Certificates of Deposit
A Certificate of Deposit is a medium term investment that provides investors with an opportunity to generate a higher return than that earned from a regular savings account.
Any individual, institution, or corporation seeking a diversified investment may subscribe to a Certificate of Deposit.
As compared to a savings account, a Certificate of Deposit offers the following advantages:
- The highest return on any liquid investment.
- Substantially higher interest than LIBOR, the London Interbank Offer Rate.
- No commission charges whatsoever.
- A readily discountable instrument.
Terms and conditions
Relevant articles of Decision No. 5572, dated June 8th, 1994, issued by the Governor of the Central Bank of Lebanon.
Article 4: Certificates of Deposit must be issued in minimum denominations according to each issue in Lebanese Pounds and U.S. Dollars, or in any other foreign currency.
Article 6: Certificates of Deposit must be issued in nominal amounts and the interest calculated on the basis of 365 days a year.
Article 8: Prior to the issuance of Certificates of Deposit, a contract between the Bank and the depositor must be executed. The contract should mention the amount received by the Bank, the issuing date, the maturity date, the interest, along with its method of calculation and the method and place of repayment, the issuing number, and the Certificate of Deposit serial number.
Article 10: The transfer and endorsement of Certificates of Deposit are subject to the provisions of the Code of Commerce related to the transfer and endorsement of securities.
Article 11:
- It is strictly prohibited for the issuing institution, or its branches or affiliates or sister companies, to discount or to purchase directly or indirectly Certificates of Deposit it has issued. Any purchasing or discounting by any bank or financial institution branches or affiliates or sister companies or any other subsidiaries related in any other way to the issuing institution, shall be deemed an indirect discounting or purchasing operation.
- Any discounting or purchasing of Certificates of Deposit by Banque du Liban for the benefit of the issuer is prohibited.
Article 17: The issuer's external auditors are obligated to verify on an ongoing basis the validity of the issuance of the Certificates of Deposit and the interbank certificates compliance with applicable regulations and to advise the Banque du Liban and the Banking Control Commission of any violation of the applicable decisions and laws
Article 18: The contravener of the present decision will be subject to administrative penalties set by the High Banking Commission in accordance with the provisions of articles 208 and 209 of the Code of Money and Credit.
General provisions
- Any Certificates of Deposit to order may be transferred, by endorsement, to a named person.
- Any moral person or legal entity is entitled to hold Certificates of Deposit.
- Interest due and paid to the holder of the Certificates of Deposit is subject to withholding tax, currently at the rate of 5% as per law No. 497 dated January 30th, 2003 (the 2003 budget law). This interest will continue to be subject to corporate income tax in respect of the taxable income of banks, financial institutions and trading entities, in accordance with Article 1 of the Decree No. 5429 dated September 20th, 1982 and October 7th, 1982. Taxes withheld on the Certificates of Deposit referred to above, held by banks, financial institutions and trading entities which are subject to corporate income tax, are credited against the holder’s annual corporate income tax.
- The issue date of Certificates of Deposit is not included in the calculation of the interest.
- If the maturity date falls on a date on which banks are closed, for any reason, the Certificate of Deposit shall mature on the first business day following the closure, without additional interest being due.