Commercial Laws
The Palestinian Authority, with international assistance, is in the
process of reforming the current legal and regulatory framework
in order to establish an environment for economic development and
investment, where commercial transactions can be structured and
institutions can rely on consistent application and enforcement
of laws. The following sections outline current and proposed Palestinian
commercial laws.
Accounting and Reporting Standards
Foreign Ownership and Rental Regulations
Commercial Agency and Representation
Competition Law
Intellectual Property Protection
Promulgated Laws and Laws Undergoing Updating
Draft Laws
Capital Market Law
Licensing Requirements & Procedures
Labor Law
For more information on these, or any other laws, please do not
hesitate to Contact PIPA, we will be happy to further assist
you.
Accounting and Reporting Standards
The accounting and reporting standards in Palestine generally
conform to International Accounting Standards, and when those
do not apply, U.S. Generally Accepted Accounting Principles
(GAAP) are used.
By virtue of the1964 companies law No. (12), all public and
private companies, including foreign, must file a financial statement
audited by a certified public accountant along with a statutory
annual report within three months of the end of the fiscal year
to the companies registrar. The laws and regulations of the Certified
Public Accountants Associations prescribe the format of such
reports.
It is highly recommended that persons conducting business in
Palestine engage the services of a local Chartered Accountant
to ensure compliance with the tax laws.
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Foreign Ownership and Rental Regulations
The Landlord and Tenant Law applies to all commercial and residential
buildings within city boundaries. It controls rental increases
and limits the freedom of the landlord to terminate and evict
tenants from the rented premises. It does not regulate the lease
of land or movable properties which are regulated by other specific
laws.
The Acquisition Law in the West Bank, which regulates foreign
acquisition and the rental or lease of immovable properties,
classifies foreigners into three categories:
• Foreigners who formerly possessed Palestinian or Jordanian passports
shall have the right to own properties (not within the boundaries
of the cities), sufficient to erect buildings and/or for their
agricultural projects.
• Foreigners who hold other Arab nationality passports have the
right to own property (not within the boundaries of the cities),
which suffice for their living and business needs only.
• Others
Foreigners are allowed to own buildings or purchase land only
outside the boundaries of the cities, however, exceptions can
be made such as in the establishment of an approved investment
project.
It is critical that potential purchasers of land or buildings
perform a title search to be assured that no outstanding violations
or unpaid penalties exist on the property. Under current law,
violations and penalties are transferred to the new owner.
Accurate title search can only be obtained from the Land Registry
Department (Al-Taboh).
Land registration is done through the Department of Land Registry
(Al-Taboh), which has offices in Hebron, Ramallah, Nablus, Bethlehem,
Jericho, Jenin, and Gaza City. In order to purchase land in Palestine,
an application that includes supporting documents such as deeds
to the property, powers of attorney, etc. should be submitted
to the land registry office having jurisdiction over the land.
In Gaza, foreigners and locals are treated equally concerning
rental contracts.
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Commercial Agency and Representation
The original Commercial Agency Law was enacted since (1967),
which has been amended by the Law for Regulating the work of
Commercial Agents No. (2) for the country. The law requests that
all foreign companies distributing goods in Palestine appoint
a direct agent who is to register with the Ministry of National
Economy. Foreign companies distributing goods in Palestine, where
agents are not required or used in the ordinary course of business,
must qualify for an exception from the Ministry of National Economy
permitting them to distribute through distributors and middlemen.
Direct agents may authorize primary, sole or more distributor(s)
in Palestine to assist in the delivery of goods to and between
the West Bank and Gaza Strip.
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Competition Law
The drafted Competition Law, modeled after
EU Competition Laws and the Treaty of Rome, will introduce regulations
to prevent
anti-competitive practices. It is the Palestinian Authority’s
national policy that business activities operate in a market
environment where the principles of free competition are guaranteed.
The Law is in the final stages at the Legislative Council,
and is expected to be published in the near term.
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Some Promulgated Laws and Laws Currently Undergoing
Drafting/Updating:
Promulgated Laws:
Among the laws that have recently been promulgated by the PLC
are:
Palestinian Monetary Authority Law no. (2) of 1997:
In addition to other tasks, the PMA law sets the
goals and competencies of the PMA, specifies its capital and establishes
that the
PA is responsible for covering such capital. It also details
the
composition of the PMA’s Board of Directors, the powers
of its Governor, its relations with the PA and those of the
banks operating in the WBG.
Industrial Zones Law no. (10) of 1998:
The law establishes the Industrial and Free Zones Authority [www.piefza.org],
specifies its powers and duties, regulates the establishment,
development, and operations of industrial zones, as well as the
procedures to be followed therein, and specifies the rights and
duties of the projects licensed to operate within such zones.
Arbitration Law no. (3) of 2000:
The law unifies the rules governing the arbitration processes in
the West Bank and Gaza, and follows international trends in administering
alternative dispute resolution mechanisms. The law additionally
promotes the establishment of specialized institutions that offer
arbitration services.
Banks Law no. (2) of 2002:
The Banks Law, promulgated in 2002, defines the terms for bank
licensing, legal and illegal operations and the rules governing
overall bank management, including capital ratios.
Basic Law, 2003:
This law specifies the basic principles governing the Palestinian
Authority, the relationship between the three powers (executive,
legislative and judicial), and the major rights of Palestinian
citizens.
The Basic Law was later amended by the PLC, with the approval
of the President, to encompass the position of the Prime Minister.
This recent amendment to the Basic Law is seen to be a major cornerstone
in the democratization and reform efforts currently underway in
the Palestinian Authority..
Draft Laws:
In almost all cases laws already exist on the following legal
issues. These drafts represent updates to the existing laws. Where
this is the case, the previous law remains in force until the new
law has been promulgated.
The following represents a number of draft laws affecting the
private sector. They are currently at various stages in the legislative
process. Some are expected to be presented before the PLC in the
near future.
Securities Draft Law:
This law will represent an all-encompassing law to cover all matters
pertaining to securities exchange. This is expected to include,
among other things, public and private offerings, trade of securities,
the Palestine Securities Exchange (PSE), listing of companies,
public disclosure by listed companies and member brokerage firms.
Capital Markets Authority (CMA) Draft Law:
This law will establish the Capital Markets Authority (CMA), which
will be an independent authority responsible for overseeing the
non-bank financial sector, in particular: securities, insurance,
mortgage financing, leasing and pensions.
Commerce Draft Law:
Efforts are currently underway to finalize the draft Commerce Law.
The huge draft governing different aspects of trade and commerce,
and commercial operations is expected to be presented before
the PLC before the end of 2003.
Companies Draft Law:
The Companies Law will unify the rules governing companies and
corporate bodies in the West Bank and Gaza Strip.
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