Corporate delegation of authority in an Iraqi company may be reflected in several documents: a management appointment, a board or shareholder resolution, a power of attorney and a bank mandate. Problems arise when these documents authorise different persons, impose different limits or remain in circulation after the underlying authority changes. The legal analysis must identify how each document derives its effect.
The Companies Law No. 21 of 1997, as amended, governs the allocation of corporate powers in Federal Iraq. The Civil Code No. 40 of 1951 governs relevant agency relationships. Together, they require attention both to the company’s internal decision and to the authority presented to a third party.
The source of the power
The first question is which company body is competent to approve the act. The statutory powers of a joint-stock company’s board should be distinguished from those of the general assembly and managing director. In other company forms, the appointment and powers of the managing director must be examined through the applicable general assembly or owner process.
A person cannot create authority merely by describing themselves as a director or authorised representative. The appointment, constitution and relevant resolutions should support the capacity claimed. The inquiry is particularly important where an overseas group officer signs documents for an Iraqi subsidiary.
The approval of the commercial transaction and the delegation of power to execute it may also be separate steps. A resolution approving a loan should identify who may sign and whether that authority extends to security, guarantees, amendments and ancillary documents.
The power of attorney
A power of attorney should identify the principal, the representative and the acts covered. The scope must be read against the underlying corporate authority and the Civil Code’s agency rules. General wording may be insufficient where the proposed act requires specific authority or particular formalities.
Borrowing, granting security, transferring assets, settling disputes and appointing substitutes can raise different questions. The company should avoid treating authority for routine administration as necessarily covering every exceptional transaction. Where subdelegation is intended, its availability and limits should be considered expressly.
Etihad’s corporate services can support the preparation of powers of attorney that correspond to valid company decisions and the intended transaction. Documents issued abroad may also require translation and authentication for use before Iraqi authorities or institutions.
Bank mandates as a separate operating arrangement
A bank mandate establishes the bank’s recognised instructions for operating the account. It should be consistent with the company’s corporate powers, but it does not automatically authorise every underlying commercial commitment. A signatory permitted to make payments may still need additional corporate approval before entering into a major loan or guarantee.
The company should identify whether the bank recognises individual or joint signatures, transaction limits and electronic approval roles. These arrangements should be updated when management or delegated authority changes. An internal policy amendment should not be assumed to have changed the bank’s records without completion of the bank’s process.
Conversely, the fact that a bank has accepted a signatory does not conclusively resolve a dispute about whether the company’s internal approval requirements were satisfied. The two records should be reviewed together.
Internal limits and third-party reliance
A delegation matrix may set spending limits or require parent approval, while the external power of attorney appears broader. That inconsistency creates risk for both the company and the representative. The legal effect of an act exceeding internal instructions depends on the authority documents, applicable law and circumstances of the third party’s dealing.
It is therefore unsafe to assume either that every internal breach invalidates the transaction or that every signed document binds the company regardless of authority. The company’s position should be assessed on the specific record, including what the third party knew and what formal requirements applied.
The practical response is to align the documents before commitments are made. Material restrictions should be reflected in the relevant authority instruments where appropriate, and counterparties should receive an accurate explanation of any conditions affecting execution.
Duration and changes in personnel
Authority should be reviewed for expiry, revocation and the effect of changes in the relevant officeholder or principal. The departure of the person who originally signed a corporate power of attorney does not answer every question about its continuing validity. The company, the officeholder and the representative are distinct elements of the arrangement.
Where authority is withdrawn, the company should identify who needs to be notified and what evidence of notice should be retained. Banks, counterparties and government bodies may each require a separate update. Retaining an old original or electronic token can also create practical risks even after the internal decision has been taken.
A coordinated authority record
An authority review should connect:
- The constitution and current management appointment.
- The resolution approving the transaction or delegation.
- The power of attorney and any specific execution conditions.
- The bank mandate or recipient’s recognised authority record.
- Revocations, expiry dates and evidence of notifications.
The review should also identify commitments signed during any gap or overlap. Those commitments may require individual legal assessment; issuing a new power of attorney should not automatically be described as curing every earlier defect.
Etihad Law Firm’s banking and finance practice can coordinate the mandate and financing aspects with corporate counsel. Consistent authority documents help the company act efficiently while giving third parties a reliable basis for accepting its instructions.