• LATEST NEWS: Iraqi Musician Naseer Shamma named UNESCO artist for peace.
    • LATEST NEWS: Germany offers 500 million Euro credit to Iraq to aid reconstruction
    • LATEST NEWS: Baghdad museum to showcase artefacts at the Venice Biennale, Italy
    • LATEST NEWS: The seventh exhibition and conference of Karbala for the Economy, Construction and Investment between 30/04/17 - 02/05/17
    • LATEST NEWS: Iraq Gets $5.34 Billion IMF Loan to Support Economic Stability
  • Members' Area
  • Baghdad: 01:17

Launch a company in Iraq

ESTABLISHING A LEGAL BUSINESS PRESENCE IN IRAQ
The Companies Law No. 21 of 1997 (amended by CPA No. 64 in 2004) (Companies Law) allows several types of corporate entities to be registered in Iraq (including the Kurdistan Region of Iraq).
For foreign investors looking to enter the Iraqi market, three main vehicles can be used:
 private limited liability company (LLC);

 branch office of a foreign entity; and

 representative office of a foreign entity.

There are also mixed and joint stock companies, but the above corporate structures are most appropriate for establishing a corporate presence in Iraq for foreign investors. The section below provides an overview of the main features and requirements for registration.

Limited Liability Company
According to the Companies Law, foreign investors have the right to establish or participate in Iraqi companies without any restriction, but with the approvals of Iraqi ministries/departments. For example, the establishment of an LLC in Federal Iraq that intends to engage in oil and gas services does require the approval of the Iraqi Ministry of Oil.
Some of the important characteristics to establishing an LLC and its formation under the Companies Law are explained below.
Memorandum of Association
The Memorandum of Association of an LLC is its governing document and should contain the following:
 name and form of the company, and its objectives;
 head office address in Iraq;
 name, address, occupation and nationality of the founder(s); and
 share capital.

Minimum Capital
The minimum capital of an LLC is IQD 1,000,000 (equivalent to approximately USD 850). The nominal value of each share must be one Iraqi Dinar. The Companies Law prohibits the issue of shares with a higher or lower value. The share capital must be fully paid when the LLC is registered. Cash contributions must be paid into an account with a bank authorised to operate in Iraq (there are several foreign banks that operate in Iraq such as Standard Chartered and Is Bank) and are frozen in the account, until documents are presented to the bank showing that the establishment formalities have been completed. Contributions in kind must be stated in the Memorandum of Association, and the value must be approved by all the founders. In certain sectors, the prescribed minimum capital could be higher than the minimum capital. Notably, in the oil sector, the minimum capital set by the Iraqi Ministry of Oil is IQD 2 Billion.
Shareholders
An LLC must not have more than 25 shareholders who may be a combination of legal entities and individuals. An LLC may be established by a single person (including legal person), there being no minimum requirement for the number of shareholders.
The share capital of an LLC is divided into indivisible shares of a uniform nominal value. Transfer of shares is permitted but subject to a pre-emption right in favour of the other shareholders.
Management
While an LLC cannot be managed by a Board of Directors, it is managed by a General Manager. There is no requirement for managers to be Iraqi nationals; however, the appointment of foreign nationals must be approved by the Iraqi Ministry of Interior (MOI).
The powers of the General Manager, as well as his salary and bonuses, are determined by the General Assembly. A General Manager’s authority includes the power to conduct all transactions and business relating to the performance of the company’s normal corporate activity. According to the Companies Law, and subject to the decision of the General Assembly, the manager of an LLC has the same powers and is subject to the same restrictions that apply to the Board of Directors of a joint stock company.
A manager of an LLC may be removed from his position by virtue of a decision of the authority that appointed him/her. The authority must give the manager a reason for such a decision.
Liability of Partners
The liability of the LLC partners towards third parties is limited by law to the extent of their investment in the capital of the LLC.
Registration Procedure
An investor wishing to set up a company in Federal Iraq must complete an application and submit it to the Companies’ Registrar in Baghdad.
The application must include the following information concerning the business entity proposed to be registered by the Companies’ Registrar at the Iraqi Ministry of Trade:
 name of the LLC;
 type of business activity;
 business address, phone number, facsimile number and email address;
 address of its offices in Iraq;
 ownership structure (wholly Iraqi owned, wholly or partially foreign owned);
 memorandum of Association
Certain documents must also be submitted with the application to register an LLC.
Timeline for Incorporating an LLC
The Companies’ Registrar must obtain the approval of the MOI before issuing a certificate of registration for an LLC that is owned by foreign parties. The timeline for such approval ranges between three to six months, and in some cases, it can even take longer.
Following approval from the MOI, a registration certificate is issued by the Companies’ Registrar. The LLC is then ready to operate its activities throughout Federal Iraq.
Branches and Representative Offices of Foreign Companies
Features
A foreign parent company may establish a branch office in Iraq, which acts as an extension of the parent company, provided the parent company has secured a contract from the Iraqi Government, or a contract with a prime contractor who is contracted with the Iraqi Government. A branch office may only conduct the commercial activities allowed by its parent company, and is also bound by the operations envisaged by the contract upon which it relies to establish its presence in Iraq.
In contrast, a representative office may only engage in business development and marketing activities, and thus, cannot engage in any commercial activity in Iraq. A representative office may be converted to a branch office if a government contract, or a contract with a prime contractor of the Iraqi Government, is secured.
Establishment Procedure
An application to register branch office or a representative office must include the following information concerning the foreign parent company:
 legal name;
 trade name;
 type of business activity;
 business address of its office in Federal Iraq;
 telephone, facsimile and electronic mail in Iraq, where available;
 to the extent applicable:
 the amount of its charter or authorised capital (specifying the currency);
 net worth at the end of the most recent financial period (indicating the date and specifying the currency); and
 the names and addresses of any owners holding 10% or more of its equity.
Certain documents must also accompany the registration application.
Timeline for Establishing a Branch Office or a Representative Office
The timeline for registering a branch office or a representative office from the date of submission of the necessary documents typically ranges between one to two months.

REGISTRATION OF A LEGAL BUSINESS PRESENCE IN THE KURDISTAN REGION OF IRAQ
The Kurdistan Region of Iraq applies the same Companies Law allowing for 100% foreign ownership, but has some procedural differences relating to registration. The most significant difference is the Companies Registrar in Erbil does not require a government contract in order to register a branch office. Furthermore, the timeline to incorporate an LLC or a branch office in the Kurdistan Region of Iraq is considerably shorter, ordinarily ranging between two to four weeks on average.

COMMERCIAL AGENCY 
Commercial agency in Iraq is primarily governed by the Organisation of Commercial Agency Law No. 51 of 2000 (Agency Law). The Agency Law deals with the appointment and registration of commercial agents, and contains provisions regulating information to be supplied by commercial agents to the Companies Registrar. Only Iraqi nationals are permitted to be commercial agents.

TV WATCH NOW >

  • The new British Ambassador to Iraq, Jon Wilks, discusses his hopes for the future of Iraq and strengthening UK – Iraq relations
    Watch Video >

  • Al-Burhan Centre, part of the Al-Burhan Group, hosts a dinner for the IBBC trade mission to Baghdad, 30th October 2017.
    Watch Video >

  • Baroness Nicholson gives a joint press statement on video with H.E. Dr Mahdi Al Alaq, Secretary General of the Council of Ministers as they visited the IBBC delegation in Baghdad.
    Watch Video >

Password Reset

Please enter your e-mail address. You will receive a new password via e-mail.