Ali Zuweid's Political Programme · Proposed legislation · Economy, Finance, Investment and Employment
State-Owned Enterprises Governance and Restructuring Law
A legislative proposal replacing the framework established in 1997 with a modern system for managing state ownership: a clear rationale for each enterprise, professional boards, separation of ownership from regulation, disclosed public-service support, financial discipline, defined paths for recovery, merger, conversion, sale or liquidation, and social safeguards for workers.
Executive Summary
Public Companies Law No. (22) of 1997, as amended, remains Iraq's principal legislation governing state-owned enterprises. It defined a public company as a self-financing economic unit wholly owned by the state and regulated establishment, capital, losses, mergers, conversion and liquidation. It has been amended several times, including by Fifth Amendment No. (28) of 2015, which expanded companies' right to participate in ventures with Iraqi companies. However, its basic structure predates the 2005 Constitution and modern governance developments. It leaves much of the relationship between the ministry, company and board, and between commercial and public functions, within an administrative model that does not adequately separate the state as owner from the state as regulator and policymaker.
In 2026, reform moved from a theoretical issue to an actual government initiative. On 15 March 2026, the Ministry of Planning announced discussions on restructuring economically unviable public companies affiliated with the Ministry of Industry and Minerals, in cooperation with that ministry and the consultancy KBR, with the aim of improving economic and administrative performance and adopting modern institutional assessment methods. This step reinforces the need for a general law defining how decisions on continuation, recovery, merger, conversion or liquidation are made, instead of leaving each wave of reform dependent on separate sectoral decisions.
The proposed legislation is based neither on wholesale privatisation nor on retaining everything. It begins with a prior question: why does the state own this company? It then classifies the portfolio into strategic companies or essential utilities, competitive commercial companies, companies carrying out public-service obligations, companies capable of recovery, and unviable companies. This classification determines the path: retention with improved governance, financial and operational reform, merger or separation, partnership, conversion into a joint-stock company, admission of a minority or strategic investor, or orderly liquidation.
The proposal establishes a small professional ownership function within the General Secretariat of the Council of Ministers, rather than a large new ministry or economic authority. The State Ownership and Corporate Portfolio Management Unit would be responsible for ownership policy, classification, board nominations and aggregate reporting, with the gradual transfer of ownership rights in commercial companies away from ministries that regulate their markets. The aim is to remove a fundamental conflict: the body setting competition or tariff rules should not simultaneously manage a competitor that it owns.
The law also reshapes the board of directors into a genuine board rather than an extension of the ministry. Most members would be non-executive, a proportion would be independent, the roles of chair and executive management would be separated, and appointments would follow a skills matrix and fixed terms. The board would select the chief executive through professional competition and a performance contract, holding that person accountable for results.
Financially, the proposal ends the idea of implicit support. If the state wants a company to sell a service below cost, serve an unprofitable area or maintain an activity for social reasons, it must record this as a public-service obligation and specify its cost and funding. If a company is loss-making for commercial reasons, state banks or the Treasury should not be expected to cover its salaries and loans without a reform plan. Guarantees, arrears, support and transactions with the state must be disclosed in financial statements and the aggregate report.
The proposal does not treat employment as a mere accounting item. Every restructuring plan affecting employment requires a transition plan: redeployment where there is a genuine need, labour-market-related training, retirement or voluntary departure under the law, and settlement of entitlements on termination. It prohibits recruitment into the same positions after their reduction for efficiency reasons unless a proven need exists.
This policy aligns with the latest international governance approaches. The 2024 OECD Guidelines on Corporate Governance of State-Owned Enterprises emphasise a professional state ownership function, board independence, separation of ownership and regulation, competitive neutrality, disclosure of support and obligations, and periodic review of ownership rationales. The International Monetary Fund also called for stronger accountability in state-owned enterprises in its 2025 Iraq consultation. The proposal uses these references to modernise Iraqi law, rather than to copy a foreign institutional model.
Legal position and need for replacement
The Iraqi legislation database confirms that Public Companies Law No. (22) of 1997 remains in force. It was primarily designed to regulate self-financing economic units wholly owned by the state and established provisions on formation, capital, losses, investment, oversight, merger, conversion and liquidation. One of its strengths is that it did not exclude conversion or liquidation: it required company assessment when specified loss levels were reached, allowed mergers and conversion into joint-stock companies, and regulated liquidation.
However, these tools operate within a decentralised ownership structure in which the minister and ministry are central to the relationship with the company. Modern governance standards have developed towards separating ownership from regulation, defining ownership rationales, granting boards genuine independence and making the cost of social objectives visible rather than leaving it concealed in financial statements.
The ratio of losses to nominal capital is no longer sufficient on its own to assess a company. A company may own substantial assets without an up-to-date valuation, incur losses because it provides an uncompensated public service, or show an accounting profit while suffering from arrears, deferred maintenance and low productivity. The proposal therefore moves to a multidimensional assessment instead of a single financial threshold.
Given the scale of the proposed changes to the ownership function, boards, transparency, financial discipline, conversion and employment, amending scattered provisions of the 1997 law would produce a highly complex text. The proposal therefore adopts repeal and replacement, with a transition period preserving existing companies, contracts and rights.
Restructuring in practice in 2026
In March 2026, the Ministry of Planning announced the start of discussions on restructuring economically unviable public companies within the Ministry of Industry and Minerals, in cooperation with that ministry and KBR. It described the aim as improving economic and administrative performance and developing assessment, analysis and sustainability methodologies. This indicates that the state has already begun moving beyond administrative mergers alone towards more systematic performance assessment.
The Ministry of Industry's experience also includes an earlier wave of mergers beginning in 2015. Existing companies such as the State Company for Textile and Leather Industries and the State Company for Hydraulic Industries resulted from mergers of several companies and factories. Merger alone, however, does not demonstrate successful restructuring. The proposed law requires prior analysis of savings, markets, assets, debts and employment, followed by measurement of whether efficiency actually improved.
In its 2025 assessment of Iraq, the International Monetary Fund points to the need to strengthen accountability frameworks for state-owned enterprises as part of broader governance and non-oil growth reforms. The proposal therefore treats restructuring as a reform of ownership, governance, finance and competition, rather than a temporary administrative campaign.
Proposed legislative policy
The model rests on a professional owner, an accountable board, operationally independent management and full transparency. The state determines why it owns the company and what it expects from it, but does not manage its daily procurement or commercial decisions from the minister's office. The board selects and oversees management, management implements decisions, and the sector regulator remains separate from the ownership function.
The proposal uses classification rather than a single solution. Strategic companies and essential utilities may remain state-owned under strict governance; commercial companies may undergo conversion and admit private capital; recoverable companies receive a defined reform period; and unviable companies move towards liquidation, asset sales or merger into a more viable entity.
The proposal does not permit a public monopoly to become a private monopoly. Where an asset is a natural monopoly or an essential utility, clear regulation of tariffs, quality and access must precede the sale of control. A commercial company operating in a competitive market may be sold following valuation, competition, disclosure and protection of workers and creditors.
