New Amendment to the Iraqi Companies Law No 21 of 1997
Iraqi Law 17 of 2019 amending the Iraqi Companies Law No 21 of 1997 was published in Gazette 4554 and takes effect from the date of publication on 9 September 2019.
The amendment to the Iraqi Companies Law contains a variety of changes. Mohammed Norri reviews aspects of the new Law:
- The concept of a holding company was introduced. The new Law will now regulate holding companies;
- A foreign natural or legal person may acquire membership in his capacity as a founder or a shareholder in a joint stock or limited company, provided the percentage of contribution from an Iraqi person is not less than fifty-one percent (51%) of the capital. A company may also appoint a deputy managing director in addition to a managing director to practice the powers of the managing director in his absence;
- A company’s licence will be cancelled or suspended if it fails to commence its activities within two years from registration;
- If a company does not issue a recommendation of liquidation in accordance with Article 147 and sixty days has lapsed, then the Registrar will issue a decision to liquidate the company;
- The new law has increased penalties for companies that carry out business in Iraq without a registration certificate. The new penalties include imprisonment for a minimum period of three months and/or fines (not exceeding three million Iraqi Dinars but not more than five million Iraqi Dinars.);
- The new law significantly increases penalties for companies that do not submit records and financial statements to the competent authority. A fine not no less than fifty thousand Iraqi Dinars but not exceeding two hundred and fifty thousand Iraqi Dinars for every day of delay. This is provided that the total amount of the fine shall not be more than five million Iraqi Dinars.
- When awarding governmental contracts, the government shall prioritize Iraqi companies, including those that have foreign companies as partners.