Capital Increases of Corproates

Capital Increases Under Iraqi Companies Law No. 21 of 1997 (as amended), companies may increase their capital to onboard new investors, strengthen financial capacity, expand operations, or meet regulatory or contractual requirements. Capital increases require corporate approvals, amendments to registration documents, and filings with the Iraqi Registrar of Companies. Legal Procedures Shareholder Resolution approving the capital increase Amendment of the Articles of Association to reflect the new capital value and share allocation Subscription and Payment of the new capital by existing shareholders or new investors Submission to the Registrar of Companies for approval and registration Issuance of Updated Corporate Documents showing the amended capital Publication Notice for transparency and third-party notification Tax and Social Security Updates reflecting the amended capital for compliance purposes Strategic Reasons Funding expansion or new projects Satisfying regulatory capital adequacy requirements Onboarding strategic investors or joint venture partners Restoring capital adequacy after losses Preparing for mergers, listing, or restructuring events How Etihad Can Assist Etihad provides legal and regulatory advisory services to banks, financial institutions, and businesses, supporting compliance with applicable laws, regulations, and regulatory guidance issued by any competent authorities.  

Commercial Agency in Iraq

Commercial Agency The commercial agency regime in Iraq originally operated under Commercial Agency Law No. 51 of 2000. In 2017, Iraq issued Law No. 79 of 2017, which introduced significant amendments to modernize commercial representation, address market competition, and regulate foreign principals engaging in the Iraqi market through agents or distributors. Changes Introduced by Law No. 79 of 2017 Registration Requirement Reinforced: The amendment strengthened the mandatory registration of commercial agencies with the Ministry of Trade’s Commercial Agency Register. Unregistered agencies may face restrictions related to: Customs clearance Importation rights Enforceability of commercial claims Recognition of Wider Agency Forms: The amendment expanded the scope to cover: Exclusive and non-exclusive representation Distribution and dealership models Commission agencyThis aligned the law with modern commercial distribution practices. Foreign Principal Compliance: Foreign manufacturers or suppliers appointing Iraqi agents must now provide: Authorization letters Contract documentation Corporate evidenceLegalization/attestation procedures were reinforced to ensure authenticity. Contractual Clarity & Termination Rights: The amendment introduced stronger requirements for: Written agency agreements Termination procedures Compensation or settlement mechanisms where applicable Termination without legitimate cause may expose principals to claims depending on contract structure. Consumer & Warranty Obligations: Law No. 79 clarified the agent’s responsibility for: After-sales service Warranty support Spare parts and technical servicing (where applicable) These obligations are especially relevant for high-risk sectors (automotive, industrial, medical, oilfield equipment). Competition and Market Protection: The amendment aimed to prevent: Market dominance through exclusive dealings without justification Parallel import conflicts Abuse of exclusive distribution systems Regulatory authorities may intervene where competition concerns arise. Record-Keeping and Disclosure: Agents are now required to maintain updated commercial records to facilitate: Taxation Customs audits Consumer protection investigations Practical Implications for Foreign Companies Foreign suppliers entering Iraq should: Ensure agency contracts are legally compliant Legalize documentation for registration Address termination compensation clauses contractually Clarify exclusivity, pricing, and warranty responsibilities   Failure to properly register may result in: Disputes with customs Enforcement limitations Unofficial distribution channels (parallel imports) Regulatory scrutiny How Etihad Can Assist Etihad provides legal and regulatory advisory services to banks, financial institutions, and businesses, supporting compliance with applicable laws, regulations, and regulatory guidance issued by any competent authorities.  

