Company types under Law No. 21 of 1997

In briefCompanies Law No. 21 of 1997 as amended lists the forms of an Iraqi company, including the joint-stock company, the limited company, the general partnership, the sole proprietorship, the simple company and the holding company. This page is an overview; the detail is on the page for each type. The company acquires legal personality under the Law and, except for the simple company, from the date the certificate of incorporation is issued.

The choice of company form is read from Companies Law No. 21 of 1997 as amended, not from a popular label. The framework is on registering a company. This is an overview; the detail of each type is on its page. The Law Office of Ali Barakat follows the question from Baghdad, al-Yarmouk.

The contract and legal personality

Article 4 defines a company as an agreement under which two persons or more each put in property or work towards an economic venture, so as to share the resulting profit or loss. By way of exception, the company may be formed of one natural person and is then referred to as a sole proprietorship, and a limited-liability company may be formed by a single owner. The company acquires legal personality under this Law, as article 5 states. In the types for which a certificate of incorporation is issued, personality is acquired from the date the certificate is issued, under article 22. A company established in Iraq under this Law has Iraqi nationality, under article 23.

Article 8 provides that a private company is formed by agreement between two or more persons other than the State sector, with private capital, subject to the exceptions the same article sets out. The mixed company is read from article 7: an agreement between a person from the State sector and another person, with mixed capital in which the State sector's participation is not, in principle, less than twenty-five per cent. Any economic project not covered by article 10 may take the form of one of the companies the Law provides for, under article 11. Article 10 requires companies that carry on insurance, reinsurance or financial investment to be joint-stock companies.

Joint-stock and limited companies, the partnership and the sole proprietorship

Article 6 lists four forms at this point. A mixed or private joint-stock company is composed of no fewer than five persons. The shareholders subscribe for shares in a public offering and are liable for the company's debts to the extent of the nominal value of the shares for which they subscribed. The detail is on joint-stock companies. A mixed or private limited company may not have more than twenty-five natural or legal persons, who contribute to its shares and bear liability for its debts to the nominal value of the shares they have taken. The limited company with a single owner is set out on its page. A general partnership is formed of no fewer than two and no more than twenty-five natural persons, each of whom has a share in the capital, and who bear jointly unlimited personal liability for all of the company's obligations. A sole proprietorship is a company composed of one natural person who owns the single share and is personally and unlimitedly liable for all of the company's obligations. The difference between a sole proprietorship and a limited company is on the comparison page.

Article 12 allows a natural or legal foreign person to acquire membership as a founder or a shareholder in joint-stock and limited companies, provided that the Iraqi participation is not less than fifty-one per cent of the capital, under the text as replaced by Law No. 17 of 2019. That rule is not extended to a general partnership or to a sole proprietorship without a text.

The simple company and the holding company

The simple company has its own chapter. It is formed of no fewer than two and no more than five partners, who contribute shares in the capital, or of whom one or more contribute work and the others property, under article 181. Its contract must be notarised by a notary public and a copy is left with the Registrar; failing that, the contract is void, under article 182. It acquires personality on the day a copy of the contract is left with the Registrar, under article 183, not from a certificate of incorporation as in the other types under article 22. The detail, together with the general partnership, is on their page.

The holding company was added by article 7 bis under Law No. 17 of 2019. It is a joint-stock or limited company that controls a limited or joint-stock company or companies, called subsidiaries, either by owning more than half of the company's capital and controlling its management, or by controlling its board of directors in joint-stock companies. The word "holding" must, in addition to the type, be attached to its name on papers, notices and correspondence. A subsidiary is prohibited from owning shares in the holding company. At the end of each financial year a consolidated balance sheet and profit-and-loss statements are prepared for the holding company and its subsidiaries. The detail is on holding companies.

The office follows a reading from Baghdad, al-Yarmouk.

Legal basis and sources

Frequently asked questions

Does a simple company acquire legal personality from a certificate of incorporation?

No. Article 183 provides that it acquires personality from the date a copy of its contract is deposited with the Registrar, after the contract has been notarised by a notary public.

May a foreign person form any type of company?

Article 12 allows a foreign person to acquire membership as a founder or a shareholder in joint-stock and limited companies, with the Iraqi share of the capital.

Is a holding company a form separate from the joint-stock and limited companies?

Article 7 bis makes it a joint-stock or limited company that controls subsidiaries, requires the word "holding" to be attached to the name, and sets out rules on consolidated accounts.

Always check the text in force and its amendments in the official source.

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Company forms under the Iraqi Companies Law