Draft State-Owned Enterprises Governance and Restructuring Law
Chapter One — General Provisions
Article 1 — Title
This Law shall be called the State-Owned Enterprises Governance and Restructuring Law.
Article 2 — Objectives
This Law aims to manage state ownership of companies professionally and transparently; improve efficiency, productivity and social and economic returns; separate the state's role as owner from its role as regulator and policymaker; subject support and public functions to costing and disclosure; improve boards, accountability and oversight; define clear paths for reform, merger, conversion, partnership and liquidation; and protect the rights of workers, creditors and consumers and public funds during restructuring.
Article 3 — Scope of Application
This Law applies to wholly state-owned public companies, to companies converted under its provisions in which the state retains direct or indirect control, and to subsidiaries and joint ventures insofar as state ownership rights, oversight and disclosure are concerned. Special banking, insurance and regulated-sector laws shall be observed in technical and prudential matters.
Article 4 — Definitions
The following expressions have the meanings assigned to them: “public company” means an economic unit with legal personality wholly owned by the state; “state-controlled company” means a company in which the state directly or indirectly holds more than half the voting rights, has the legal power to appoint a majority of the board, or exercises effective control; “owner” means the Iraqi state represented by the body exercising ownership rights under this Law; “state ownership policy” means the document defining ownership rationales, objectives, expectations and portfolio management rules; “Unit” means the State Ownership and Corporate Portfolio Management Unit; “strategic company” means a company whose continued state ownership is justified by economic security, an essential utility, a natural monopoly, a sovereign resource or a fundamental public interest; “public-service obligation” means a non-commercial task imposed by the state on a company to achieve a specified public objective; “restructuring” means operational, financial, institutional and legal measures intended to restore efficiency, change the ownership model or terminate an activity; “conversion” means converting a public company into a joint-stock company or another legal form under this Law and the Companies Law; “privatisation” means the full or partial transfer of state ownership in a company or commercial asset to the private sector; and “independence” means the absence of any material or employment relationship or interest that significantly constrains a board member's objectivity.
Article 5 — Governing principles
State ownership shall be managed according to the public interest, long-term value, efficiency, transparency, accountability, competitive neutrality, fiscal sustainability and protection of workers' and counterparties' rights. Continued state ownership is not an end in itself, nor is privatisation; the choice shall be determined by the public interest and assessment of each company and sector.
Article 6 — Relationship with other laws
Companies Law No. (21) of 1997, as amended, shall apply to companies converted into joint-stock or mixed companies where no special provision exists. Financial administration, procurement, competition, integrity, labour, retirement, social security, environmental and regulated-sector laws shall each apply within their respective remit.
Article 7 — Neutrality towards the ownership model
This Law creates no automatic entitlement to sell or retain a company. Decisions on retention, restructuring, conversion, sale or liquidation shall be subject to tests of public interest, viability, sustainability and protection of competition and rights under its provisions.
Article 8 — Prohibition on unjustified company formation
No new public company may be established unless a study, published in summary, demonstrates a clear ownership rationale that cannot be efficiently achieved through regulation, contracting, competition or the private sector alone, and the Council of Ministers grants approval under this Law.
Chapter Two — State ownership policy and the ownership body
Article 9 — State ownership policy
Within six months of this Law's entry into force, the Council of Ministers shall approve a national state ownership policy defining ownership rationales, priority sectors, commercial and public objectives, governance principles, dividend and capital policy, and criteria for retention, conversion, sale and liquidation.
Article 10 — Periodic review
The state ownership policy shall be reviewed at least once every four years. Its summary and implementation report shall be presented to the Council of Representatives and published.
Article 11 — Establishment of the State Ownership Unit
A professional unit called the State Ownership and Corporate Portfolio Management Unit shall be established within the General Secretariat of the Council of Ministers by reorganising relevant existing resources and structures. It shall be the central body coordinating the exercise of state ownership rights.
Article 12 — Independence of the ownership function
The exercise of ownership rights shall, as far as possible, be separated from regulation, licensing, tariff-setting and contract-award functions. No sector ministry may use its regulatory authority to give a state-owned company an advantage not prescribed by law.
Article 13 — Functions of the Unit
The Unit shall prepare ownership policy, maintain the portfolio register, propose company classifications, establish frameworks for board nomination and evaluation, review business plans and financial objectives, prepare the annual aggregate report, and coordinate restructuring, conversion and sale decisions within its assigned powers.
Article 14 — State Ownership Council
A State Ownership Council shall be formed under the chairmanship of the Secretary-General of the Council of Ministers, with representatives of the Ministries of Finance, Planning and Trade, the competent sector body, and the head of the Unit as members. The Central Bank and regulatory bodies may be invited where matters concern their remit.
Article 15 — Functions of the Ownership Council
The Ownership Council shall adopt recommendations on company classification, owner objectives, board appointments within prescribed limits and restructuring plans. It shall refer decisions on company formation, merger, conversion, sale of a controlling stake or liquidation to the Council of Ministers.
Article 16 — Transfer of the exercise of ownership rights
Within three years, the Council of Ministers shall approve a phased timetable for transferring the exercise of ownership rights in competitive commercial companies from sector ministries to the central Unit or to a state holding company established by law. The ministry shall remain responsible for sector policy and regulation.
Article 17 — Shared ownership during transition
Until the transition is complete, the sector ministry shall exercise ownership rights in mandatory coordination with the Unit, in accordance with owner objectives and nomination and disclosure policy. It may not issue daily operational instructions to the company's board beyond its legal powers.
Article 18 — State ownership register
The Unit shall manage a unified digital register covering companies, ownership percentages, capital, principal assets, boards, subsidiaries, joint ventures, guarantees, support, transfers, financial results, classifications and reform paths.
Article 19 — Aggregate report
The Unit shall publish an annual aggregate report on the state-owned company portfolio covering book value where available, revenue, profit and loss, debt, support, guarantees, distributions, risks, workforce size, public objectives, board performance and portfolio changes.
Article 20 — Owner expectations
For each company, the Unit shall issue an Owner Expectations Document defining the purpose of ownership, financial and operational objectives, capital structure, risk tolerance, dividend policy, public obligations and performance indicators. It shall be reviewed annually.
Chapter Three — Company classification and ownership rationales
Article 21 — National classification
Each company shall be classified at least once every three years into one of the following categories: strategic company or essential utility; commercially competitive company; company entrusted with a public service; recoverable company requiring restructuring; economically unviable or redundant company; or company undergoing liquidation or conversion.
Article 22 — Criteria for strategic companies
Strategic classification shall consider national or economic security, a natural monopoly that cannot be efficiently regulated by a less extensive measure, control of essential infrastructure, management of a sovereign resource, or the absence of a realistic alternative for delivering a critical public service.
Article 23 — Competitive commercial companies
A company shall be considered commercially competitive if it sells in a market where private competition exists or could exist and its activity does not inherently justify a monopoly or full state ownership. It shall be periodically reviewed to determine whether conversion, admission of shareholders or sale of a stake is possible.
