This article considers how US buyers in Iraqi share acquisitions should negotiate disclosure standards when the seller’s records are incomplete. An Iraqi seller may offer extensive warranties while producing only partial records of contracts, tax filings or shareholder decisions. The key question for the buyer is what legal protection remains when the disclosure file cannot establish the target’s actual position, and how the agreement should treat identified risks, unresolved gaps and matters genuinely verified by evidence.
There is no standalone acquisitions code in Iraq. The framework comes from the Companies Law No. 21 of 1997, which governs share transfers, corporate approvals and registration with the Companies Registration Directorate; the Iraqi Civil Code No. 40 of 1951 on consent, misrepresentation, interpretation and liability; the Income Tax Law No. 113 of 1982; the Labour Law No. 37 of 2015; and the Competition and Antitrust Law No. 14 of 2010, which may require review by the Competition and Antitrust Council.
Defining what counts as disclosure
The sale agreement should specify how a matter must be disclosed to qualify a warranty. A vague reference to information available at the company’s office leaves the parties arguing over what the buyer knew. The disclosure letter, supporting documents and relevant date should be identified, and a reliable copy of everything delivered should be preserved, ideally as an indexed data room archive.
The Civil Code’s principles on consent, interpretation and liability for misrepresentation remain relevant regardless of English or US-style drafting. In corporate transactions in Iraq, disclosure wording should also be coordinated with the target’s corporate records and the required transfer formalities. A contractual statement cannot replace a registration or approval that Iraqi law requires.
Categorising gaps by their practical consequence
Not every missing file matters equally. An absent contract copy may be recoverable from the counterparty, while an undocumented shareholder resolution may raise a real question about the validity of a past share issue or the manager’s authority. The buyer should ask whether each gap affects title to shares, an operating permit, a liability or the enforceability of an important contract.
The review should identify:
- Records held elsewhere that can be obtained before completion.
- Matters supported only by management explanations.
- Liabilities that can be quantified despite poor records.
- Rights whose existence or validity remains uncertain.
- Documents requiring formal correction through the proper process.
Management certificates help but are not conclusive proof. They should state the signatory’s knowledge and the enquiries actually made. Disclosure that a contract is missing does not mean the buyer accepted every liability hidden within it; the agreement should say what risk is assumed and what protection remains.
Official records as a cross-check
Some gaps can be filled from official sources. The Companies Registration Directorate holds the company’s registered capital, shareholders and manager; the tax authority can confirm filings and clearances; and the Real Estate Registration Directorate can confirm property ownership. Obtaining official extracts reduces reliance on seller statements and often reveals discrepancies early, when they can still be addressed through price or conditions.
Matching warranties and remedies to the evidence
Knowledge qualifications should be defined, including whose knowledge counts and what enquiries must be made. The buyer should also understand how its own knowledge affects later claims under the agreement and Iraqi law, since a buyer that knew of a problem may find a claim harder to pursue.
Specific indemnities, escrow or retentions may address identified exposures. Their value depends on wording, claim procedures and the seller’s ability to pay, which is often limited where sellers are individuals who will take proceeds abroad. A review of commercial contracts in Iraq should connect liability allocation with enforceable remedies rather than relying on a long warranty schedule alone.
Using completion conditions for matters that cannot wait
Some defects should be cured before shares transfer, such as missing corporate approvals, outstanding security over assets or errors in the share register. The evidence of satisfaction and the party entitled to confirm it should be identified.
Minutes must not be backdated or transactions reconstructed inaccurately. Where a lawful corrective resolution is possible, its actual date and effect should be recorded. An indemnity can allocate financial consequences but cannot legalise an unlicensed activity or bind a regulator or creditor.
Preserving a disclosure record for future claims
At completion, the final disclosure file should be reconciled with the signed agreement and outstanding actions, and the buyer should maintain access to records needed for tax, employee and contractual matters. Claims periods should be calendared and records kept in a form that can be translated and presented in Iraqi proceedings or arbitration if needed.
Conclusion & how Etihad Law Firm can help
Incomplete records are common in Iraqi targets, and the solution is to categorise gaps carefully and match each to verification, allocation or a completion condition.
As Iraq mergers and acquisitions lawyers for American companies, Etihad Law Firm conducts due diligence using official Iraqi records, drafts disclosure, warranty and indemnity provisions, and manages corrective steps and registration, helping US buyers understand which risks are evidenced, which are allocated and which must be resolved before completion.