Business in Iraq

Business in Iraq


Introduction:

When you want to establish a business in Iraq. First of all you have to decide. Where the seat of the company will be? and what business nature is? what are the services that you intend to provide through your company? Answers to these questions have a direct impact on the company set up.

Geographic Territory:

If you study to register a corporate in Iraq, you have to know that the Republic of Iraq consists of two regions. They are the central\ Federal Iraq. which it is usually referred to as the Government of Iraq (GOI). And the Kurdistan Region. which it is referred to as Kurdistan Regional Government (KRG). Although it looks like the laws and legislation applied in the GOI are also applicable in the KRG. But actually there are differences in practice and application of those laws and legislations what related to corporate in Iraq.

So if you want to establish your own company in Iraq. And start your own business. You must first decide as we mentioned in the beginning. Where do you intend to establish that corporate in Iraq? In Central Iraq or in the Kurdistan Region? Because establishing a business in Iraq in one territory, will not entitle you do your business in the other. Unless you register and activate the same company in the other territory by following certain legal procedures. And that of course brings more financial and legal burdens upon you.

However, it is good to know that each territory has some significance in nature and business opportunities. For example; if you are thinking of a maritime transport and operations. Then you must go to Basrah. But if you are an oil and gas company. You must think twice whether you want to establish your company in central Iraq or in the Region. As both territories are oil rich. But there are a lot of differences in practice and application of laws and regulations between the two territories. Procedures in the KRG seem to be much easier and smoother than the GOI.

Registration Offices

There are two Company Registrar’s offices in the Republic of Iraq. One central Registrar’s office located in Baghdad. Which is applicants from all governorates and cities of the GOI approach to register and\ or update their companies and\ or to branch offices. On the contrary, the KRG has three directorates that are subordinate to the Directorate General of Companies’ Registration. Which it is the umbrella of those three offices located in the main cities of Erbil, capital of the Region, Sulaimaniyah, and Dahuk.

These three offices are arms of the Registrar, and are very helpful to the business. Unlike the GOI, if you want to establish your own company, or a branch office, or you are required to update your company’s or branch office’s status, you go directly to the competent office with you which are registered or want to register. For example, if you want to work in Erbil, you approach Erbil’s Directorate of Companies’ Registration. And if you want to work in Sulaimaniyah or in Dahuk, you go directly to the office located in that city. That office will send copies of your representations and documents to the Registrar. So you do all the paperwork in your city and the competent office takes care the rest. Another important point is that you should consider the registration cost.

The cost for establishing a company or a branch office in the KRG is much lower (almost 30%) than that in the GOI.

Relationship between the company’s seat and business nature:

In the GOI, the type of services and business nature of the company determine its seat. For example, if the company’s business nature is contracting and wants to operate in an area that’s under the control of the GOI. Then that the company must be established and\ or registered in Baghdad.

But if your business in Iraq usually does business with Turkey or European countries for example. Then it is better to register it with the KRG. Because of the short distance between the Region and Turkey and then to Europe. Of course there are reasons that one must take into account in addition to what has been mentioned. Such as such as Visa and Residence requirements, time and cost. Answers to all those questions give you a crystal clear idea of who to start your business and enable you to make the right decision and manage any potential risks.

To get more information or register a company in Iraq Contact KY law firm.

How to Register a Company in Iraq

Requirements to Register a Company in Iraq


Requirements to register a company in Iraq

Requirements to register a company in Iraq differ according to the company’s business nature and its intended seat. The Republic of Iraq consists of two regions. They are the central\ Federal Iraq which is usually referred to as the Government of Iraq (GOI) and the Kurdistan Region which is referred to as Kurdistan Regional Government (KRG).

Although it looks like the laws and legislation are apply in the GOI are also applicable in the KRG. But actually there are differences in practice and application of those laws and legislation. So if you want to establish your own company or start your own business, you must first decide as we mentioned in the beginning, where do you intend to establish that company, in Central Iraq or in the Kurdistan Region. Because establishing a company in one territory, will not entitle you do your business in the other unless you register and activate the same company in the other territory by following certain legal procedures, and that of course brings more financial and legal burdens upon you.