Article 24 — Public-service companies
Where the state requires a company to provide a service, apply a price or maintain operations that do not yield a normal commercial return in order to achieve a social or regional purpose, the obligation shall be expressly recorded, with its scope, cost and funding source specified.
Article 25 — Recoverable companies
A company shall be classified as recoverable if it suffers losses or low productivity but has a realistic plan to restore sustainability through reform of management, structure, assets, employment, partnerships or capital within a defined period.
Article 26 — Unviable companies
A company shall be deemed unviable if its structural losses persist, no strategic or public-service rationale justifies its continuation, and an independent test shows no realistic recovery capacity within a reasonable horizon.
Article 27 — Evidence-based decisions
Classification shall not rely solely on one financial year or one loss ratio. It shall consider cash flows, demand, assets, technology, debt, productivity, public-service costs, market alternatives, social impact and closure risks.
Article 28 — Reclassification
A company may be reclassified following a material change in its market, mission, technology or financial position. The decision shall be reasoned and a summary published.
Chapter Four — Company formation, capital and objectives
Article 29 — Establishment of a public company
A company shall be established by a Council of Ministers decision on an application supported by an independent study of the rationale, viability, alternatives, capital, fiscal implications and competition. The formation decision and articles of incorporation shall be registered with the Companies Registrar.
Article 30 — Articles of incorporation
The articles of incorporation shall state the company's name, purpose, activity, registered office, capital, ownership body, rationale for state ownership, restrictions on disposal of strategic assets and any public-service obligation.
Article 31 — Capital
Capital shall be determined by the needs of the business and its business plan, rather than as a formal cover for losses. Capital increases shall require an economic or investment rationale and shall appear in the budget when funded by the Treasury.
Article 32 — Capital increases
The state shall not inject new capital into a loss-making company except under an approved reform plan, for a public-service obligation or for a viable investment. The decision shall explain why equity funding is preferable to liquidation, conversion or contracting.
Article 33 — Capital reductions
Capital may be reduced to absorb losses, restructure the financial position or facilitate conversion, after creditors' rights are protected and assets and liabilities valued in accordance with the law.
Article 34 — Subsidiaries
A public company shall not establish a subsidiary or acquire a controlling stake in another company unless directly related to its approved strategy and following financial, competition and integrity due diligence and owner approval within prescribed thresholds.
Article 35 — Joint ventures
A joint venture with a private or foreign investor may be entered into through transparent competition or an investment procedure permitted by law, with independent valuation of assets and contributions and specification of ownership, governance, exit rights and technology transfer.
Article 36 — Investment outside the company's activities
Company funds shall not be used in activities or companies unrelated to its purpose or the owner's strategy, except for liquidity management and short-term financial investment under board policy and financial controls.
Chapter Five — Board of directors
Article 37 — Board responsibility
The board of directors is responsible for the company's strategic direction, management oversight, risk management, approval of business plans, internal budgets and major investments, and performance monitoring. It shall act in the interests of the company and its public owner within the law.
Article 38 — Board composition
The board shall comprise five to nine members according to the company's size and complexity. A majority shall be non-executive, and independent members shall constitute at least one third in medium-sized and large companies specified by regulations.
Article 39 — Worker representation
At least one seat shall be allocated to an elected worker representative in companies whose workforce exceeds the threshold prescribed by regulation. The representative shall be subject to the same duties as other board members and shall not represent a sectional interest when voting.
Article 40 — Prohibition on conflicting political and executive membership
A board member may not be a minister, member of the Council of Representatives, governor or holder of a party executive position. The roles of board chair and company chief executive may not be combined.
Article 41 — Membership criteria
Members shall possess competence, integrity and appropriate experience in management, finance, the relevant sector, law, technology, human resources or risk. They shall not have been convicted of a felony or a misdemeanour involving dishonour or breach of trust unless legally rehabilitated.
Article 42 — Nomination
The Unit shall maintain a candidate register and apply an open, competitive nomination process for independent members. Appointments shall be based on a skills matrix suited to the company's strategy, rather than on employment grade alone.
Article 43 — Term of membership
Membership shall be for four years, renewable once. Staggered terms may be adopted to ensure institutional continuity.
Article 44 — Removal of a member
No member may be removed before the end of the term except for loss of a legal qualification, documented poor performance, serious conflict of interest, repeated absence or breach of duties. The decision shall state its reasons.
Article 45 — Duties of care and loyalty
Members shall act in good faith, on sufficient information, with professional care and in the interests of the company and the state. Exploiting information or office for personal benefit or the benefit of a related party is prohibited.
Article 46 — Board evaluation
The board shall conduct an annual evaluation of its performance and its committees. The Unit or an independent body shall periodically conduct an external evaluation of boards in major companies.
Article 47 — Board committees
Audit, risk, nomination and remuneration committees shall be established in companies specified by regulations. Other committees may be established as needed. The audit committee shall be chaired by an independent non-executive member.
Article 48 — Audit committee
The audit committee shall review financial statements, internal controls, internal and external audit work, related-party transactions, and integrity and reporting systems.
Article 49 — Risk committee
The risk committee shall review risk appetite, debt, investments, insurance, cybersecurity, business continuity, and environmental and operational risks.
Article 50 — Board remuneration
Board remuneration shall follow a uniform, transparent policy reflecting company size, members' responsibilities and company performance. It shall not be linked to short-term incentives encouraging excessive risk. Aggregate remuneration shall be published.
Article 51 — Board meetings
The board shall hold regular documented meetings. Dissenting opinions and abstentions for conflicts of interest shall be recorded in the minutes, and minutes and records shall be retained electronically in accordance with the law.
Chapter Six — Executive management
Article 52 — Chief executive
The chief executive shall manage daily operations and implement the board's strategy, and shall be accountable to the board, rather than the sector minister, for operational decisions falling within the company's independence.
Article 53 — Selection of the chief executive
In companies specified by regulations, the board shall select the chief executive through open professional competition based on experience, competence and integrity, and shall conclude a performance contract specifying its term and objectives.
Article 54 — Interim appointment
When the office becomes vacant, an interim manager may be appointed for no more than six months. Interim appointments shall not be used to circumvent competition or entrench management that is not subject to evaluation.
Article 55 — Management team
The chief executive shall appoint senior executives under an approved structure and professional human resources policy. Sensitive positions shall be subject to integrity and conflict-of-interest requirements.
Article 56 — Separation of powers
The internal rules shall separate board and executive management powers and define limits on financial, contractual and investment delegation. The board shall not intervene in daily operations except through oversight and policies.
Article 57 — Performance contract
The chief executive's contract shall include financial, operational and service objectives and indicators of productivity, quality, safety and sustainability. It shall specify the circumstances for rewards, warnings and termination.
Article 58 — Management evaluation
The board shall annually evaluate the chief executive against disclosed indicators and link renewal and rewards to multi-year results rather than short-term accounting profits alone.
