When is a branch chosen, and when is an Iraqi limited company chosen?
When a company formed outside Iraq enters the Iraqi market, the first point is not which form to fill in, but which legal shape is intended: a branch that represents the parent, or an Iraqi limited company formed with the Registrar of Companies. Both paths run before the Companies Registration Department at the Ministry of Trade, but the governing text and the legal consequence differ. The framework for the branch is on the branch registration page. The framework for Iraqi companies is on registering a company in Iraq.
What does each path create?
A branch, in the Foreign Company Branches Regulation No. 2 of 2017, is the legal entity that represents the foreign company in Iraq. The branch's obligations — from the accounts to a liquidation — fall in the end on the foreign company itself; article 12 of the regulation provides expressly that the foreign company bears the legal and financial obligations that attached to its branch while it was present in Iraq, if the licence is cancelled and the branch is struck off. The registration licence is not a licence to carry on the activity, and carrying on the activity is confined to the cases in article 6, as the practice-area page explains.
A limited company, by contrast, is an Iraqi legal person that acquires its personality under Companies Law No. 21 of 1997, as amended. After the certificate of incorporation is issued, the company is responsible for its obligations within the limits the Companies Law sets for that type, not as a direct extension of a foreign company. Its formation, the amendment of its contract, and the meetings of its general assembly are separate subjects in the company-registration area.
The intended activity is read, together with whether it calls for a contract with a government body, an investment licence, or a sectoral permit, and whether what is wanted is a separate Iraqi person or a representation of the parent.
Foreign participation in an Iraqi company after the 2019 amendment
Article 12 of the Companies Law, after its replacement by the text of Law No. 17 of 2019, distinguishes the Iraqi from the foreign person. An Iraqi natural or legal person has the right to acquire membership of the companies the Law provides for, as a founder, a shareholder or a partner, unless that person is barred, by reason of the person or of the person's capacity, under a statute or a decision issued by a court or a government body. A foreign natural or legal person may acquire membership as a founder or a shareholder in joint-stock and limited companies, provided the Iraqi participation is not less than fifty-one per cent of the capital.
That restriction does not apply to the opening of a branch, because a branch is not an Iraqi company in whose capital a subscription is made. It is a restriction that is read when the choice is to form an Iraqi limited company in which a foreign party takes part. The minimum capital figures are fixed by article 28 after the same amendment.
What is reviewed before the choice is made?
Before the choice is made, the file is asked: does the intended activity fall within the cases in which a branch may carry on activity, as article 6 of the regulation lists them, or is a wider trade with the private sector intended that may meet the minimum the regulation fixes for that route? And is the exception added by Regulation No. 1 of 2025 in article 14 enough for a company that has contracted to supply goods or services, or does the agreement include the provision of services inside Iraq for a year or more, so that it falls outside the exception?
From the side of the Iraqi company: is there an Iraqi partner or shareholder who meets the proportion in article 12? Do the company's objects cover the activity? Will the business be managed by a managing director under the Companies Law, rather than by a resident branch manager under article 7 of the Branches Regulation?
If a branch is opened beside an Iraqi company, each entity keeps its own file: the branch licence does not stand in for the company's certificate of incorporation, and the company's certificate does not stand in for a branch licence if what is intended is representation of the foreign company itself. A commercial agency recorded with the Commercial Agencies Section is a third path, described on the commercial-agency page, and it is not to be confused with the other two.
The office follows a reading of the choice from Baghdad, al-Yarmouk.
Legal basis and sources
- Foreign Company Branches Regulation No. 2 of 2017, as amended
- Companies Law No. 21 of 1997, article 12 after Law No. 17 of 2019
- Amendment Law No. 17 of 2019 to the Companies Law
Frequently asked questions
Is a branch a separate Iraqi company?
No. The branch represents the foreign company in Iraq. The limited company is the one that is an Iraqi legal person after it is formed with the Registrar under the Companies Law.
May a foreign person form a limited company alone?
Article 12 after the 2019 amendment allows a foreign person to acquire membership as a founder or a shareholder in a limited or joint-stock company, provided the Iraqi participation is not less than fifty-one per cent of the capital. Formation of a company with a single Iraqi owner is the subject of a separate page in the companies area.
May a branch and an Iraqi company exist together?
The two entities may exist together in practice if each path is completed under its own text. Neither stands in for the other, and the existence of one does not, by itself, allow the activity that the other requires.
Related topics and articles
- 01A branch, a subsidiary and a representative office, and what may differ in the RegionA foreign-company branch, an Iraqi subsidiary, and a so-called representative office, with a general note on the Region, under the 2017 regulation.
- 02A limited company with a single ownerA single-member limited company is allowed by article 4, second paragraph, and differs from a sole proprietorship, whose liability is unlimited.
- 03Closing a foreign-company branch: liquidation and strike-offClosing a foreign-company branch in Iraq: strike-off by the Registrar, or liquidation on the company's request, under Regulation No. 2 of 2017 as amended.
- 04What did the 2023 and 2025 amendments change in Iraq's Foreign Company Branches Regulation?The first amendment to Foreign Company Branches Regulation No. 2 of 2017, by Regulation No. 4 of 2023, and the second, by Regulation No. 1 of 2025: who counts as a foreign company, one year instead of two, the registrar's deadline and deemed approval, the legal adviser, when a branch is active, and the supply-contract exception.
- 05Can an unregistered foreign company operate or open an office in Iraq?Whether a foreign company may do business or open premises in Iraq without a branch registration licence: article 14 of Foreign Company Branches Regulation No. 2 of 2017, the 2025 supply-contract exception, when activity exists, and the penalty in article 215 of the Companies Law.