This article examines key legal checks for German investors acquiring Iraqi industrial operators, focusing on whether the target’s licences actually cover the production it carries out and whether its workforce can sustain that production lawfully. A valid company registration and a busy factory floor do not, on their own, answer those questions.
There is no single acquisitions code in Iraq. The framework is drawn from the Companies Law No. 21 of 1997; the Iraqi Civil Code No. 40 of 1951; the Industrial Investment Law for the Private and Mixed Sectors No. 20 of 1998 and the Investment Law No. 13 of 2006; the Protection and Improvement of the Environment Law No. 27 of 2009; the Labour Law No. 37 of 2015; the Retirement and Social Security for Workers Law No. 18 of 2023; and the Competition and Antitrust Law No. 14 of 2010. Authorities that may be involved include the Companies Registration Directorate, the General Directorate for Industrial Development, the National Investment Commission or a provincial commission, and the Ministry of Environment.
Corporate existence versus operating permission
The Companies Law establishes the corporate framework, but industrial, environmental and other approvals govern particular activities. Registration of a company does not replace a licence to establish or operate an industrial project. The buyer should review the industrial licence actually issued, any later approvals for expansion and any investment licence with its associated exemptions.
The licensed entity, location, product range and capacity should be checked against current production. New machinery, additional shifts or a different manufacturing process may require fresh approval even if the company name is unchanged. It is also important to establish which authority issued each approval and whether the site falls under federal or Kurdistan Region procedures.
Comparing the legal file with production evidence
Copies of certificates are not enough. Production logs, utility consumption, maintenance records and sales volumes show whether the operation described in the licence matches the business being bought. Where they diverge, the issue should be investigated before a seller’s general warranty that all permits are held is accepted.
The review should connect installed machinery and actual throughput with approved activities, environmental conditions with emissions and waste arrangements, land or lease rights with the factory’s physical footprint, and import and customs records with equipment in the asset register. Inspection findings should be matched against corrective actions and any open correspondence with authorities. A licence application or preliminary approval should never be presented as equivalent to full operating permission.
Workforce capability as a legal dependency
Workforce skills determine whether production can continue, but training certificates do not replace legal compliance. The buyer should review employment contracts, occupational health and safety arrangements under the Labour Law, and any role-specific qualifications. Foreign specialists require separate residence and work authorisation analysis.
Outstanding social security contributions, unpaid entitlements and pending labour disputes should be identified, as they remain with the employing company after a share purchase. The buyer should also find out whether critical know-how sits with employees, an external contractor or the seller’s group. A share acquisition keeps the employer in place, but it does not ensure that key staff will stay or that support agreements will survive a change of control clause.
Transaction structure and approvals
A share purchase and an asset purchase produce different consent, registration and transfer consequences. In a share deal, the transfer must be recorded with the Companies Registration Directorate and may require shareholder approval or pre-emption waivers. In an asset deal, licences may not follow individual machines into a new company, and employees and contracts must be dealt with separately.
Merger control should be assessed early. The Competition and Antitrust Council has become more active, and its published procedural guidance has signalled closer attention to transactions affecting Iraqi markets, with review periods and penalties for non-compliance. Whether a filing is needed depends on the parties’ positions and the effect of the transaction, and should be considered before the completion date is fixed. Existing financing should also be checked for restrictions on a change of ownership or the disposal of machinery.
Turning findings into completion conditions
Material gaps should be addressed through conditions precedent, specific corrective obligations or a revised price or structure. Warranties and indemnities allocate risk between buyer and seller, but they do not legalise unauthorised production or bind a regulator. If remedial approval is uncertain, the valuation should not treat future capacity as already secured, and escrow or deferred consideration may be appropriate.
Building integration around lawful capacity
The completion file should record permitted output, open inspections and responsibility for essential staff and technical support. Any expansion after completion should follow its own approval process, and the integration plan should allow time for that.
Land, utilities and customs history
Industrial sites in Iraq are often located on state land allocated for industrial use, under leases or allocations with their own conditions on use, transfer and duration. The buyer should check whether the land right survives a change of control or must be transferred with approval, and whether rent and other obligations are current. Utility connections and allocations can also be personal to the existing operator. Finally, machinery imported with customs exemptions under an investment or industrial licence may be subject to restrictions on transfer, and duties may become payable if exempted equipment is sold or used outside the approved project. These points can materially affect the value of an asset deal.
Conclusion & how Etihad Law Firm can help
Industrial acquisitions in Iraq are workable, but value depends on legal operating capacity rather than physical capacity alone. As Iraq mergers and acquisitions lawyers for German companies, Etihad Law Firm conducts licensing, environmental and employment due diligence, advises on competition and registration steps, and drafts transaction documents that convert findings into practical protection, so that the business acquired can lawfully deliver the production behind the investment.