Article 59 — Pay and incentives
The company shall adopt a pay and incentive system balancing the ability to attract skilled staff, sustainability and internal fairness, subject to ceilings and general policies approved by the owner and applicable laws.
Chapter Seven — Public objectives and public-service obligations
Article 60 — Separation of commercial activities and public functions
Where the state assigns the company a social, service or strategic objective that does not yield a normal commercial return, the assignment shall be made in writing and its financial impact measured, rather than left implicit in company results.
Article 61 — Public-service contract
Public-service obligations shall be specified in a contract or performance decision stating the service, beneficiary group, quality standard, duration, cost, compensation method, indicators and review mechanism.
Article 62 — Public-service compensation
A public obligation shall be compensated at its efficiently incurred cost after associated revenues are taken into account. Compensation shall not finance commercial losses unrelated to the assigned service.
Article 63 — Disclosure of support
The company and ownership body shall disclose subsidies, transfers, exemptions, guarantees, fuel, energy or land allocations, subsidised loans and other forms of quantifiable support.
Article 64 — Prohibition on unfunded mandates
No service, price, operation or investment imposing a material cost may be required of a company without identifying its funding source or treatment, except in an emergency under a published, time-limited decision.
Article 65 — Accounting separation
Where a company combines competitive activities with a subsidised public service, it shall maintain separate internal accounts enabling identification of revenues, costs and assets used and preventing unlawful cross-subsidisation.
Article 66 — Impact assessment
The Unit and sector body shall review all public-service obligations at least once every three years to determine whether the need persists and whether delivery through the company remains appropriate compared with alternatives.
Chapter Eight — Finance and capital discipline
Article 67 — Financial independence subject to accountability
The company shall be managed on economic principles with operational independence and shall bear the consequences of its decisions within the limits of its capital and the law. A blanket state guarantee of its obligations shall not be presumed.
Article 68 — Business plan
The board shall annually submit a multi-year business plan covering sales, costs, investment, financing, employment, productivity, risks, public obligations and cash-flow forecasts.
Article 69 — Capital structure
The Owner Expectations Document shall set target ranges for indebtedness, liquidity and returns. Any material increase in borrowing or guarantees shall be reviewed against the plan.
Article 70 — Borrowing
The company may borrow within its powers, applicable laws and approved business plan. Its debt shall not constitute a Treasury liability unless an express guarantee is issued by the legally authorised body.
Article 71 — Government loans
Neither the Treasury nor state banks shall provide preferential financing to a persistently loss-making company without a measurable reform plan, credit assessment and repayment terms disclosed to oversight bodies.
Article 72 — Sovereign guarantees
No government guarantee of company debt shall be granted except under financial administration and budget laws and after the public interest, risks, cost and probability of being called are explained. It shall be recorded as a contingent liability.
Article 73 — Dividend policy
The State Ownership Council shall establish a uniform dividend policy reflecting investment needs, capital structure and company profitability. Companies shall neither be drained through distributions that prevent maintenance and modernisation nor retain profits without justification.
Article 74 — Use of profits
Profits shall be used after taxes, loss coverage and reserves in accordance with the approved dividend policy. Distributions due to the state shall accrue to the public Treasury unless otherwise provided by law.
Article 75 — Losses
If recurring losses or material capital erosion arise, the board shall submit a diagnosis and remedial plan within ninety days, explaining the causes of losses, liquidity trajectory and alternative options.
Article 76 — Going-concern assessment
Where serious indications suggest that the company cannot continue for twelve months, the board shall commission an independent assessment and promptly notify the owner, the Board of Supreme Audit and competent bodies.
Article 77 — Prevention of hidden arrears
The company shall not finance its activities by accumulating unrecorded arrears to suppliers, workers, tax authorities, social security, energy providers or banks. Arrears shall be disclosed in statements and reports.
Article 78 — Major capital investments
Major capital projects shall undergo feasibility, life-cycle cost and sensitivity studies and obtain board and owner approval according to applicable thresholds. Expansion shall not be approved to offset weakness in the core business without justification.
Article 79 — Management of surplus cash
Surplus liquidity shall be managed under an approved low-risk investment policy. It shall not be used for speculation, financing related parties or activities outside company strategy.
Article 80 — Transactions with the state
Transactions between the company and ministries or other state companies shall be on market terms or a documented public-service basis. Exchanging goods and services at artificial prices to conceal losses or support is prohibited.
Chapter Nine — Accounting, audit and disclosure
Article 81 — Accounting records
The company shall maintain its records under the Iraqi accounting system and standards adopted by competent bodies. Major companies shall gradually move to officially adopted international financial standards where appropriate.
Article 82 — Financial statements
Annual financial statements shall be prepared no later than ninety days after the financial year ends and shall include financial position, income, cash flows, changes in equity, notes and contingent liabilities.
Article 83 — External audit
Statements shall be audited by the Federal Board of Supreme Audit under its law. Major companies may appoint an additional independent external auditor through competition with audit committee approval.
Article 84 — Internal audit
An independent internal audit function shall report functionally to the audit committee and administratively to the chief executive, with access to records, systems and premises.
Article 85 — Annual report
An annual report shall be published covering the board's statement, objectives and results, audited statements, risks, public obligations and support, related-party transactions, board and management remuneration, material incidents and sustainability.
Article 86 — Ownership and subsidiary disclosure
The company shall disclose its ownership structure, subsidiaries, joint ventures, shareholding percentages, related parties and reciprocal guarantees.
Article 87 — Disclosure of government assistance
Any capital contribution, transfer, subsidised loan, guarantee, exemption or non-cash benefit received from the state shall be shown separately.
Article 88 — Open data
Basic data shall be published in machine-readable formats within the state ownership register, allowing comparisons across companies and years while protecting commercial and security secrets.
Article 89 — Disclosure deadlines
Regulations shall prescribe periodic disclosure deadlines. The company shall immediately report any material event significantly affecting its financial position, service continuity or state ownership.
Article 90 — Protection of trade secrets
Disclosure of technical secrets or information whose release would harm competition or security is not required. However, confidentiality shall not be used to conceal company results, state support, management compensation or related-party transactions.
Article 91 — Data standardisation
The Unit, Ministry of Finance and Board of Supreme Audit shall adopt uniform definitions of debt, support, contingent liabilities, returns, assets and employment to reduce statistical inconsistencies.
Article 92 — Records archiving
Records, decisions, contracts, statements and reports shall be retained electronically for the legally prescribed periods in a manner ensuring integrity, retrieval and auditability.
Chapter Ten — Competitive neutrality, procurement and transactions
Article 93 — Competitive neutrality
In its commercial activities, the company shall be subject to market and competition rules and shall receive no state-ownership advantage in taxation, customs, financing, land or licensing except under a statutory provision or disclosed public-service compensation.
Article 94 — Separation of regulator and owner
The company shall not participate in setting market rules governing its competitors. The ministry shall, as far as possible, separate its regulatory unit and ownership function in structure, powers and personnel.
