With increased international interest in doing business in Iraq, it is becoming more of a necessity to set up offices or subsidiary companies within Iraq in order to pursue its vast opportunities. The following is a summary guide of the types of companies that can be set up in Iraq. The advice of local Iraqi corporate lawyers will be required before registering a company in Iraq.
The Regulatory Framework
The regulatory framework for setting up and registering companies in Iraq has been in effect in its current form since 2004. It provides the framework for foreign companies to establish themselves and to conduct commercial activities in Iraq. Continued developments in Iraq’s legal trade and investment laws provide certain exemptions and incentives for those investing in Iraq.
Which company option?
The Iraqi Companies Law No. 21 of 1997, as amended by CPA Order No. 64 of 2004 (the “Companies Law”) provides a range of incorporation options that are available for individuals or entities looking to do business in Iraq, which are:
- Sole Owner Company
- Simple Company - Partnership of 2 to 5 persons
- Joint Liability Company - Partnership of 2 to 25 persons
- Limited Liability Company - 1 to 25 shareholders
- Joint Stock Company - 5 to 100 shareholders
(Further information on the partners’ / shareholders’ liabilities and minimum share capital is detailed here - click to download)
Government Co-ownership
Joint Stock companies and limited liability companies can be formed with governmental persons having a minimum of 25% share ownership.
Foreign Companies entering the Iraqi market
Whilst the Companies Law provides several incorporation options for foreign companies seeking to do business in Iraq, a foreign company may choose to set up a foreign company branch office under CPA Order number 39 of 2003, which allows foreign companies to form and operate through a branch office. Companies must consider their options from a liability perspective. Setting up a branch office is one of the quickest ways of setting up an office for a foreign company, however foreign companies may wish to ring fence their liability in Iraq with the establishment of a limited liability company or a joint stock company. Most companies will prefer to set up a limited liability company to avoid the added complications of a public offer.
Many of the foreign companies currently operating in Iraq are set up as branch offices, however, new regulations have come into force recently that impose a requirement that the company establishing the branch office has a contract with a term of at least six months with the Government of Iraq or a governmental entity in Iraq. Therefore new entrants to Iraq without any such governmental contract are increasingly taking the incorporation route to establish themselves in Iraq.
For a review of the complete article, and details on registration procedures for companies and branch offices in Iraq, please click hereEstablishing your company in Iraq to download our guide to .
