Iraq has indeed become one of the top choices of global investors and companies to invest in and launch their business ventures. One such reason is the country’s improving economic growth and standing. If you are planning to register an LLC in Iraq, we’d say it’s a great idea. However, as a law firm in Iraq with decades of experience, we’d advise you to read this guide to registering an LLC in Iraq first before you begin. We say this because the laws for registering and launching a business in modern-day Iraq are not as simple as they used to be.

The Changing Dynamics

Published in Gazette 4554, the Iraqi Companies Law No 21 of 1997 was amended with Iraqi Law 17 of 2019. It came into effect on 9th September 2019.

Various changes were made in the Iraqi Companies Law. These include the following:

• The first amendment was the introduction of the holding company.
• The law stated that a legal or foreign natural individual could acquire membership in his capacity as the founder or a shareholder of a limited company or joint-stock only if the contribution percentage of the Iraqi person is more than 51% (fifty-one percent) of the invested capital. Also, in addition to the managing director, the company should appoint a deputy managing director for practicing the powers of the managing director in case of his absence.
• The license of the holding company shall be suspended or canceled if they are unable to establish their activities in Iraq within two years from the date of registration.
• Moreover, if the company does not issue the liquidation recommendation in conformance with Article 147, and two months (sixty days) have lapsed, then by law, the company liquidation decision will be issued by the registrar.
• Company shall be penalized for carrying out business activities in Iraq if it doesn’t have a registration certificate. The penalties have increased, including a minimum of three months imprisonment and fines of not more than five million Iraqi Dinars.
• Also, by law, the government will prioritize Iraqi companies for governmental contracts if they have foreign companies as partners.

LLC Registration—Understanding the Essential Steps

Under Iraqi law, an LLC (Limited Liability Company) can be established between two and twenty-five shareholders. However, under the Companies Law, there is an exception to the Iraqi general rule. It allows a single person, judicial or natural, to form a Limited Liability Company.

Furthermore, when registering an LLC in Iraq, foreign investors must have MoA (Memorandum of Association). This works as a foundation document between the shareholders. However, if one founder creates the LLC, you must prepare a statement with the same requirements as the Memorandum of Association as per Commercial law.

As per the Companies Law, the items to be included in the MoA are:

• The company’s proposed name, along with the company form
• The company’s proposed location (it should be in Iraq)
• The proposed company’s purpose of establishing in Iraq and the nature of activities it will engage in
• The capital of the proposed company, such as the number of shares and the value of the shares
• Founder names with their professions, nationalities, permanent addresses, percentage of capital owned

The Companies Law sets forth the minimum share capital requirements. These requirements must be paid in full with shares in equal, indivisible, and nominal values of one Iraqi dinar. Furthermore, when registering your LLC in Iraq, you must:

1. Reserve your company’s name with the BCoC (Baghdad Chamber of Commerce) and Federation of Chambers of Commerce. You need to make sure that the name is unique to get approval.
2. Next, deposit your share capital in the proposed LLC. The deposit must be in an Iraqi bank. Once you deposit the amount, you will receive a deposit receipt letter. This letter should then be submitted to the Ministry of Trade in Iraq. The Ministry of Trade will provide you with a deposit letter.
3. Now, from the General Commission for Taxes, you will have to apply for and receive tax clearance certificates. These are no objection letters addressed to the Registrar of Companies.
4. Next, make sure to submit the following documents to the Registrar of Companies: the MoA duly signed by the founders with names and objectives of the company, business address and contact details, and complete details of the shareholders and directors along with the ownership structure.
5. Moreover, you must also furnish:

• Legalized and notarized passport copies of the directors and shareholders
• Notarized and legalized registration certificate copies of the corporate shareholders
• A bank statement that certifies the deposit of the share capital

In a situation where the founder of the new business entity in Iraq is a company, the application should include the following information:

• The resolution of the board of directors or shareholders of the founding company planning to launch the LLC in Iraq
• Copy of the founder’s constitutional documents
• The lease agreement and title deed copy of the proposed LLC head office in Iraq
• The letter issued by the Iraqi bank shows that the share capital has been received as well as deposited in the bank.
• Tax clearance letter in respect to the founder
• Power of attorney issued by the founder appointing a local lawyer to undertake the procedure of setting up the LLC in Iraq

Please note that in some situations, steps may vary depending on legal complexities or business structure. But don’t worry, our lawyers are here to help. We can provide you with quality assistance unique to your situation, ensuring that registering an LLC in Iraq for you is simple, smooth, and stress-free.

Article written by :

Mustafa Muayad
mustafa.muayad@muayadandassociates.com

Founder & Managing Partner
Muayad & Associates