Foreign Market Entry in Iraq

Foreign Market Entry in Iraq Foreign companies entering the Iraqi market must structure their operations in compliance with Iraqi Companies Law No. 21 of 1997 (as amended) and sector-specific regulations applicable to banking, oil & gas, telecom, insurance, and other regulated activities. Market entry can be achieved through several legal and contractual mechanisms depending on commercial strategy, risk allocation, and regulatory requirements. Market Entry Models Branch Registration of a Foreign Company: Foreign companies may register a branch to execute contracts or operate long-term projects in Iraq. Under Iraqi law: A branch may only be registered after obtaining a contract award, governmental approval, or project justification Branches are subject to: Registrar of Companies registration Tax Authority registration Social Security registration Sectoral licensing (when relevant) Branch profits are taxable and require a final tax settlement at project closeout Branches are commonly used for EPC, oil & gas, engineering, construction, defense, and telecom-related operations. Incorporating a Local LLC in Iraq: Foreign investors may incorporate a Limited Liability Company (LLC) with: 49% foreign ownership and 51% owned by Iraqi shareholder Minimum shareholder: 2 shareholders Corporate approvals issued by the Registrar of Companies   LLCs are used for: Long-term service operations Local distribution and commercial agency Oilfield support services Logistics, contracting, and industrial projects   After establishment, the LLC must register with: Tax Authority Social Security Chamber of Commerce Sectoral regulators (if required) Joint Venture Companies with Iraqi Participants: Foreign companies may form a joint venture with an Iraqi partner for: Market access advantages Regulatory requirements (sector-dependent) Local content compliance (especially in oil & gas and tendering)   JV structures may be: Contractual JV (unincorporated) Equity JV (incorporated LLC or JSC) Corporate governance, profit distribution, and exit provisions are typically defined in JV agreements.   Commercial Agency & Distribution: Under Commercial Agency Law No. 79 of 2017, foreign companies may appoint Iraqi agents for: Distribution Sales representation After-sales and warranty support Agencies must be registered with the Ministry of Trade – Commercial Agencies Registry and require legalized foreign principal documentation.   This model is common for: Industrial equipment Automotive products Oilfield tools and consumables Medical and pharmaceutical products Consumer goods   Free Zone & Special Zone Presence: Under Free Zones Law No. 3 of 1998, investors may establish companies or branches in Iraq’s Free Zones for: Customs-free import/export activities Warehousing and logistics Light industrial operations Goods entering Iraq’s domestic market are subject to customs duties, while goods exported abroad remain exempt. Strategic Considerations Depending on sector, foreign companies may require approvals from: Ministry of Oil (oilfield services, EPC, drilling) Central Bank of Iraq (banking & fintech) Communication & Media Commission (telecom) Insurance Diwan (insurance activities) Standardization & Quality Control (industrial imports) Ministry of Health (medical & pharma) Ministry of Interior (security services)   Tax & Social Security Integration Income tax under Income Tax Law No. 113 of 1982 (as amended) Withholding taxes on foreign services Social security contributions for Iraqi and foreign employees Tax clearance upon contract completion or entity dissolution How Etihad Can Assist Etihad provides legal and regulatory advisory services to banks, financial institutions, and businesses, supporting compliance with applicable laws, regulations, and regulatory guidance issued by any competent authorities.  

Shareholder Structures – Iraqi Companies

Shareholder Structures in Iraqi Companies Shareholder structures define ownership percentages, voting power, distribution rights, and governance participation within companies operating in Iraq. Under Companies Law No. 21 of 1997 (as amended), shareholder arrangements are reflected in the company’s Articles of Association, shareholder registers, and contractual agreements between partners. Elements of Shareholder Structuring Share ownership percentages and classes Voting rights and decision-making thresholds Board representation and management authority Dividend and profit distribution rights Minority protection mechanisms Share transfer rules and pre-emption rights Exit and buyout mechanisms between shareholders Purpose and Legal Benefits Reduces ownership and governance disputes Protects investor and minority shareholder rights Clarifies authority over corporate decisions Facilitates continuity in succession and transfer situations Supports regulatory compliance during share transfers or restructuring How Etihad Can Assist Etihad provides legal and regulatory advisory services to banks, financial institutions, and businesses, supporting compliance with applicable laws, regulations, and regulatory guidance issued by any competent authorities.  

Joint Ventures Under Iraqi Law

Joint Ventures Under Iraqi Law Joint ventures (JVs) are a common market entry structure in Iraq used to combine local capabilities with foreign technical, financial, or operational expertise. JV arrangements are governed by Iraqi Companies Law No. 21 of 1997 (as amended) and may be formed as either an incorporated company or a contractual collaboration depending on the project and regulatory requirements. Types of JV Models Incorporated Joint Ventures (Equity JV): Under Iraqi corporate law, foreign and Iraqi partners may establish a jointly owned company, typically in the form of: Limited Liability Company (LLC), or Joint Stock Company (JSC) (used for large or strategic projects)   Key characteristics: Equity ownership is defined in the Articles of Association Shareholders enjoy voting rights, dividend entitlements, and exit rights Entity registers with: Registrar of Companies Tax Authority Social Security Sector regulators (if required) Fully operational legal personality with contracting capacity   Equity JVs are common in long-term oilfield services, industrial operations, construction, and public-private project models. Contractual Joint Ventures (Unincorporated JV): Contractual JVs are legally recognized cooperation agreements where parties collaborate without forming a separate company. Under Iraqi practice, these agreements: Allocate roles, revenue shares, and liabilities Do not create a separate legal entity Are often used for bidding or executing specific tenders   Contractual JVs are widely used in: EPC and construction tenders Oil & gas service contracts Project-specific partnerships Government procurement participation   Foreign Partner Participation: Foreign companies may participate in Iraqi JVs through: Equity contribution to an Iraqi company Branch registration for direct contracting Technical cooperation agreements Consortium bidding structures   Foreign ownership is permitted except in sectors with special regulatory restrictions. Legal and Regulatory Considerations Companies Law No. 21/1997 (as amended) Tax Law No. 113/1982 (as amended) Social Security Law Sector-specific licensing rules (e.g., oil & gas, telecom, banking, insurance)   Depending on the sector, JV approval may also be required from: Ministry of Oil (oilfield services & EPC) Communications & Media Commission (telecom licensing) Central Bank of Iraq (banking/fintech) Insurance Diwan (insurance sector) Ministry of Trade (commercial agency overlap)   Governance & Shareholder Arrangements Iraqi JV partners typically negotiate: Board representation Voting thresholds Reserved matters Dividend policies Technical support and IP arrangements Local content commitments Exit and share transfer mechanisms   Such provisions may be recorded in a Shareholders’ Agreement in addition to the Articles. JVs are frequently adopted in: Oil & gas field services and EPC contracts Infrastructure and construction projects Manufacturing and industrial operations Telecommunications and IT services Public procurement and PPP arrangements How Etihad Can Assist Etihad provides legal and regulatory advisory services to banks, financial institutions, and businesses, supporting compliance with applicable laws, regulations, and regulatory guidance issued by any competent authorities.  

