Private and mixed joint-stock companies
A joint-stock company is one of the forms in Companies Law No. 21 of 1997, as amended, and may be private or mixed. The frame is on company registration. A comparison of the types is on the forms page. If a joint-stock company takes on the character of a holding company, the rules in article 7 bis are on that page.
When is it private, and when is it mixed?
Article 6, first paragraph, makes a mixed or private joint-stock company a company composed of no fewer than five persons, in which 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. Article 7 makes a mixed company an agreement between one or more persons from the state sector and one or more persons from outside that sector, with mixed capital in which the state sector's share is in principle no less than twenty-five per cent. Two or more persons from the mixed sector may also form a mixed company. If the state sector's share falls below twenty-five per cent, the company is treated as a private company, as article 8, second paragraph, point 2, allows. A mixed company is joint-stock or limited, under article 7, second paragraph.
Article 8 makes a private company an agreement between two or more persons from outside the state sector, with private capital, subject to exceptions including a state-sector share of less than twenty-five per cent in a private joint-stock or limited company. Insurance, reinsurance and financial investment must be carried on in a joint-stock company, under article 10. The percentages here are statutory figures in the text, not registration fees.
The subscription and the certificate of incorporation
The founders subscribe to the capital in the amounts they have agreed to contribute, under article 15. On forming a mixed joint-stock company, the founders subscribe for no less than thirty per cent and no more than fifty-five per cent of the nominal capital, which must include the minimum reserved for the state sector of twenty-five per cent, under article 39, first paragraph. On forming a private joint-stock company, the founders contribute no less than twenty per cent of the nominal capital, under article 39, second paragraph. The remaining shares are offered to the public within thirty days of the date of approval of formation, by a statement the founders issue and publish in the bulletin and in at least two daily newspapers after the Registrar's approval, under article 39, third paragraph. If the Registrar refuses the offering, the matter is referred to the state authority in the stock and securities markets, as the text describes it.
For companies other than a joint-stock company, the certificate of incorporation is issued when the decision approving formation is made, under article 19. For a joint-stock company, the certificate is issued only after the public offering, and within fifteen days of the founders submitting the information set out in article 46, under article 21. The company acquires legal personality from the date the certificate is issued, under article 22. The founders meet within thirty days of the issue of the certificate, under article 87. Later general-assembly meetings are on their page.
The board of directors
In a joint-stock company the board appoints the managing director, defines that person's powers, supervises him or her, and may make a removal, under article 117, first paragraph, and presents the accounts in the first six months where the text so requires. Every decision of the board is signed by its chair and sealed with the company seal, under article 118. The chair and the members of the board must take in the company's affairs the care they take in their own, without falling below the care of an ordinary person of their standing, and they are responsible to the general assembly for any act they do in that capacity, under article 120. In a mixed company, a majority of the members of the board may object to the Council of Ministers against any measures or directions that are not in conformity with the Law, under article 118, third paragraph.
The Law Office of Ali Barakat follows this reading of the joint-stock form from Baghdad, al-Yarmouk.
Legal basis and sources
Frequently asked questions
When is the certificate of incorporation of a joint-stock company issued?
After the public offering, and within fifteen days of the founders submitting the information set out in article 46, under article 21. For companies other than a joint-stock company, the certificate is issued when the decision of approval is made, under article 19.
What is the minimum state-sector share in a mixed company?
Article 7 makes the state sector's share in principle no less than twenty-five per cent. If it falls below that threshold, the company is treated as private, as article 8 allows.
May insurance be carried on in a limited company?
Article 10 requires companies that carry on insurance, reinsurance or financial investment to be joint-stock companies. The rule is not extended to an activity the text does not mention, and insurance is not taken out of it.
Related topics and articles
- 01Company forms under the Iraqi Companies LawCompany types under Companies Law No. 21 of 1997 as amended: joint-stock, limited, partnership, simple, sole proprietorship and holding.
- 02General assembly meetings, quorum and minutesA general assembly meeting: the invitation, quorum, minutes and decisions under the Companies Law, and sending those decisions to the Registrar.
- 03Holding companies in the Companies Law after the 2019 amendmentA holding company is a joint-stock or limited company that controls a subsidiary, under article 7 bis added by Law No. 17 of 2019.
- 04Obligations 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.
- 05The 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.