Article 95 — Access to essential infrastructure
Where the company controls essential infrastructure required by competitors, access shall be granted under fair, non-discriminatory rules and tariffs established by law or the regulator.
Article 96 — Procurement
Company procurement shall be subject to the Public Procurement and Government Contracts Law in cases specified by that law. Competitive commercial companies may use simplified commercial procedures where permitted by law and under a transparent board-approved policy.
Article 97 — Sales and marketing
Long-term sales and supply contracts and commercial discounts shall follow an approved, auditable policy. Selling below economic cost to exclude competitors is prohibited, except to fulfil a compensated public service.
Article 98 — Related-party transactions
A material transaction involving a board member, manager, company associated with them or related government body shall be disclosed in advance and decided by disinterested members on market terms.
Article 99 — Prohibition on conflicts of interest
No board member, manager or procurement officer may hold an undisclosed interest in a company contract, investment or supplier. Violations shall entail legal and disciplinary measures without prejudice to criminal liability.
Article 100 — Competition and prevention of monopoly
Public companies shall be subject to the Competition and Anti-Monopoly Law. State ownership shall not exempt them from rules on collusion, abuse of dominance or anticompetitive practices.
Article 101 — Selective government assistance
Where the state grants a company assistance unavailable to its competitors, the purpose, duration, value and conditions of that assistance and an assessment of its effect on competition shall be disclosed, unless publication is precluded by a lawful security reason.
Article 102 — Transfer pricing
Transactions between the company and its branches or associated state companies shall have an economically justifiable and documented basis. Transfer pricing shall not be used to shift profits or losses in a manner that conceals performance.
Chapter Eleven — Investment, participation and partial ownership transfers
Article 103 — Strategic partnerships
A strategic partner may be admitted to a company, activity or factory if a study establishes a need for capital, technology, management or market access that cannot efficiently be obtained otherwise. Selection shall be competitive and transparent.
Article 104 — Valuation of contributions
Assets, land, rights, brands, know-how and equipment contributed by the state or company shall be valued by an independent valuer using an approved methodology before ownership percentages are determined.
Article 105 — Conversion into a joint-stock company
By Council of Ministers decision, a public company may be converted into a joint-stock company under the Companies Law following valuation of assets and liabilities, a workforce plan, creditor protection and specification of the state's share and rights.
Article 106 — Partial offering
A minority stake may be sold or capital increased through admission of new investors by public offering or a competitive strategic-investor process. The transaction shall be preceded by an independent valuation, information memorandum and beneficial ownership disclosure.
Article 107 — Protection of minority shareholders
Where a company has multiple shareholders, rules on equality in information, voting and distributions, related-party transactions and minority rights shall apply under the Companies Law and this Law.
Article 108 — Sale of a controlling stake
A stake giving the private sector control of a strategic company or natural-monopoly utility shall not be sold except by a special law or an express legislative provision specifying regulatory safeguards. Non-strategic commercial companies may be sold by Council of Ministers decision after completing the procedures under this Law.
Article 109 — Competitive sale
Shares or assets shall be sold through a regulated market, auction, tender or other competitive procedure securing price, value and transparency. Direct negotiation is permitted only for an expressly prescribed and disclosed exceptional reason.
Article 110 — Beneficial ownership
Disclosure of beneficial owners, funding sources and any relationship with members of government, the company or advisers is required. Anyone providing false information or concealing effective control shall be excluded.
Article 111 — Prohibition on sham sales
Selling an asset or company to a front or related party to re-establish a monopoly or transfer it for private benefit below fair value is prohibited. The transaction shall undergo independent integrity and competition review.
Article 112 — Sale proceeds
Proceeds from sales of public shares or assets, after transaction costs and substantiated legal obligations, shall accrue to the public Treasury or a capital account specified by the Budget Law. They shall not remain outside the budget by administrative decision.
Article 113 — Use of proceeds for employment measures
The Budget Law may allocate part of the proceeds to workforce transition, voluntary retirement, training and settlement of entitlements arising directly from restructuring.
Article 114 — Prohibition on undisclosed buyer guarantees
The state shall not grant a buyer an open-ended guarantee against competition, losses or market changes. Guarantees shall be confined to rights and obligations specified in transaction documents and the contract.
Chapter Twelve — Restructuring
Article 115 — Initiating restructuring
Restructuring shall begin by owner decision following an independent financial, operational, market and legal assessment. The decision shall specify the reasons for reform, its objectives, duration, alternatives and the rights of workers and creditors.
Article 116 — Restructuring plan
The plan shall analyse activities, units, factories, assets, employment, debt, demand, technology and competition, and specify measures concerning management, costs, investment, financing, merger, separation, partnership or liquidation.
Article 117 — Viability gateway
The state shall not inject substantial additional funding into a company classified as recoverable before approval of a plan specifying the break-even point, funding, indicators and the date for assessing success or moving to another option.
Article 118 — Operational reform
The plan may include structural simplification, consolidation of units, closure of unviable production lines, technology upgrades, maintenance, digital transformation, and redesign of supply chains, marketing, costing and quality systems.
Article 119 — Financial reform
Sustainable debts may be rescheduled, liabilities settled, part of debt converted into equity where legally permitted, capital reduced or non-core assets sold, provided losses are neither concealed nor transferred to a public body without recording them.
Article 120 — Management restructuring
The board, executive management, incentives and accountability systems shall be restructured where governance failings are established. Restructuring shall not consist merely of renaming or administrative mergers that leave the business model unchanged.
Article 121 — Company mergers
Two or more companies may merge where their activities are complementary or the merger produces genuine efficiency in assets, management or markets. A study identifying savings, costs, debts, assets and employment shall precede the merger decision.
Article 122 — Separation of activities
An activity, factory or unit may be separated into an independent company where separation improves transparency, competition or investability, or removes inefficient cross-subsidisation.
Article 123 — Holding companies
A state holding company for a group of similar companies may be established by law or a decision grounded in law where it performs a professional ownership function and reduces sectoral interference. It shall not be used to add a bureaucratic layer without value.
Article 124 — Sale of non-core assets
Assets unnecessary for the business may be sold following inventory, independent valuation and a competitive procedure, while protecting land and assets serving public or strategic uses.
Article 125 — Unused assets
Unused land, buildings and equipment shall be inventoried. Reuse, transfer, leasing or sale shall be determined by the greatest public value, rather than cash price alone, with regard to urban planning and the environment.
Article 126 — Duration of recovery plans
As a rule, an unviable company's recovery plan shall not exceed three years. It may be extended once for one additional year if substantial progress is demonstrated. Thereafter, the owner shall decide on conversion, merger, liquidation or another option.
Article 127 — Independent review
Major plans shall undergo independent technical and financial review before approval. A summary of the decision, rationale and impact on the budget and employment shall be published.
Article 128 — Prohibition on recycling losses
No new company may be created, or loss-making activity transferred to it, to reset accounting losses without addressing liabilities, assets and operational causes.
