This article considers how an Iraqi share offering can be planned so that responsibility for disclosure is clearly established and the required approvals are obtained in the right order. Share offerings involve many participants: the issuer, its directors, selling shareholders, brokers, auditors, legal advisers and, in some cases, underwriters. They also involve several authorities: the companies registry, the Iraq Securities Commission, the Iraq Stock Exchange and, for regulated companies, sector regulators. Confusion about who is responsible for what, or about which approval comes first, can delay the offering or expose participants to liability.
A clear plan addresses two questions at the outset. Who will prepare, verify and take responsibility for each part of the disclosure? Which authorities must approve the offering, in what order and with what documents? The answers shape the offering timetable and the allocation of work among advisers.
The Companies Law No. 21 of 1997, as amended, governs capital increases, public subscription and the responsibilities of founders and directors. The Interim Law on Securities Markets, issued as Coalition Provisional Authority Order No. 74 of 2004, and Iraq Securities Commission rules govern public offerings and disclosure. The Iraq Stock Exchange’s listing rules govern admission of shares to trading. The Iraq Central Depository’s rules govern registration of shares. Sector legislation, such as the Banking Law No. 94 of 2004, may require regulatory approval for offerings by regulated companies.
Mapping the participants and their roles
The offering plan should identify each participant and its role:
- Issuer and directors. Responsible for the overall accuracy of the offering document and for information about the company.
- Selling shareholders. Responsible for information about themselves and the shares they sell, and potentially more depending on their involvement.
- Auditors. Responsible for audited financial statements and any reports included in the document.
- Legal advisers. Responsible for legal due diligence and legal statements, within the scope of their engagement.
- Brokers and underwriters. Responsible for their own conduct in marketing and, depending on their role, for due diligence.
Clear allocation helps ensure that every part of the document has an owner who verifies it.
Establishing disclosure responsibility formally
Responsibility should be documented. Directors should formally approve the offering document after reviewing it and the verification process. Responsibility statements in the document should identify who takes responsibility for its contents. Engagement letters with advisers should define the scope of their work. Underwriting or placement agreements should contain representations and indemnities allocating responsibility between the issuer, selling shareholders and intermediaries. Corporate governance advice in Iraq can help structure board approvals and responsibility statements.
Identifying the approval route
The approvals required depend on the type of offering and the issuer:
- Corporate approvals. General assembly approval of the capital increase or, for a sale of existing shares, any approvals required under the articles.
- Sector approvals. For banks, insurers and other regulated companies, approval from the sector regulator for the capital increase or for changes in shareholding.
- Securities approvals. Iraq Securities Commission approval of the public offering and the offering document.
- Exchange approvals. Iraq Stock Exchange approval for listing of new shares.
- Registry. Registration of the capital increase with the companies registry.
Each approval has its own documents and timetable.
Sequencing approvals
Approvals are often interdependent. A sector regulator may need to approve the capital increase before the Iraq Securities Commission will approve the offering. The registry may register the capital increase only after the subscription is complete. The exchange may list new shares only after registration. The offering plan should map these dependencies and build a timetable that reflects them. Commercial and regulatory advice in Iraq can help map the approval sequence.
Preparing the offering document
The offering document should be prepared in accordance with the prescribed content requirements. It typically covers the company’s history, business, management, shareholders, financial statements, risks, use of proceeds, terms of the offering and subscription procedures. Drafts may be reviewed by the Iraq Securities Commission, which may request changes. The document must be in Arabic, and translations for foreign investors should be consistent with the official version.
Conducting due diligence and verification
Due diligence supports the accuracy of the document. Legal due diligence covers corporate records, licences, material contracts, property, litigation and compliance. Financial due diligence covers the financial statements and forecasts. Verification links each material statement to supporting evidence. These processes also help participants demonstrate that they took reasonable care if the document is later challenged.
Managing publicity and communications
During the offering, communications should be consistent with the offering document. Marketing materials, presentations and media statements should not contain information that is not in the document or that conflicts with it. Participants should be briefed on what they can say. Premature publicity before approval may breach rules on public offerings.
Completing the offering
After the subscription period, shares are allocated, excess subscriptions refunded, the capital increase registered and the shares listed and recorded with the Iraq Central Depository. Post-offering disclosure, including announcement of results, should be made as required. Litigation and dispute resolution advice in Iraq can assist if disputes arise about allocation or disclosure.
Planning the offering timetable realistically
Offerings in Iraq involve several authorities and steps whose duration may be difficult to predict. A realistic timetable should include time for:
- Preparation. Due diligence, drafting of the offering document, preparation of financial statements and corporate approvals.
- Regulatory review. Sector regulator approval, Iraq Securities Commission review and any revisions requested.
- Marketing and subscription. Publication of the offering document, marketing and the subscription period.
- Allocation and settlement. Allocation of shares, refunds, registration of the capital increase and listing.
Market conditions may also affect timing. A timetable that assumes every approval will be obtained in the shortest possible time may lead to commitments that cannot be met, such as announced subscription dates that must be postponed. Building contingency into the timetable, and communicating dates only once approvals are secured, protects the issuer’s credibility.
Financial statements included in the offering document may become stale if the timetable slips, requiring updated statements and revisions to the document. The timetable should account for this risk.
Illustrative example. An Iraqi insurance company plans to increase its capital through a public offering. It initially submits the offering document to the Iraq Securities Commission, which advises that it must first obtain approval of the capital increase from the insurance regulator. The company has not identified who will verify the actuarial statements in the document. The company revises its plan: it obtains the insurance regulator’s approval, appoints an independent actuary to verify the relevant statements, has the board formally approve the document after a verification process and resubmits to the commission.
Conclusion & how Etihad Law Firm can help
A successful Iraqi share offering requires clear allocation of disclosure responsibility and careful sequencing of approvals from corporate, sector, securities and exchange authorities. Planning these elements at the outset reduces delays and protects participants from liability.
Etihad Law Firm advises issuers, selling shareholders and intermediaries on Iraqi share offerings, from planning and approvals through to completion. We help clients structure offerings with clear responsibilities and an efficient approval route.