Disclosure of the beneficial owner in Iraqi companies
Who appears in the company contract, and who controls its decisions, is read from Companies Law No. 21 of 1997 as amended. The framework is on registering a company. The Law Office of Ali Barakat follows the question from Baghdad, al-Yarmouk.
What the company contract and the register of members state
Article 13 requires the company contract to contain, at a minimum, the founders' names, nationalities, occupations and permanent places of residence, and the number of shares or the amount of the share of each, as well as the company's name and type, its principal office, its purpose and its capital. In a limited company with a single owner, or in a sole proprietorship, a statement stands in the place of the contract, under article 14, and those provisions apply to it wherever they appear. These particulars form part of the application for incorporation before the Registrar, under article 17, and the contract is not valid until the Registrar has authenticated it.
A register of members is kept in the company. Everything entered in the register of members is treated as correct unless the contrary is proved, under article 131. A member has the right to inspect the register of members. If that is refused, the member may apply to the Registrar to require the company to allow inspection, under article 132. In joint-stock companies, limited companies and general partnerships, the company's registers are made available for inspection by the members during the ten days preceding the general-assembly meeting and during the meeting. Transfers of shares are recorded in the transfer register under articles 66, 68 and 69, as set out on amending the contract and transferring shares.
These rules identify who is a member, a shareholder or a partner in the company, before the Registrar and in the company's registers. They do not, in those articles, use the expression "beneficial owner", and they do not, of themselves, create a separate form under that heading.
Disclosure of the board's interests
Article 119 does not allow the chairman of the company's board, or any member of it, to benefit from any interest, direct or indirect, in transactions or contracts made with the company, except after obtaining the general assembly's permission, based on a disclosure of the nature and extent of those interests. The chairman or member is liable to the company for any harm it suffers by reason of a breach of this article. Nor may that person vote or take part in a matter in which there is a direct or indirect interest without disclosing it to the other members who have no such interest and obtaining the approval of their majority. The details are recorded in the minutes of the board's meetings and are made available to the general assembly and to the auditors. The managing director, in exercising those powers, is subject to articles 119 and 120, under article 124.
This disclosure concerns the interest of the chairman or of a member in a company transaction. It is not a separate duty under the heading of beneficial owner, which article 119 does not mention. Article 4, third paragraph, also restricts the use by the owners of capital of their powers in a way that harms the company or endangers creditors' rights when insolvency is imminent.
Opening a bank account and the disclosure duty
Opening a company bank account may require the bank to obtain information about the owners under its own rules and those of the Central Bank. That is read on its own path, including the general framework on banking, without transferring a banking duty onto recording the company with the Registrar.
The office follows a reading from Baghdad, al-Yarmouk.
Legal basis and sources
Frequently asked questions
Does the Companies Law, in the articles above, require a separate form in the name of the beneficial owner?
Those articles require the founders to be stated in the contract, a register of members to be kept, and the interests of the chairman and members of the board to be disclosed. They do not impose, under that heading, a separate beneficial-owner filing before the Registrar beyond what those articles already require.
What must the company contract state about the owners?
Article 13 requires the founders' names, nationalities, occupations and permanent places of residence, and the number of shares or the amount of the share of each.
Does a member have the right to inspect the register of members?
Yes. Article 132 gives that right. If it is refused, the member may apply to the Registrar to require the company to allow inspection.
Related topics and articles
- 01The company contract and internal rules: the function of each documentThe company contract and the statement before the Registrar under articles 13 and 14, distinct from any internal rules.
- 02Documents for an application to form a company before the RegistrarDocuments to form a company are those in article 17 after 2019: the contract, a bank certificate, and a joint-stock feasibility study.
- 03Obligations that recur after a company is recordedFinal accounts, the audit, the general-assembly meeting and copies sent to the Registrar, distinct from post-incorporation steps and from branch duties.
- 04The address of a company or branch, a lease and a title deedThe company's address in its contract, before the Registrar and in the commercial register; a lease or deed may evidence it. Not a real-estate page.
- 05Registering a company in Basra: which department is approached, and what differs from Baghdad?Registering a company when dealing in Basra under the federal Companies Law, followed from Baghdad.