This article examines how UAE investors developing Iraqi energy assets can preserve investment licence benefits when restructuring ownership. Investors may reorganise a project to admit a lender, move it to another group company or prepare for sale, often assuming existing benefits continue. Whether they do depends on the transaction, the licence holder and the conditions attached to the project.
The central statutes are the Investment Law No. 13 of 2006, as amended, which governs investment licences and the exemptions and guarantees attached to them, and the Companies Law No. 21 of 1997, which governs share transfers and corporate changes. The federal investment regime excludes oil and gas extraction and production, so eligibility should not be assumed for every energy activity. The Ministry of Electricity Law No. 53 of 2017 is relevant to power projects, and Kurdistan Region projects are governed by the regional investment law.
The project and the entitlement to benefits
The review should identify the licensed investor, the approved activity and the legal basis for each benefit. Tax exemptions, land arrangements and customs exemptions on imported equipment may each have different conditions and administering authorities. The licence should be read with the project agreement and subsequent approvals.
For energy investment in Iraq, the distinction between power generation, renewable energy and excluded petroleum activities can be decisive. A group description such as energy infrastructure is not a substitute for checking the licensed activity, and Kurdistan Region projects require separate analysis.
Shares, assets and the licence holder
A share transfer may leave the licensed company unchanged, while an asset transfer moves the project to a different legal person, and an upstream restructuring presents different facts again. The Investment Law permits transfer of a project to another investor with the commission’s approval, and the new investor generally steps into the original investor’s rights and obligations. Required approvals should be assessed for the actual transaction.
A review of Iraqi corporate restructuring should identify changes to ownership, management and authority. Updating the Companies Registration Directorate’s records does not amend the investment licence, land arrangements or sector permissions, and each record should be updated through its own procedure.
Continuing project conditions
Benefits often depend on the project being implemented as approved and on compliance with specified obligations, including timelines and the use of exempted imports for the licensed project. A restructuring does not restart or extend the benefit period. Imported equipment that benefited from customs exemption may not be sold or transferred outside the project without approval, and doing so can trigger repayment of duties.
Outstanding breaches or incomplete filings should be identified. A buyer may acquire a company whose licence remains formally valid while the commission has raised performance concerns. The transaction documents should allocate responsibility for correction, recognising that a seller warranty cannot replace the required regulatory response.
Lender security and step-in
Where restructuring is linked to financing, lenders will want security over shares and project assets and a route to transfer the project on default. Because licence transfer requires approval, lenders should seek the commission’s acknowledgement of their security and of a possible future transfer, rather than assuming enforcement will automatically carry the licence with it.
Approval conditions and completion
Where consent or amendment is required, the transaction should specify the approval and whether it is a completion condition. Conditions imposed by the authority, including continuing obligations for the incoming investor, should be reflected in the documents, and an application receipt distinguished from an effective approval.
Tax, customs, land and financing documents should be coordinated with the timetable, and evidence of approvals retained so that the entity claiming a benefit is the one named in the records. If a benefit cannot continue, its economic effect should be addressed in pricing or the decision to proceed.
Tax and customs exemptions in practice
Investment licences may provide exemptions from income tax for a period and from customs duties on imported project equipment. These exemptions are usually conditional on the project being implemented as licensed and on the exempted equipment remaining in the project. Exemption periods typically run from the start of commercial operation, so a restructuring that delays operation does not necessarily extend the period available.
When ownership changes, the incoming investor should obtain evidence of which exemptions have been used, which remain available and whether any conditions have been breached. Customs exemption records should match the equipment actually installed, and any equipment removed or replaced should have been dealt with properly. Gaps discovered after completion can lead to claims for duties and penalties against the project company, which the new owner will bear unless the transaction documents allocate them to the seller.
Conclusion & how Etihad Law Firm can help
Investment benefits should be treated as conditional rights attached to a defined investor and project, not as features that automatically survive any change in ownership.
As Iraq investment license counsel for UAE-based businesses, Etihad Law Firm reviews investment licences and restructuring plans, obtains commission approvals, and coordinates corporate, customs and land records, helping energy sponsors preserve the benefits lawfully available after the transaction.