Chapter Thirteen — Employment and social transition
Article 129 — Protection of rights
Restructuring shall respect workers' acquired rights under applicable laws and contracts. Conversion shall not be used to extinguish wages or accrued retirement or social security entitlements.
Article 130 — Workforce transition plan
Every restructuring affecting employment shall include a transition plan specifying workforce numbers, skills, required positions, surplus staff and arrangements for transfer, retraining, voluntary retirement and compensation.
Article 131 — Redeployment
Where economically appropriate and feasible, priority shall be given to redeploying qualified workers within the company or to other state companies with genuine vacancies before termination.
Article 132 — Retraining
The ownership body shall establish training programmes linked to labour-market needs and real opportunities in the public and private sectors. Formal courses unconnected to an employment pathway shall not suffice.
Article 133 — Voluntary retirement
Voluntary retirement or departure programmes may be adopted under retirement, labour and social security laws after actuarial and financial costs are calculated and approved in the budget.
Article 134 — Termination compensation
A worker made redundant through restructuring without fault shall receive compensation and entitlements prescribed by applicable laws and any additional programme approved by law or the budget.
Article 135 — Workers in converted companies
When a company becomes a joint-stock company or admits an investor, the plan shall specify workers' status, transfer of contracts and rights, and non-discrimination. A limited share allocation may be offered for voluntary employee subscription on fair terms.
Article 136 — Social dialogue
The ownership body and company shall consult worker representatives at an early stage on plans materially affecting jobs, without granting any party a veto over decisions made in accordance with the law.
Article 137 — Prohibition on replacement recruitment
Following efficiency-related workforce reductions, new staff shall not be recruited into the same positions without demonstrated need and an approved human resources plan.
Article 138 — New recruitment rule
After this Law enters into force, new recruitment in commercial companies shall be based on need, competence and competition. A company shall not serve as a channel for general public recruitment beyond its plan and funding.
Article 139 — Safety during transition
Cost or workforce reductions shall not weaken the minimum requirements for safety, industrial security, maintenance or environmental protection. These functions shall form part of the restructuring plan assessment.
Chapter Fourteen — Merger, conversion, liquidation and insolvency
Article 140 — Merger or conversion decision
The Council of Ministers shall issue a merger or conversion decision on the State Ownership Council's recommendation and an independent study. It shall specify the effective date and transfer of rights, debts, contracts, assets and workers.
Article 141 — Protection of creditors
Creditors shall be notified of conversion, merger or liquidation in accordance with the law. Assets shall not be transferred while liabilities are left in an empty entity with intent to harm creditors.
Article 142 — Liquidation
A company that has lost its ownership rationale and cannot viably be recovered, merged or sold may be liquidated by Council of Ministers decision under a plan ensuring identification of assets, liabilities, workers and contracts.
Article 143 — Liquidation committee
A professional liquidation committee shall be appointed with financial and legal expertise and representation from the Ministry of Finance and Board of Supreme Audit where appropriate. It shall follow a timetable, provide periodic reports and maintain a public record of non-confidential transactions.
Article 144 — Suspension of new obligations
From the liquidation decision date, the company shall cease incurring new obligations other than those required to preserve assets, complete necessary work and settle rights, unless authorised by the liquidation committee.
Article 145 — Order of settlement
Claims of creditors, workers, tax authorities, guarantee holders and other parties shall be settled according to priorities prescribed by applicable laws. No government body shall receive a priority not established by law.
Article 146 — Sale of liquidation assets
Assets shall be sold competitively and transparently following valuation. An asset may be transferred to a public body at fair value if public need is demonstrated and transfer is more beneficial than sale.
Article 147 — Liquidation period
As a rule, liquidation shall be completed within three years. Any extension shall be submitted to the Council of Ministers with reasons for delay and the cost of continuation.
Article 148 — Deregistration
After final accounts are approved and settlement completed, the Companies Registrar shall be notified to deregister the company and publish the termination of its legal personality in accordance with the law.
Article 149 — Insolvency of converted companies
If a company converts into a form subject to company, bankruptcy and insolvency law, the general rules for that form shall apply. Implicit government protection shall not continue because of its ownership history.
Article 150 — Continuity of essential services
Where a company undergoing restructuring or liquidation provides an essential service, the sector body shall prepare, before the decision, a plan to continue the service through another company, contract, public utility or alternative means.
Chapter Fifteen — Integrity and accountability
Article 151 — Code of conduct
Each company shall adopt a code of conduct covering conflicts of interest, gifts, confidentiality, supplier dealings, inside information and reporting misconduct.
Article 152 — Disclosure of interests
Board members and senior executives shall submit annual declarations of interests and associated entities, updated upon any material change, without prejudice to financial disclosure laws.
Article 153 — Prohibition on exploiting information
Unpublished company information shall not be used for profit or to help a party buy assets or shares, win a contract or obtain a commercial advantage.
Article 154 — Revolving-door employment
Regulations may impose a reasonable restriction period on a board member or chief executive moving to a counterparty or investor whose material contract or transaction they directly supervised, in accordance with labour laws and constitutional rights.
Article 155 — Protected reporting
The company shall provide a secure, independent channel for reporting corruption, fraud and misconduct and protect reporting persons against retaliation in accordance with the law.
Article 156 — Internal investigations
The audit committee shall adopt procedures for investigating material financial and administrative violations. Suspected crime or corruption shall be referred promptly to competent bodies.
Article 157 — Board and management liability
A member or manager shall not be relieved of liability merely because a government body approved a decision if that person concealed material information or breached the law or duties of care and loyalty.
Article 158 — Protection of professional judgement
A member or manager shall not be liable merely because a commercial loss occurs if the decision was made in good faith, without a conflict of interest, on reasonable information and within their powers.
Article 159 — Major transactions
The sale of a material asset, substantial borrowing, a joint venture, company acquisition or guarantee for another party shall require enhanced approval levels and independent assessment according to thresholds prescribed by regulations.
Article 160 — Anti-money laundering
Companies shall, according to their activities, comply with applicable requirements on anti-money laundering, countering terrorist financing, targeted financial sanctions and verification of beneficial ownership.
Chapter Sixteen — Special sectors and transitional provisions
Article 161 — Banks and financial institutions
State banks and financial institutions shall be subject to Central Bank laws, prudential legislation and the Banking Sector Reform Law. This Law's provisions on ownership policy, governance and disclosure shall apply insofar as they do not conflict with special rules.
Article 162 — Oil, gas and sovereign resources
Constitutional provisions and special laws on oil and gas resources shall be observed when applying this Law to companies operating in those sectors. This Law does not authorise transfer of ownership of natural resources or sovereign rights over them.
Article 163 — Natural monopolies
Restructuring or privatisation shall not turn a natural monopoly into an unregulated private monopoly. Independent regulation of tariffs, access and quality shall be established or activated before control is sold.
