Corporate governance for ISX-listed companies operates within a framework more demanding than that applicable to private companies. The general framework under the Companies Law No. 21 of 1997 (as amended) is supplemented by additional standards administered by the Iraq Securities Commission (ISC) and the Iraq Stock Exchange (ISX), reflecting the broader stakeholder base of public companies and the importance of investor confidence in supporting the capital markets.
Sources of Governance Requirements
ISX-listed companies face governance requirements from multiple sources, including the Companies Law providing the general corporate governance framework for public joint stock companies, ISC regulations and instructions addressing matters specific to listed companies, ISX listing rules imposing market-specific governance expectations, sector-specific governance requirements for issuers in regulated industries, Where applicable, international governance standards adopted by sophisticated issuers, and the issuer’s own articles of association and internal governance documents. The combination produces a layered framework requiring careful mapping for the specific issuer.
Board Composition
Listed company boards face specific composition requirements:
- Minimum board size appropriate to the company’s scale and complexity.
- Mix of executive and non-executive directors supporting effective oversight.
- Independent directors providing challenge to executive proposals and supporting investor confidence.
- Specific qualifications including financial expertise on audit committees.
- Compliance with limits on multiple directorships.
- Diversity considerations where applicable.
- Disclosure of board composition and director credentials to support investor evaluation.
Effective composition supports both compliance and substantive board effectiveness.
Board Committees
Listed companies typically operate board committees supporting specialised attention to specific governance areas, including audit committee, financial reporting, internal control, external audit, and where applicable internal audit oversight, remuneration committee, executive compensation policy and specific decisions, nomination committee, board succession and senior management appointments, risk committee, risk management oversight for larger or regulated companies, specific committees for sector-relevant matters in particular industries, and composition and procedures of committees specified in their charters. Committees support deeper attention to specialised matters while preserving overall board accountability.
Audit Committee
The audit committee deserves particular attention because of its central role in financial reporting integrity. Audit committee responsibilities typically include:
- Oversight of the external audit including auditor selection, independence, and effectiveness.
- Review of financial statements and supporting disclosures before approval.
- Oversight of internal control over financial reporting.
- Where applicable, oversight of the internal audit function.
- Review of significant accounting policies and estimates.
- Handling of complaints about financial reporting and accounting matters.
- Engagement with the external auditor including private sessions without management.
Audit committee composition typically includes financial expertise and independence appropriate to the role.
Executive Leadership
The relationship between board and executive leadership for listed companies typically engages, including clear distinction between board and executive roles, often including separation of chairman and chief executive functions, defined limits of authority for executive decisions versus board reservation, executive compensation arrangements aligned with company performance and shareholder interests, performance management and succession planning for executive roles, conflict of interest procedures addressing executive personal interests, and transparent reporting from executive to board supporting effective oversight. Public-company executive arrangements typically face elevated scrutiny compared with private companies.
Risk Management and Internal Control
Listed companies typically operate substantial risk management and internal control frameworks. Key elements include identification of significant risks affecting the company, control systems designed to manage those risks, monitoring of control effectiveness, internal audit functions providing independent verification, reporting of risk and control matters to the board and where applicable to the audit committee, and where required by the regulatory framework, disclosure of risk management arrangements to investors.
Stakeholder Engagement
Public companies engage with broader stakeholder bases than private companies. Effective stakeholder engagement involves, including investor relations capability supporting communication with the investment community, annual general assembly and continuing shareholder communications, engagement with regulators on policy and specific matters, media relations supporting accurate public information about the company, Where applicable, engagement with sector-specific stakeholders, and sustainability and ESG considerations as they affect stakeholder relationships. Stakeholder engagement is a continuing activity rather than an episodic response to specific events.
How We Can Help
Etihad Law Firm advises ISX-listed companies on corporate governance matters, governance framework design, board and committee charters, compliance with Companies Law, ISC regulations, and ISX listing rules, response to governance issues, and the integration of governance with broader strategic and operational considerations.