Company Liquidation Under Iraqi Law

Company Liquidation Under Iraqi Law Company liquidation in Iraq is governed by Companies Law No. 21 of 1997 (as amended) and involves the legal process of winding up a company, settling debts, liquidating assets, and removing the entity from the corporate register. Liquidation ends with the dissolution of the company, closure of tax and social security files, and issuance of a final strike-off decision. Legal Procedures for Liquidation Shareholder Resolution approving liquidation and appointing a liquidator Notification to the Registrar of Companies Liquidator’s inventory and valuation of assets Settlement of debts and creditor claims Tax Authority settlement and clearance Social Security settlement for employees Distribution of remaining funds to shareholders Submission of final liquidation report Company strike-off and dissolution Regulatory and Compliance Requirements Tax clearance is obtained from the General Commission for Taxes Social Security clearance is issued confirming employee settlements Customs clearances are completed for import-heavy operations (e.g., oil & gas, industrial) Sectoral approvals are obtained for regulated companies (e.g., banking, telecom, insurance) Reasons for Liquidation Market exit or restructuring Contract completion with no future operations Regulatory changes Group restructuring or consolidation Inability to meet financial obligations (leading to compulsory liquidation) How Etihad Can Assist Etihad provides legal and regulatory advisory services to banks, financial institutions, and businesses, supporting compliance with applicable laws, regulations, and regulatory guidance issued by any competent authorities.  

Labor Compliance Iraq

Labor Compliance Iraq Etihad Law Firm, together with Anli Law Firm, contributed to the Labor Compliance Keys in Iraq by jointly preparing the Iraq chapter of the publication. The Iraq chapter provides an updated overview of the legal framework governing labor and employment compliance in Iraq. It covers key areas relevant to both national and international employers operating in the jurisdiction, including: employment contracts and classifications social security and statutory contributions workplace regulations and standards foreign workforce and work permit requirements termination procedures and severance dispute resolution mechanisms cross-border compliance considerations This publication serves as a practical reference for organizations managing workforce operations in Iraq and the wider region, offering structured guidance on regulatory obligations and compliance practices across the full employment lifecycle. Full version of guide can be found here  For further information or inquiries, please feel free to contact our team.

