The company contract and internal rules: the function of each document
What is submitted to the Registrar of Companies with the application for incorporation is the company contract, or the statement that stands in its place. The framework is on registering a company. Amending the contract after the company exists is on its page. The Law Office of Ali Barakat follows the question from Baghdad, al-Yarmouk.
The company contract and what it must contain
Article 13 requires the founders to prepare a company contract signed by them or by their legal representatives, containing at a minimum: the company's name and type, with the word "mixed" added if it is in the mixed sector, and any other acceptable elements; the principal office, which must be in Iraq; the purpose for which it was formed and the general nature of the work it will perform; its capital and the division of that capital into shares; the manner of distributing profits and losses in general partnerships; the number of elected members of the board of a private joint-stock company; and the founders' names, nationalities, occupations, permanent places of residence and the number of shares or the amount of the share of each. The contract is submitted with the application for incorporation to the Registrar, together with the bank's certificate of the deposit of capital and, in a joint-stock company, the feasibility study, under article 17.
The company contract is not valid until it has been authenticated by the Registrar in accordance with article 19, as article 203 provides. The Registrar approves the application unless it is found to conflict with a specific provision, and announces the decision within ten days. This document is the instrument of incorporation that the Law names "the company contract", and the minimum particulars are read from article 13 in the official file.
The statement that stands in the place of the contract
Article 14 deals with the founder of a limited-liability company when the company has no other founders, and with the founder of a sole proprietorship: that founder prepares a statement that stands in the place of the company contract, and the provisions that apply to the contract apply to the statement wherever they appear in this Law. In that case the statement is not a document of a lower rank than the contract. It stands in its place, and is read with the particulars in article 13 and with the requirement of authentication. The difference between a sole proprietorship and a limited company with a single owner lies in the form of liability and in the number of owners, not in dispensing with a written statement before the Registrar, and is set out on the type pages.
In a simple company, the contract must be notarised by a notary public and a copy deposited with the Registrar, otherwise the contract is void, under article 182, and personality is acquired from the date of deposit, under article 183. That is a special form of the incorporation document, already set out on company forms.
How any internal rules differ
The Companies Law, in the articles above, makes the company contract — or the statement that stands in its place — the instrument of incorporation before the Registrar. Those articles do not, as a condition of forming the company, require a separate set of internal rules that stands in the place of the contract or that takes the place of the Registrar's authentication. If the company, after it exists, adopts rules for its internal organisation, those rules remain within the limits of what does not conflict with the contract and the Law, and they are not presented as a substitute for amending the contract where the text requires an amendment, as in the transfer of a share in a general partnership under article 69. The force of any internal clause is read in the light of the contract and the text adopted in the file.
The office follows a reading from Baghdad, al-Yarmouk.
Legal basis and sources
Frequently asked questions
Do internal rules stand in for the company contract before the Registrar?
No. The incorporation document the Law requires is the company contract, or the statement that stands in its place under article 14. The contract is not valid until the Registrar has authenticated it.
When is a statement used instead of the contract?
In a limited company when there are no other founders, and in a sole proprietorship, under article 14. The provisions that apply to the contract apply to the statement wherever they appear in the Law.
Is drawing up the contract among the partners enough without the Registrar's authentication?
No. Article 203 provides that the company contract is not valid until the Registrar has authenticated it in accordance with article 19. Any additional internal rules do not stand in for the contract and do not take the place of that authentication.
Must the principal office stated in the contract be in Iraq?
Yes. Article 13 requires the contract to contain a statement of the company's principal office, which must be in Iraq. That particular is an element of the incorporation particulars before the Registrar, and is not the address of the premises in the commercial register at the chamber.
Related topics and articles
- 01Amending the company contract, changing the managing director and transferring sharesAmending the company contract, changing the managing director and transferring shares under Companies Law No. 21 of 1997 as amended.
- 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.
- 03The company name before the Registrar of CompaniesThe company name in its contract before the Registrar, the trade name in the commercial register, and a trademark as a separate path.
- 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.