In this blog, however, we are talking about registering a domestic company in Central Iraq. Although there are differences in practice and application between that and the KRG.

Requirements to Register a Company in Iraq

Requirements to Register a Business in Iraq:
  1. Business name.
  2. Original Articles of Incorporation\ Memorandum of Association and Shareholders’ Agreement.
  3. Shareholders’ IDs, passports, residency, etc.
  4. POAs from shareholders to the local counsel who will carry the registration process.
  5. Physical office and original lease.
  6. Nominee Managing Director’s IDs, passports, residency, etc.
  7. Bank statement confirming the deposit of minimum capital.
  8. Nominee statutory lawyer’  agreement.
  9. Candidate statutory accountant’s agreement,
  10.  Nominee statutory engineer’s agreement (only for construction companies)
  11. Sectoral entity’s consent letter (only in special cases and for special companies), and
  12. Competent security authority’s consent (only for expat shareholders or Managing Director).

 

Details of Requirements to Register a Company in Iraq
Business name

The Iraqi law provides that a business\ trade name must be Arabic. But cannot be in any foreign language. Due to such name is not a property of a business entity that’s established and registered abroad. This provision doesn’t apply to the KRG where even a foreign name owned by a local national, entity or company is accepted.

 

Original Articles of Incorporation\ Memorandum of Association and Shareholders’ Agreement

Shareholders must have a written agreement showing the company’s name, capital, business nature, and shareholders’ names, nationalities and every shareholder’s percentage to the capital. The Articles of Incorporation\ Memorandum of Association of an LLC is its governing document and should set out the following: Name and form of the company, and its purpose; Main office address in Iraq; Name and nationality of the shareholders, and Shared capital.

POAs from shareholders to the local counsel who will carry the registration process,

First of all and before the application filled, and as an requirement of register a company, each and every shareholder must authorize the legal counsel who shall take care of the registration process by a legal POA. The POA could be via a local notary or an Iraqi embassy or consulate at which the shareholder resides.

Physical office and original lease,

Excising a physical office requirements to register a company in Iraq. Every company must have a physical office that shall be its registered seat or main office. The applicant/shareholders have to present privately owned or leased property office. The Inspection department at the Registrar’s office shall begin a due diligence process and verify the existence of the office and the accuracy of address.

Bank statement confirming the deposit of minimum capital,

The minimum capital of an LLC is IQD1,000,000. Capital is one of requirements to register a company in Iraq. The Iraqi Company Law prohibits the issue of shares with a higher or lower value. Shareholders must pay the shared capital. Further the amount deposit into an account with a bank authorized to operate in Iraq. Also shall remain in deposit until registration procedures will be finished. And documents showing that the establishment formalities have been completed are presented to the bank with which the capital is deposited. Contributions in kind are also permissible. But must be recorded in the memorandum of association. Certainly the shareholders must approve the value.

Statuary lawyer, accountant, and\ or engineer

Every company must have a statutory legal advisor and an accountant. In the same vein for construction companies, If the company’s business is construction or engineering the applicant has to present a statutory engineer.

 

Sectoral entity’s consent letter (only in special cases and for special companies)

Some companies’ business nature require approval of competent sectoral authority or authorities. Consequently if a company’s business is transportation. As a result the shareholders should get permit from the Ministry of Transportation. Telecommunications company needs approval of the Ministry of Telecommunications. Private security companies need approval of the Ministry of Interior and Security police, and so on.

 Competent security authority’s consent (only for expat shareholders or Managing Director):

If the managing director of a company is a foreign national therefore he\ she must obtain the security police’s consent and approval to work in Iraq. Likewise to the shareholders.But it can be easier if the managing director is a local national.

To get more information or register a company Contact KY law firm.

Lead Counselors is a Fully Legal Services Law Firm in Iraq . We represent clients throughout Iraq including Kurdistan Region in litigation, business and trademark registration, personal injury matters and other legal issues.

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