This article examines the preparation a seller should undertake before marketing or signing the sale of an Iraqi operating business. Buyers often discover gaps in ownership records, consent arrangements or group dependencies after commercial terms have been agreed. Early preparation allows the seller to explain those issues accurately and reduce the risk of avoidable price reductions or delayed completion.
The Companies Law No. 21 of 1997, as amended, and the Iraqi Civil Code No. 40 of 1951 are central to ownership, authority and contractual transfer. Relevant liabilities may arise under the Income Tax Law No. 113 of 1982, as amended; the Labour Law No. 37 of 2015; and the Workers Retirement and Social Security Law No. 18 of 2023. Sector permissions and investment licences must be reviewed according to the business. A sale involving Kurdistan Region should also address the applicable regional records and procedures.
Establishing what the seller can deliver
The seller should establish exactly what it owns, what it can transfer and what the buyer will need to operate:
- Verify ownership and restrictions. Reconcile corporate or asset records with the proposed transaction and identify competing claims, security and transfer limits. Any uncertainty should be investigated before the seller makes an unqualified contractual statement.
- Confirm disposal authority. Where the seller is a company, examine its own authority to enter the sale as well as the target’s required internal steps. Identify the documents and signatories needed to evidence that authority.
- Identify exclusions and group dependencies. Record shareholder balances, excluded assets and arrangements remaining with the seller. Premises, trademarks or software held by another group entity may need transfer, licensing or transitional support.
Corporate legal support in Iraq can help resolve those dependencies before negotiations advance. A clear perimeter allows the seller to explain its offer and reduces late requests for additional assets or services.
Preparing a coherent corporate record
The seller should assemble current registration documents, constitutional documents, appointments, resolutions and material filings. Inconsistencies should be investigated and, where possible, corrected through the proper procedure. Reconstructing a missing record should not involve backdating or presenting a later decision as contemporaneous.
The document set should distinguish original records from copies and explain gaps that remain. A clear index reduces repeated buyer requests and helps the seller respond consistently. Documents held by former managers or external advisers should be recovered early enough to avoid a last-minute dependency on their cooperation.
Reviewing the consents that can delay a sale
The seller should review financing, customer, supplier and property documents for restrictions on transfer or changes in control. Licence conditions and investment permissions require a separate review. The result should identify who must consent, the information needed and whether approaching that person could affect the business relationship.
The buyer and seller should agree the timing of sensitive approaches. Confidentiality may justify delaying contact, but that commercial choice should be reflected in the timetable and completion conditions. A seller should avoid representing that all consents are routine when a counterparty has discretion to refuse or renegotiate.
Explaining tax and workforce positions accurately
Open tax assessments, objections and outstanding information requests should be organised by period. The seller should be able to explain what has been paid and what remains unresolved. Tax advisory support in Iraq can help identify documents needed to substantiate the position and avoid an unsupported statement that the company has no historic exposure.
Employee records should reconcile appointments, departures, remuneration and social security notifications. The sale process may uncover administrative gaps that can be addressed before signing. Where an issue cannot be resolved, a clear disclosure and negotiated allocation are usually more useful than an incomplete assurance.
Separating the seller from the business
The exit plan should identify guarantees, bank mandates, personal undertakings and security that the seller expects to end. Selling shares does not necessarily release the seller from those commitments. The relevant creditor or counterparty should provide an effective release where required.
Continuing services should be documented. If the seller will provide office space, finance support or procurement assistance after completion, the agreement should state the duration, charges and service limits. The seller should retain only the access needed to perform those services and meet legitimate record obligations.
Building the completion deliverables around evidence
The completion list should be organised around evidence that each promised step has occurred:
- Specify the deliverable and responsible party. Identify executed transfer documents, approvals, releases and handover items. A description such as all necessary documents should be supported by a list suited to the particular transaction.
- Address steps that occur at different times. Where registration follows signature, define the interim position and the conditions for releasing funds. The parties should understand what remains to be done and who bears the associated responsibility.
- Preserve the final transaction record. Retain the disclosure materials, agreed schedules and evidence of completion. Arrange access to records transferred to the buyer where the seller may need them for tax matters or the defence of a claim.
Illustrative example. The seller expects to receive the price and withdraw from the business at completion, but a guarantee it gave for the target remains outstanding. A buyer’s undertaking to seek release may not achieve the seller’s intended exit if the creditor has not agreed. The completion list should distinguish the buyer’s promise from an effective creditor release and state how any continuing exposure will be handled. The seller should also retain the records supporting its disclosures and any agreed temporary obligations. These details affect the substance of the exit as much as the transfer of ownership.
Conclusion & how Etihad Law Firm can help
Seller preparation makes the business easier to assess and the proposed exit easier to implement. It also allows unresolved matters to be negotiated on a documented basis before they become urgent completion problems.
Etihad Law Firm assists sellers with transaction preparation, disclosure and exit documentation. Our commercial contract practice in Iraq supports consent reviews, transition services and releases so that the sale terms reflect the seller’s intended continuing obligations.