This article considers the principal legal issues in transferring an operating business through an asset acquisition in Federal Iraq. A buyer may select the assets it wishes to acquire, but the transaction must still establish how those assets, customer arrangements, permissions and employees will support operations after completion. A signed purchase agreement alone may not deliver every element of that business.
The relevant framework includes the Companies Law No. 21 of 1997, as amended; the Iraqi Civil Code No. 40 of 1951; the Real Estate Registration Law No. 43 of 1971; the Labour Law No. 37 of 2015; the Workers Retirement and Social Security Law No. 18 of 2023; and the Competition and Antitrust Law No. 14 of 2010. The Income Tax Law No. 113 of 1982, as amended, and sector rules also require consideration. The transfer route must be examined separately for each category of asset and right.
Defining the assets and liabilities being transferred
The agreement should identify the assets and obligations being acquired in schedules that can be checked against the business:
- Describe assets individually where necessary. Equipment descriptions, inventory records, property references and identified intellectual property rights establish what the buyer expects to receive. General wording should not replace the detail needed to verify title or delivery.
- Separate owned assets from third-party property. Leased equipment, customer-supplied items and assets owned by affiliates may be used by the business without belonging to the seller. Determine what consent, replacement agreement or other arrangement is needed for continued use.
- Allocate liabilities expressly. Identify the obligations assumed by the buyer and those retained by the seller. This allocation operates between the parties subject to law and does not necessarily prevent employees, creditors or authorities from asserting their own rights.
Corporate transaction advice in Iraq should test the proposed acquisition perimeter against those rights. The buyer should understand which operating resources will actually be available after completion.
Confirming title and transfer formalities
The seller’s ownership and authority should be verified before payment. Security interests, attachments, leases and restrictions may prevent the buyer from obtaining the intended right. Releases should identify the assets covered and be coordinated with the relevant registration or delivery steps.
Real estate requires particular care under the registration framework. The buyer should verify the registered owner, property description, permitted use and any limits on its eligibility to acquire the interest. Real estate legal advice in Iraq should establish the required formalities and the point at which the property right becomes effective, rather than relying solely on the asset purchase agreement.
Examining licences separately from physical assets
The sale of machinery or premises does not establish that an operational licence can be transferred. The review should identify the licence holder, issuing authority, activity and conditions. The buyer may need consent, an amended permission or a new licence, depending on the applicable regime.
The agreement should state what happens if a critical permission is unavailable at the intended completion date. A temporary operating arrangement needs its own legal analysis and should not place the buyer in the position of using another entity’s licence without authority. The commercial timetable should follow the lawful route to operation.
Transferring contracts and continuing performance
Customer and supplier contracts should be reviewed for assignment restrictions, consent requirements and the distinction between transferring a receivable and transferring performance obligations. A counterparty’s agreement may be needed to replace the seller with the buyer or release the seller from future duties.
The transfer documentation should address deposits, prepaid amounts, warranties, open orders and claims arising before completion. The parties should also allocate responsibility for work that spans the transfer date. Without that allocation, customers may receive inconsistent instructions about who will complete work and who must resolve defects.
Protecting employee rights through the transfer
The federal Labour Law contains continuity rules for specified transfers of an enterprise. The new employer can become responsible for existing employment obligations, and the former employer can remain jointly liable for relevant obligations arising before the transfer. The parties should not assume that selecting an asset sale eliminates workforce liabilities.
The employment review should establish the affected personnel, service history, unpaid rights and social security position. Employment and labour support in Iraq should be involved before issuing new contracts, obtaining resignations or changing payroll. The transaction documents should allocate costs without presenting private arrangements as a waiver of statutory employee rights.
Coordinating completion and operational handover
The closing plan should coordinate legal transfer with the practical ability to use the acquired business:
- Match payment to transfer evidence. Coordinate signed instruments and required formalities with equipment inspection, stock counts and delivery records. Where an asset will transfer later, define custody, insurance, permitted use and responsibility for intervening loss.
- Support the financial allocation. Review tax treatment and the allocation of consideration with advisers, using records that explain the agreed values. The contractual price schedule should be consistent with the assets and obligations actually transferred.
- Complete the operational handover. Obtain manuals, access credentials, maintenance histories and relevant customer records through lawful access arrangements. Confirm that these resources can be used together and identify any continuing support needed from the seller.
Illustrative example. The buyer acquires a service business’s equipment and stock, but its main software account is held by an affiliate and the maintenance records remain with the seller. Physical delivery alone may not allow the buyer to operate the equipment effectively. Diligence should identify the software permission and record access required for the intended business. The transfer documents should then address the lawful route to continued use, responsibility for obtaining it and any agreed transition support. If that access is essential, its availability should be considered when setting the conditions for payment and completion.
Conclusion & how Etihad Law Firm can help
An asset acquisition succeeds when the buyer obtains the specific rights and operational resources required for the business. Title, permissions, contracts and workforce obligations each need their own transfer analysis and completion evidence.
Etihad Law Firm assists with Iraqi asset acquisitions, diligence and transfer documentation. We help coordinate the required corporate approvals and operational arrangements so that the purchase agreement and the actual handover describe the same business.