Article 164 — Security and defence companies
National security considerations shall be observed in defence and security companies, while audit, governance, integrity and disclosure requirements continue to apply insofar as they do not reveal classified information.
Article 165 — Portfolio inventory
Within nine months of this Law's entry into force, the Unit shall complete an initial comprehensive register of all public companies, subsidiaries, joint ventures, principal assets, support, guarantees, debts and workers.
Article 166 — Initial classification
The initial classification of all companies shall be completed within twelve months of the inventory's completion. Each company shall receive a category, an initial path and an ownership or reform rationale.
Article 167 — Reconstitution of boards
Boards of medium-sized and large companies shall be restructured under this Law within eighteen months, preserving continuity and avoiding simultaneous termination of all memberships where this would harm management.
Article 168 — Statements and audit
Within one year, the Ministry of Finance, Unit and Board of Supreme Audit shall establish a transition roadmap for improving financial statements, audit and accounting standards. Companies shall receive no more than three years to meet new requirements according to their category.
Article 169 — Plans for loss-making companies
Companies recording recurring operating losses or relying on support unrelated to a public service shall submit a restructuring plan within nine months of classification.
Article 170 — Legal adaptation
Articles of incorporation, internal rules, structures and regulations shall be amended to comply with this Law within twenty-four months.
Article 171 — Continuation of previous decisions
Previous merger and conversion decisions, contracts, partnerships and acquired rights shall remain valid unless amended in accordance with the law. They shall not be reopened retrospectively merely because this Law has been enacted.
Article 172 — Repeal of the Public Companies Law
Public Companies Law No. (22) of 1997, as amended, is repealed from this Law's effective date. Regulations, instructions and decisions issued under it shall remain in force where not inconsistent for no more than eighteen months or until replaced, whichever is earlier.
Article 173 — Regulations and instructions
The Council of Ministers shall issue implementing regulations within one hundred and eighty days. The Unit, Ministry of Finance and competent bodies shall issue manuals and instructions within their respective remit.
Article 174 — Review of the Law
After five years, the government shall conduct a comprehensive review of this Law, restructuring outcomes and their impact on public finances, competition, employment and services, and submit a report to the Council of Representatives.
Article 175 — Entry into force
This Law shall enter into force one hundred and eighty days after its publication in the Official Gazette.
Statement of reasons
This Law is enacted to modernise the legislative framework for state-owned enterprises in accordance with the Constitution and the requirements of a modern economy; separate state ownership from regulatory and policy functions; strengthen board independence and professional executive management; make the costs of public-service obligations, support and guarantees visible; enforce financial discipline, competitive neutrality and transparency; establish objective paths for company continuation, recovery, merger, conversion, admission of partners or liquidation; and protect workers, creditors and users during restructuring.
Explanatory memorandum
1. Why Repeal and Replace?
The current law contains important tools, but rests on a model in which a public company is closely integrated with its ministry and basic governance operates through internal rules. The proposed reform changes the logic of ownership itself: the state defines the ownership rationale and objectives, the board governs, management manages, and the regulator regulates the market. This change is difficult to achieve through scattered partial amendments.
2. Why a central ownership unit?
When a ministry both owns a company and sets sector policy or regulates the sector, incentives arise to shield the company from competition or interfere in its decisions. The central Unit does not handle day-to-day management. Its function is to unify owner policy, data, nominations and evaluation through a gradual transition that does not disrupt sectors.
3. Why are losses alone insufficient as a criterion?
A company may lose money because it provides a public service at a government-set price; another may be profitable because it receives subsidised fuel, land or loans whose full impact is not visible. The law therefore distinguishes commercial losses from public obligations and assesses cash flows, productivity, demand, assets, debt and competition, rather than the loss-to-capital ratio alone.
4. Explicit rather than hidden support
If the state wants a company to run an unprofitable transport route or produce goods at a socially determined price, this is a legitimate public policy choice, but it must be measurable and funded. Separate public-service accounts prevent its cost being treated as commercial failure while also preventing the public-service mandate from becoming a pretext for covering inefficiency.
5. Privatisation is not the default
The law provides tools for partial or full sale without requiring them. Public ownership may be justified in strategic sectors and essential utilities. In a competitive market, admitting private capital or selling the company may be preferable. Public value, competition and sustainability govern the decision, rather than an ideological position on ownership.
6. Workers' rights are part of reform design
Restructuring that assumes thousands of workers can be transferred or dismissed without a social plan will face political and practical obstacles. The proposal therefore requires an inventory of skills and positions before a decision, followed by redeployment, training, voluntary departure and statutory compensation, while preventing arbitrary recruitment from resuming shortly afterwards.
7. Conversion into a joint-stock company
The current law already allows a public company to become a joint-stock company. The proposal retains this tool but adds clearer conditions: valuation of assets and debts, protection of creditors and workers, definition of the state's share, investor disclosure and minority shareholder rights after conversion.
8. Commercial decisions and protection of competent managers
A board cannot be asked to make commercial decisions and then held liable merely because the outcome was unprofitable. The proposal therefore protects informed professional decisions taken in good faith without conflicts, while retaining liability for fraud, concealment, gross negligence or illegality.
Portfolio classification and decision paths
| Category | Rationale | Typical path |
|---|---|---|
| Strategic / essential utility | Economic security, sovereign resource, natural monopoly or critical service. | State retention + governance and indicators + independent regulation. |
| Competitive commercial | Operates in a market where the private sector can compete. | Commercial governance, followed by assessment of conversion, investor admission or sale. |
| Public service | A non-commercial social or regional task. | Public-service contract, transparent compensation and accounting separation. |
| Recoverable | Financial or operational weakness with a realistic prospect of reform. | A plan of up to 3 years, conditional funding and decision indicators. |
| Unviable | No strategic rationale or realistic recovery plan. | Merger, asset sale, conversion or orderly liquidation. |
This classification prevents “strategic” status from becoming blanket immunity from accountability, while also preventing losses from automatically triggering sale. Each category has a different financial and institutional logic and is periodically reassessed rather than frozen for decades.
Governance model
The sector ministry gradually moves from owner and manager to policymaker and regulator, while the ownership Unit defines state expectations, coordinates nominations and monitors the portfolio. The board is the main accountability link: it approves strategy, risk and investment, appoints the chief executive and evaluates performance.
The proposal does not require every board member to come from outside the state; some companies need government or sector expertise. It does, however, prevent board membership from automatically following officeholding. It requires a non-executive majority, a proportion of independent members and a skills matrix, and prohibits combining the roles of chair and chief executive.
Worker representation is retained in large companies, but the worker representative becomes a full board member with all corresponding duties, acting in the company's interest rather than exclusively for one group. Separate channels are established for social dialogue on working conditions and restructuring.
Public service and support
One of the main sources of ambiguity in public companies is the mixing of commercial activities and social tasks. The proposal separates them: commercial activity is assessed for efficiency and competition; if the state requests a non-commercial service, it must define, fund and monitor it. Social policy costs thus become visible in the budget rather than disappearing into company losses.
