Branch, subsidiary or representative office in Iraq

In briefThe federal regulation in force organises the branch of a foreign company. A subsidiary is an Iraqi company formed under the Companies Law, and a foreign person's participation in it is subject to article 12 after the 2019 amendment. A representative office was organised, together with branches, in Regulation No. 5 of 1989, which Regulation No. 2 of 2017 repealed; a current federal path under that name is not assumed unless a later text confirms it.

Three descriptions are often used in international dealings as if they were equivalent alternatives: a branch, a subsidiary, and a representative office. Under federal Iraqi law in force they are not equivalent. Each description has a consequence for legal personality, for what activity is permitted, and for the body to which an application is presented. This page distinguishes them on the basis of the Foreign Company Branches Regulation No. 2 of 2017 and its two amendments, together with Companies Law No. 21 of 1997 after the 2019 amendment. The detailed comparison between a branch and a limited company is on a separate page.

The branch under the regulation in force

The branch is the description that the 2017 Regulation organises: a legal entity that represents the foreign company in Iraq, to which the Registrar of Companies grants a registration licence, after which the documents in article 5 are completed before any activity is carried on, and the activity itself remains within the limits of article 6. The registration licence is not a licence to carry on the activity. The prohibition in article 14 — after the addition of its third paragraph by Regulation No. 1 of 2025 — forbids a foreign company to carry on any commercial activity, or to open premises in Iraq, if it has not been granted the licence, with an exception for a company that has contracted to supply goods or services, unless the supply agreement includes the provision of services inside Iraq for a period of not less than one year.

The foreign company remains the principal. The branch does not create an Iraqi legal person separate from it. Its obligations are read in the regulation, and the liquidation or strike-off of the branch does not — under article 12 — remove the foreign company's burden of what attached to the branch while it was present in Iraq.

A subsidiary: an Iraqi company, not an extension of the parent

A "subsidiary" in ordinary dealings is not an alternative description of a branch under the 2017 Regulation. If what is meant is an Iraqi company in which the foreign company holds a controlling share, the path is the formation of a company — limited or joint-stock — with the Registrar of Companies under the Companies Law. After the certificate of incorporation is issued, the company is an Iraqi legal person, with a managing director, a general assembly and a contract that is amended under that Law, not with a resident branch manager under article 7 of the Branches Regulation.

Article 12 after the 2019 amendment restricts a foreign person's acquisition of membership as a founder or a shareholder in a limited or joint-stock company: the Iraqi participation must not be less than fifty-one per cent of the capital. That restriction is part of the reading of the "subsidiary" choice, and it does not apply to the opening of a branch. If the form of a holding company is adopted, article 7 bis — added by Law No. 17 of 2019 — defines a holding company and the conditions for control of subsidiaries, and is explained on the holding-companies page.

The existence of a subsidiary does not stand in for a branch licence if what is intended is that the foreign company carry on the activity in its own name. A branch licence does not stand in for a certificate of incorporation of an Iraqi company if what is intended is a separate Iraqi legal person.

What remains of a "representative office"?

Regulation on the Branches and Representative Offices of Foreign Companies and Economic Institutions No. 5 of 1989 organised — by its title — branches and representative offices together. Article 16 of the 2017 Regulation repealed that regulation. The regulation in force is entitled "Foreign Company Branches Regulation"; it defines the branch and the registration licence, and the articles of the regulation in force do not set out a current path under the name "representative office" as an alternative to the branch.

An office styled a representative office does not, by that description alone, hold a standing federal licence founded on the repealed regulation, and the description does not stand in for a branch licence when what is intended is the opening of premises or the carrying on of commercial activity of the kind article 14 forbids without a licence. If a later text — a statute, a regulation or instructions — organises the representative office under that name, that text is read from its official source. Until then the phrase remains a description in common use, not a federal path established in the regulation in force.

