach shareholder agreements with caution and legal precision. These contracts should never be treated as administrative formalities or copied from foreign precedents. Instead, they must be tailored to Lebanese law and carefully reviewed by counsel who understand both the business objectives and the local legal framework.
A proactive, well-drafted agreement today can prevent costly litigation tomorrow — and ensure that shareholder relationships are built on clarity, fairness, and enforceable commitments.