ISP Licensing Requirements in Iraq

ISP Licensing Requirements in Iraq – CMC The Communications and Media Commission (CMC) of Iraq has issued the official ISP Licensing Requirements governing the provision of internet services in Iraq. These requirements were issued pursuant to CMC Decision No. (175/Q/2023) dated 12 September 2023, and form the primary regulatory framework for licensing Internet Service Providers (ISPs) operating in the Iraqi market. 🧾 Licensing Scope and Classification The CMC classifies ISP licenses into three categories (A, B, and C), depending on the scope of operations, geographic coverage, and infrastructure ownership. Category A licenses apply to nationwide operators with full infrastructure capabilities, while Category B licenses apply to regional or governorate-level operators. Category C licenses are granted to service providers that deliver internet services to end users through licensed primary or regional operators.   ⚙️ Technical Requirements Applicants are required to submit detailed technical documentation describing the nature of their internet services, operational coverage, network infrastructure, and distribution mechanisms. This includes providing information on service delivery areas, branch offices across governorates, technical management personnel, tower locations, repeaters, and distribution agents. Applicants must also maintain an official website and specify the requested license duration and classification.   ⚖️ Legal Requirements The licensing framework requires applicants to submit a complete set of legal documents, including a valid company incorporation contract, certificate of incorporation, shareholders’ resolutions, confirmation from the Companies Registrar, and tax and social security clearance certificates. Foreign companies must provide evidence of branch registration in Iraq. Applicants must also submit declarations confirming compliance with CMC regulations and Iraqi laws, including the obligation to conduct transactions in Iraqi dinars.   💰 Financial Requirements The CMC has set specific licensing fees and financial guarantees based on license classification. Category A licenses require a comprehensive nationwide license fee of IQD 2 billion annually, in addition to a performance guarantee of the same amount. Category B and C licenses are subject to annual licensing fees determined per governorate, with fees varying by location. Applicants must also submit a performance bond, the value of which increases based on the duration of the license.   🏗️ Operational Capacity and Experience License holders are required to demonstrate minimum capital thresholds, technical expertise, and operational capacity. Category A licensees must have a minimum capital of IQD 2 billion and proven experience of no less than five years in the telecommunications or ICT sector. Category B and C licensees are subject to proportionate capital and experience requirements based on their license classification and service scope.   ⚠️ Compliance and Enforcement ISP licensees are subject to ongoing regulatory oversight by the CMC. Failure to comply with licensing conditions, technical standards, or financial obligations may result in regulatory action, including suspension or revocation of the license. The CMC reserves the right to monitor operations and enforce compliance throughout the license term. How Etihad Can Assist Etihad provides legal and regulatory advisory services to banks, financial institutions, and businesses, supporting compliance with applicable laws, regulations, and regulatory guidance issued by any competent authorities.  

Iraq E-Commerce Update: New Instructions Issued Under the Electronic Commerce Regulation

Iraq E-Commerce Update: New Regulatory Instructions Issued Under the Electronic Commerce Framework Recent official correspondence confirms the issuance of new regulatory instructions governing electronic commerce activities in Iraq, impacting digital businesses and online platforms.   Key Regulatory Updates Issuance of official instructions related to the Electronic Commerce Regulation Instructions issued pursuant to Regulation No. (3) of 2025 Circulation of an English-language version of the regulation Clarification of: Regulatory requirements for electronic commerce Required documentation Application procedures for electronic merchant platforms   Scope of Application E-commerce platforms operating in Iraq Digital and online businesses offering goods or services FinTech companies engaging in digital trade activities Foreign companies providing online services to the Iraqi market   What Businesses Should Do Review the Electronic Commerce Regulation and related instructions Assess whether their activities fall within the scope of electronic commerce Prepare required documents and compliance information Align internal operations with digital business regulatory requirements   Alignment with Banking & FinTech / Digital Business Services This update is directly relevant to FinTech operators, digital platforms, and online businesses. Our Banking & FinTech / Digital Business advisory services support clients with: Regulatory assessment of digital business models Compliance with electronic commerce and digital trade regulations Documentation preparation and regulatory filings Ongoing regulatory risk management for digital operations   As Iraq continues to strengthen its digital economy regulatory framework, proactive compliance with electronic commerce regulations is essential to ensure operational continuity and regulatory certainty.   How Etihad Can Assist Etihad provides legal and regulatory advisory services to banks, financial institutions, and businesses, supporting compliance with applicable laws, regulations, and regulatory guidance issued by any competent authorities.  

Production Fee Requirements for Manufacturing Companies in Iraq

Production Fee Requirements for Manufacturing Companies in Iraq The General Commission of Customs, under the Ministry of Finance, has issued an official notice concerning the collection of production fees applicable to certain manufacturing and production activities in Iraq. According to the referenced correspondence issued by the Customs Affairs Department and the Production Fees Division of the Middle Region Customs Directorate, companies whose licensed activities include the production of specific goods are required to review the competent customs authority for the purpose of completing production fee assessment and payment procedures. Affected Activities: The requirement applies to companies engaged in the production of, including but not limited to: Petroleum products Vegetable oils Pharmaceutical manufacturing Ready-made garments Automotive manufacturing Cigarettes and tobacco products Electronic industries Local sugar production Alcoholic beverages Food industries Cement Light industries Products of the General Company for Industrial Gases   Compliance Requirement: Companies operating in the above sectors must coordinate with the relevant customs authority to ensure proper assessment and settlement of production fees in accordance with applicable customs and fiscal regulations. Failure to complete the required procedures may expose companies to administrative measures, penalties, or delays in customs clearance and regulatory approvals.   How Etihad Can Assist Etihad provides legal and regulatory advisory services to banks, financial institutions, and businesses, supporting compliance with applicable laws, regulations, and regulatory guidance issued by any competent authorities.