Article 14 excepts from the prohibition on carrying on activity and opening premises — after the 2025 amendment — a foreign company that has contracted to supply goods or services, unless the agreement includes the provision of services inside Iraq for a year or more. That exception is read within its limits, and it is not turned into a "representative office" by a name that does not appear in the text.

What may differ in the Kurdistan Region?

In the Kurdistan Region a step may be required before the body that handles registration in the Region, and the name of that formation, and the filing steps, may differ from what is done before the federal Registrar of Companies in Baghdad.

The matter is therefore mentioned with care: anyone who intends activity or premises in the Region reviews the regional path in force alongside the federal path if that is required, without an assumption that one path stands in for the other. The file is followed from Baghdad, al-Yarmouk.

Accounts, management, and in whose name does it appear?

In a branch, the accounts of the whole of the activity in Iraq are kept in Arabic, audited by a licensed auditor, and the final accounts and the activity report are presented to the Registrar within eight months after the year ends. The branch is managed by a resident manager, or by a deputy under an authorisation, and the Registrar is notified of a change within sixty working days from the mission's authentication. The name that appears on the papers is the name of the branch as it stands in the registration licence, together with the place of management in Iraq.

A subsidiary — if an Iraqi company is meant — keeps its accounts, holds its general meeting and appoints its managing director under the Companies Law, not under the branches regulation. Its name is the name of an Iraqi company in the certificate of incorporation, not the name of a branch of a foreign company. Mixing the two names in contracts or in announcements may create uncertainty about who is bound.

Using the description "representative office" on papers, or in a lease of the premises, does not of itself create a legal status that stands in for a branch licence or for a company certificate. The true nature of the activity is read: is it a supply of goods from outside Iraq that benefits from the exception in article 14 after 2025, or a presence and an activity that require a licence, or the formation of an Iraqi company?

How are the three descriptions read together?

The first question is: who is intended to be the bearer of the obligation in Iraq? If it is the foreign company itself, the starting point is a reading of the Branches Regulation: a licence, then the documents in article 5, then one of the cases in article 6, together with the narrow exception in article 14 after 2025. If a separate Iraqi person is intended, in which the foreign company holds a share, the starting point is the Companies Law and article 12 after 2019. If a "representative office" under that name is intended, the choice is not built on the repealed 1989 regulation, and it is asked whether the proposed activity is in substance a branch, or a supply that falls within the exception, or an Iraqi company.

A fourth path is also kept distinct: a commercial agency that is licensed, and whose contract is recorded, at the Commercial Agencies Section. That is a contractual representation of a foreign principal under Commercial Agency Organisation Law No. 79 of 2017, not the opening of a branch. It has its own page.

The office follows a reading of these distinctions.

Legal basis and sources

Frequently asked questions

Is a representative office a current path under the federal regulation now in force?

Regulation No. 5 of 1989, which organised branches and representative offices, was repealed by article 16 of the 2017 Regulation. The regulation in force organises the branch. A current federal path under the name of a representative office is not assumed unless a later text confirms it from an official source.

Does a subsidiary stand in for a branch licence?

No, if what is intended is that the foreign company carry on the activity in its own name. A subsidiary — if an Iraqi company is meant — is a separate legal person formed under the Companies Law, and its certificate does not stand in for a branch licence.

Does a federal entry of the branch stand in for a step in the Kurdistan Region?

The body that handles registration in the Region is reviewed when the activity or the premises concern the Region, without an assumption that one path stands in for the other.

Does a supply contract suffice to open a permanent place of business in Iraq?

The exception in article 14, after Regulation No. 1 of 2025, covers a foreign company contracted to supply goods or services, unless the agreement includes the provision of services inside Iraq for a period of not less than one year. If the agreement includes services inside Iraq for that period, the prohibition on carrying on the activity and opening premises without a licence applies again. The agreement is read in its own terms.

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

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A branch, a subsidiary and a representative office, and what may differ in the Region