Establishing a factory in Iraq begins with selection of the right corporate vehicle and progresses through incorporation, registration, and the chain of approvals that authorise manufacturing activity. Companies Law No. 21 of 1997 (as amended) provides the principal framework for corporate establishment, with sector-specific overlays for industrial activity administered through the Ministry of Industry and Minerals. Investors who treat establishment as a substantive workstream, rather than an administrative checkbox before the real work begins, produce structures that support the underlying business better than reactive arrangements assembled later.
Corporate Vehicle Selection
Iraqi law offers several corporate vehicles suitable for manufacturing operations:
- Limited Liability Company (LLC), the dominant choice for most small and mid-sized manufacturing operations
- Joint Stock Company (JSC), used for larger projects, public offerings, and ventures with multiple institutional shareholders
- Single-Member Limited Liability Company, available since the 2019 amendments, useful for wholly-owned subsidiaries
- Branch of a foreign company, registered with the Ministry of Trade and limited to the parent’s activities
- Mixed-sector company, where the State or a State entity participates as shareholder
The LLC remains the dominant vehicle for foreign-invested manufacturing because of its operational flexibility and limited liability profile.
Capital Requirements
The 2019 amendments to the Companies Law substantially reduced minimum capital thresholds for most company types. The nominal floor is modest, but sector-specific licensing particularly industrial licensing from the Ministry of Industry and Minerals considers realistic capitalisation of the proposed activity. Undercapitalised structures attract delay in licensing and scrutiny in operations. Investors should capitalise structures realistically rather than at the legal minimum, particularly for substantive industrial activity.
Foreign Ownership
Iraqi law permits 100% foreign ownership of LLCs and JSCs engaged in most manufacturing activities. This contrasts with several regional jurisdictions that require local participation, and is one of the more attractive features of the Iraqi framework for foreign manufacturers. Sectoral restrictions apply in defined categories including natural resources and certain sensitive industries, but mainstream industrial activity is open to full foreign ownership.
Registration Process
Incorporation follows a defined sequence:
- Name reservation with the Companies Registrar
- Drafting and notarisation of the Memorandum and Articles of Association
- Deposit of paid-in capital with an Iraqi bank
- Submission of incorporation documents to the Companies Registrar at the Ministry of Trade
- Issuance of the Certificate of Incorporation
- Registration with the General Commission for Taxes (Tax ID)
- Registration with social security and labour authorities
Realistic timelines range from four to twelve weeks depending on the corporate form and the completeness of documentation. Foreign-language documents require certified translation and legalisation.
Post-Incorporation Steps
Incorporation is the beginning rather than the end. Post-incorporation steps for a manufacturing operation include opening operational bank accounts, obtaining the industrial licence from the Ministry of Industry and Minerals, registering for indirect taxes where applicable, registering employees with social security, securing operational premises through lease or land allocation, and applying for sector-specific approvals before commencing production. The interval between incorporation and operational start is often longer than the incorporation itself.
Documentation Requirements
Standard documentation for factory establishment includes certified copies of shareholders’ identification or constitutional documents, evidence of legal existence for corporate shareholders, board resolutions authorising the investment, powers of attorney for representatives, lease or ownership evidence for the registered office, and proof of capital deposit. Foreign documents require legalisation through the Iraqi consular network and certified Arabic translation. The documentary portfolio should be assembled before submission rather than reactively as the Companies Registrar requests items.
How We Can Help
Etihad advises on factory establishment in Iraq, selection of corporate vehicle, drafting of constitutional documents, navigation of the Companies Registrar, foreign ownership structuring, and coordination of post-incorporation steps. We work with foreign investors entering the Iraqi manufacturing market and with established operators expanding into new corporate structures.