Disclosable support includes not only cash but concessional loans, guarantees, energy or land below market prices, exemptions and transfers. The aim is not to prohibit all assistance, but to make its cost, rationale and competitive impact reviewable.
Restructuring and conversion
Reform starts with diagnosis, not a merger or sale decision. Some companies need better management, accounting, maintenance and marketing; some need a productive factory separated from idle assets; some need a technology partner or new capital; and some have no economic reason to continue.
The law therefore sets a recovery-plan period and prevents indefinite renewal of funding. If the company does not meet published indicators by the deadline, the decision moves to merger, conversion or liquidation rather than rewriting the same plan each year.
The law prohibits sham accounting restructuring, such as moving losses into a new entity while leaving liabilities in an old one, or merging companies without analysing whether their activities are genuinely complementary.
Worker protection during transition
The law does not predetermine how many jobs will be abolished or retained; that requires assessment of each company. It does impose a sequence: identify necessary positions and skills, redeploy where genuine need exists, retrain, pursue voluntary retirement or departure options, and apply termination and compensation rules where no alternative exists.
Accrued wage, retirement and social security rights survive merger or conversion, and the party responsible for them must be identified before the transaction is completed. A limited portion of shares in a converted company may also be offered for voluntary employee subscription, but shares do not replace any legally accrued financial or retirement entitlement.
Legislative alignment
| Framework | Proposed remedy |
|---|---|
| Public Companies Law No. (22) of 1997, as amended | Repeal and replacement, with an 18-month transition for instructions and regulations. |
| Companies Law No. (21) of 1997, as amended | Applies to joint-stock and mixed companies resulting from conversion in matters not regulated by this Law. |
| Federal Financial Management Law | Reference for transfers, guarantees, borrowing, budgets and fiscal risks. |
| Proposed Public Procurement and Government Contracts Law | Regulates company procurement within its scope, with proportionate commercial procedures for competitive companies where legally permitted. |
| Competition and Anti-Monopoly Law | Applies to public companies; ownership does not exempt them from competitive neutrality. |
| Labour, retirement and social security laws | Govern workers' rights and transition paths; a conversion agreement extinguishes no right. |
| Banking and Central Bank laws | Take precedence over this Law in prudential and sector-specific matters. |
Financial and Implementation Implications
The proposal provides no aggregate estimate of budget savings or privatisation proceeds because these depend on companies, assets, valuations and liabilities not yet assembled in a published, unified national database. Any aggregate figure at this stage would imply false precision.
The legislation's direct cost is relatively limited because it reorganises the ownership function within the state rather than creating a large institution. Costs include building the portfolio register, independent valuations, board nominations, accounting and audit upgrades, necessary restructuring advice and workforce transition programmes.
The most significant fiscal effects arise from ending undefined support, revealing liabilities, increasing distributions from potentially profitable companies, reducing arrears, disposing of unproductive assets and avoiding repeated capital injections into companies without a plan. These effects shall be measured using actual data after implementation, rather than a predetermined fixed savings rate.
Transition and Implementation
The first phase begins with inventory, not sale: a complete register of companies, subsidiaries, assets, debts, support and workers is assembled within nine months, followed by initial classification within twelve months. Restructuring decisions can then rely on a unified picture rather than fragmented sector databases.
Boards are then gradually reconstituted, Owner Expectations Documents issued, loss-making companies' plans submitted, and an accounting and disclosure transition roadmap prepared. The law allows two years to adapt internal rules and three years for some reporting and standards requirements, according to company size.
Previous contracts and decisions are not cancelled retrospectively. Instructions issued under the 1997 law also remain temporarily in force where consistent until replacements are issued, preventing a legal vacuum on the first effective day.
International Standards Relevant to Iraq
The 2024 OECD Guidelines on Corporate Governance of State-Owned Enterprises are the latest international reference in this field. They call for periodic review of ownership rationales, a professional ownership function, board independence, separation of ownership and regulation, competitive neutrality, transparency of support and obligations, and aggregate portfolio reporting.
The proposal also considers reforms previously discussed in Iraq's 2017 Charter of Good Governance for Non-Financial State-Owned Enterprises, as documented in World Bank materials. These include costing social objectives and making clear decisions on continuation, liquidation or privatisation when structural losses arise. The proposal elevates these principles from a policy framework into more complete legislative rules.
The proposal does not assume that extensive privatisation is the most suitable international model. The latest OECD Guidelines themselves start with the rationale for ownership and recognise that state companies may remain important in utilities, infrastructure and strategic sectors, while requiring governance, accountability and transparency consistent with leading corporate practice.
Sources and references
- Iraqi Legislation Database — Public Companies Law No. (22) of 1997The legislative reference showing that the law remains in force and setting out the definition of a public company and provisions on its formation and capital.
- Ministry of Justice — Public Companies Law with amendmentsThe Ministry of Justice page publishing Public Companies Law No. (22) of 1997 with its amendments.
- Ministry of Justice — Fifth Amendment to the Public Companies Law, Iraqi Official Gazette 4376Documents the 2015 Fifth Amendment, which expanded public companies' right to participate in ventures with Iraqi companies.
- Ministry of Planning — Restructuring economically unviable public companies in the Ministry of Industry and Minerals, 15/3/2026The latest official documentation of ongoing government work to restructure public companies and improve their economic and administrative efficiency in cooperation with a specialist consultant.
- Ministry of Industry and Minerals — Iraqi Industry PlatformAn official platform presenting public companies, factories, industrial data and partnership and investment opportunities.
- State Company for Textile and Leather Industries — Company overviewAn official example of earlier restructuring through the merger of several public companies into one entity by Council of Ministers decision.
- State Company for Hydraulic Industries — About usAnother official example of a public company formed through mergers in 2015 and continuing to operate through 2026.
- International Monetary Fund — Iraq 2025 Article IV ConsultationThe latest available comprehensive assessment emphasising stronger accountability in state-owned enterprises and reforms to employment, public finances and governance.
- World Bank — Strengthening Public Financial Management Oversight and Accountability Institutions in IraqDocuments Iraq's earlier good-governance charter for non-financial public companies, focusing on fiscal risks, separation of public-service objectives, and continuation, liquidation or privatisation decisions.
- OECD — Guidelines on Corporate Governance of State-Owned Enterprises 2024The latest comprehensive international standard for state ownership governance, boards, disclosure, competitive neutrality and sustainability.
- OECD — The state’s role as an owner, 2024A reference for professional ownership functions, board independence, owner expectations, reporting and disclosure.
- OECD — State-owned enterprises in the marketplace, 2024A reference for competitive neutrality, separation of ownership from regulation and costing public-service obligations.
- OECD — Disclosure, transparency and accountability, 2024A reference for disclosure of support, guarantees, risks, structure, obligations and transactions with the state.
- OECD — Boards of state-owned enterprises, 2024A reference for board independence and responsibilities for strategy, risk and management oversight.
Proposed legislation within Ali Zuweid's Political Programme · Prepared by Ali Zuweid