This piece highlights issues for consideration when starting a foreign business in Liberia in four areas: 1) foreign business start-up, 2) access to industrial land, 3) foreign ownership issues across sectors, and 4) commercial dispute arbitration.
Foreign Business Start-Up
It takes 8 procedures and 25 days to establish a foreign-owned limited liability company (LLC) in Monrovia, Liberia. This is faster than both the IAB regional average for Sub-Saharan Africa and the IAB global average. A foreign company establishing a subsidiary in Monrovia must notarize the documents of the parent company abroad. Foreign companies must only obtain investment approval if they want to benefit from investment incentives. Otherwise, a mere notification to the National Investment Committee suffices. If the subsidiary is engaged in manufacturing and international trade, it must obtain a trade license; this can take 3 days. Liberia is one of the few countries surveyed by IAB that does not have its commercial laws and regulations publicly available online. Foreign investors must use a local counsel when establishing a subsidiary. There is no minimum paid-in capital requirement, except in regulated industries related to financial institutions, such as insurance and banking.
Access to Industrial Land
Foreign ownership of land is prohibited in Liberia. Foreign companies seeking to lease land in Liberia have the option to lease privately or publicly held land. Publicly held land is not readily available. The best option for foreign companies seeking to acquire land is thus to lease private land. Publicly held land is usually acquired through direct negotiations with the relevant public authority. Land may be leased for a maximum of 50 years, although the usual duration is about 21 years, with the option to renew. Lease contracts can offer the lessee the right to subdivide or sublease the land. The leased land cannot be mortgaged or used as collateral, unless the land has already been developed. Land-related information can be obtained from the registry. There is no cadastre, land information system (LIS), or geographic information system (GIS) available. The registry does not always have sufficient or current information and in most cases acquiring land-related information is a burdensome process involving different sources.
Foreign Ownership Issues across Sectors
Of the 33 sectors covered by the report, 30 are fully open to foreign equity ownership in Liberia. The only exceptions are the electricity transmission and distribution industries, which are closed to foreign capital participation, as is the port operation sector. All port and airport facilities in Liberia are currently owned and operated by a publicly owned company. All other sectors, including the primary sectors and media industry, which are restricted in many countries in Sub-Saharan Africa, are fully open to foreign ownership in Liberia.
Commercial Dispute Arbitration
There is no specific statute governing arbitration in Liberia. The Liberian Civil Procedure Law governs both domestic and international arbitrations taking place in Liberia. An arbitration agreement is not severable from the main contract; it can, however, be incorporated by reference. An arbitration agreement cannot be concluded by electronic communication, oral agreement, or conduct by one of the parties. The parties cannot elect to retain a foreign lawyer to represent them in either domestic or international arbitrations. The institution administering commercial arbitration in Liberia is the Liberian Chamber of Commerce. There are no legal provisions providing explicitly for the local courts to assist the arbitration process with the production of documents or the appearance of witnesses. The Liberian courts, especially the Supreme Court, have a clear pro-arbitration policy, favoring the enforcement of arbitration agreements and awards. It takes roughly 1.4 years to enforce both foreign and domestic arbitration awards, from the filing of an application to the court of first instance to obtaining a writ of execution, with provision for an appeal. Enforcement proceedings are undertaken in the Civil Law Court in Liberia, with appeals made directly to the Supreme Court. On average, it takes around 21 weeks to enforce an arbitration award rendered in Liberia, from filing an application to a writ of execution attaching assets (assuming there is no appeal), and 21 weeks for a foreign award.
Source: Investment Across Borders Report by The World Bank. The World Bank authorizes the use of this material subject to the terms and conditions on its website, http://www.worldbank.org/terms.”
