General partnerships and simple companies
A general partnership and a simple company are forms that rest on the persons of the partners more than on the public subscription of shares. One of these two forms does not stand in for the other; both are read with company forms under Companies Law No. 21 of 1997, as amended. The frame is on company registration.
The general partnership
Article 6, third paragraph, makes a general partnership 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. That description differs from a limited or joint-stock company, where a shareholder's liability stops at the nominal value of the shares taken, under article 6, first and second paragraphs.
The company contract is the instrument of formation, and is authenticated by the Registrar under article 203. Its minimum content in article 13 includes the name and type, the principal office in Iraq, the purpose, the capital, the way profit and loss are divided in a partnership, and a statement of the partners. The detail of the contract is on its page. A partner may transfer a share, or part of it, to another partner. A transfer to a person outside the company is only with the unanimous consent of the general assembly, and in either case it is effected by amending the contract, under article 69, first paragraph.
Decisions to amend the contract, or to merge, transform or liquidate a partnership, are taken only by unanimity of the shares, under article 98, second paragraph. If unanimity cannot be reached, the text allows the matter to be taken to a court that it does not name. The general assembly of a company that is not a joint-stock company meets at least once every six months, under article 86, and the invitation and the minutes are read from the meeting page.
The simple company
The chapter on the simple company makes it of between two and 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 legal personality on the day the copy is left with the Registrar, under article 183, not from a certificate of incorporation as in article 22 for the other types. That difference remains visible when the two forms are compared.
The contract determines the method of management and appoints the partner authorised to manage, or the way that partner is chosen, and determines that partner's powers; otherwise the contract is void, under article 187. That partner carries out the acts of management within those powers and in accordance with the directions of the person who appointed him or her, under article 188, and must take in the company's affairs the care taken in his or her own affairs, without falling below the care of an ordinary person, under article 189. An agreement that one partner will not share in profit or in loss makes the contract void, with a limited exception: a partner who has contributed only work may be relieved of a share in the loss if no wage has been fixed for that work, under article 186.
A simple company ends for one of the causes in paragraphs first to fourth of article 147, and also by the partners' unanimous decision to dissolve it, by the withdrawal of one of the two partners if the company is formed of two persons, or by a final judgment of a court that article 190 does not name.
What is not allowed on a transformation or a merger?
Article 153, third paragraph, does not allow a joint-stock company, a limited company, a general partnership or a sole proprietorship to be transformed into a simple company. Article 149 does not allow a merger to result in a joint-stock, limited or partnership company, or a sole proprietorship, losing its personality in favour of a simple company. Transformation and merger are read on their page. A comparison with a sole proprietorship and a limited company is on that page.
The Law Office of Ali Barakat follows this reading of the two forms from Baghdad, al-Yarmouk.
Legal basis and sources
Frequently asked questions
Does a simple company acquire personality from a certificate of incorporation?
No. Article 183 makes personality begin on the day a copy of the contract is left with the Registrar, after the contract has been notarised by a notary public. The certificate of incorporation in article 22 belongs to the other types.
Is a general partner's liability limited to that partner's share?
No. Article 6, third paragraph, makes the partners jointly bear unlimited personal liability for all of the company's obligations. That is a basic difference from a limited or joint-stock company.
May a limited company be transformed into a simple company?
Article 153, third paragraph, does not allow a limited, joint-stock or partnership company, or a sole proprietorship, to be transformed into a simple company. Nor may a merger result in those forms losing their personality in favour of a simple company, under article 149.
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.
- 02The 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.
- 03A sole proprietorship or a limited company?A sole proprietorship has unlimited personal liability for one natural person. In a limited company, liability stops at the nominal value of the shares.
- 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.