Ali Zuweid's Political Programme · Proposed legislation · Economy, Finance, Investment and Employment
Companies, Governance, Transparency and Beneficial Ownership Law
A bill repealing and replacing Companies Law No. (21) of 1997, as amended, moving company formation and records into a digital environment, modernising legal forms, capital, board governance, minority rights, mergers and conversions, and establishing a verified beneficial ownership framework integrated with integrity and anti-money laundering requirements.
Executive Summary
Companies Law No. (21) of 1997, as amended, remains the principal reference for forming private and mixed companies in Iraq. Subsequent amendments include Law No. (17) of 2019. Recent government guides, including the investor guide published in 2026, confirm continued reliance on it for registration, while the Ministry of Justice continued applying its simple-company provisions in 2025. Foreign Company Branches Regulation No. (2) of 2017 also remains in operation following amendments in 2023 and 2025.
The existing law provided important tools, including joint-stock, limited liability and general partnership companies and sole proprietorships, permitted foreign investor participation and eased some earlier restrictions. However, it predates today's digital transformation, modern governance and beneficial ownership rules, electronic meetings and financing instruments. In many places it relies on paper procedures and capital and governance concepts not equally suited to small start-ups and large joint-stock companies.
The proposal replaces rather than patches the law because the change concerns more than one provision. It begins with unified electronic registration and a company number linkable to tax, social security and regulators. It expressly recognises single-member limited liability companies, rather than leaving individual entrepreneurs between unlimited-liability sole proprietorships and more complex structures. It retains simple companies, general partnerships, limited liability and joint-stock companies, making requirements proportionate to each form's size and risks.
On governance, the proposal expands duties of care and loyalty, conflict-of-interest and related-party rules, gives joint-stock company boards a genuine role in strategy, risk and management, and strengthens shareholder information rights, electronic voting, derivative actions and protection against dilution and abuse. Listed-company requirements are not imposed on small companies; proportionality is part of the law itself.
Beneficial ownership is central to reform. In June 2026, FATF placed Iraq under increased monitoring, with improved risk-based implementation of beneficial ownership measures among action-plan items. The proposal therefore goes beyond asking who the registered shareholder is, requiring ownership chains to be traced to the natural person ultimately owning or controlling the company, addressing nominee shareholders and directors and control through other means, and empowering the Registrar to verify rather than merely store data.
The proposal does not make a twenty-five per cent threshold an automatic escape from scrutiny. Regulation may use it as a maximum indicative threshold, but effective control remains an independent basis. This accords with FATF's updated approach requiring adequate, accurate, current information and effective authority access.
For mergers and conversions, the proposal adopts universal legal succession to protect contracts and creditors, permits divisions and conversion between forms, and grants minorities fair-value exit rights in specified material transactions. Insolvency is not regulated in detail here because POL-41 is dedicated to bankruptcy, insolvency and corporate restructuring. This law confines itself to solvent voluntary liquidation and referral to insolvency law upon inability to pay.
The bill temporarily retains the existing foreign-branch regime to avoid disrupting registered companies, requiring its update within eighteen months of entry into force. Transition is therefore gradual: existing companies continue, while registration, beneficial ownership and governance move through defined stages.
Current legal position
As of this document, Companies Law No. (21) of 1997, as amended, remains Iraq's general law for private and mixed companies. Amendment Law No. (17) of 2019 confirmed continuation of its basic structure with modifications, while government investment guides for 2025 published in 2026 confirm that legal company registration still proceeds under it.
In March 2025, the Ministry of Justice adopted a uniform template for simple-company contracts under Article (183) of the existing law, indicating continued use of its company forms. For foreign companies, the former branch regime is no longer the latest reference: the current regulation is No. (2) of 2017, amended by Regulation No. (4) of 2023 and then No. (1) of 2025.
This is not a legislative vacuum but an accumulation: a primary law from 1997, amendments, registration instructions, a newer branch regime, and anti-money laundering and sectoral governance requirements. Repeal and replacement by a law consolidating core rules is clearer than adding further amendment layers.
Legislative Gap
| Area | Gap | Treatment |
|---|---|---|
| Company formation | Multiple procedures and documents, historically reliant on attendance and paper. | Digital register, government connectivity and a statutory decision deadline. |
| Single-member company | A need for clear limited liability for individual entrepreneurship. | Single-member limited liability company. |
| Board governance | A need for clearer loyalty, care, independence, committee and related-party duties. | A comprehensive legislative governance chapter. |
| Minority shareholders | Limited tools against abuse, dilution or controller transactions. | Derivative actions, information and exit rights, and independent valuation. |
| Beneficial ownership | Fragmented information; FATF requirements emphasise accuracy, updating and verification. | A verified central register and a chain traced to the natural person. |
| Merger and conversion | A need for clearer succession, creditor protection and division rules. | Modern procedures, legal succession and minority protection. |
| Small companies | The same burden may apply across different sizes. | Proportionality, electronic templates and limited exemptions. |
Legislative policy
The proposal adopts one company law with differentiated risk-based requirements. Core rules on personality, liability, beneficial ownership and truthful registration apply to all, while governance, audit and disclosure increase as companies move from small, closely held businesses to public or listed joint-stock companies.
The law does not turn the Companies Registrar into an economic approval authority. Its role is legal, registrational and supervisory over register accuracy, rather than deciding whether a market needs a new company. Regulated activities still require the competent sector licence, but registration does not depend on a general economic judgement.
The proposal also separates company law from bankruptcy law. Solvent companies may dissolve and voluntarily liquidate here; insolvent companies move to the POL-41 insolvency and restructuring system, avoiding duplicate priority, rescue and judicial liquidation rules.
Draft Companies, Governance, Transparency and Beneficial Ownership Law
Chapter One — General Provisions
Article 1 — Title
This Law shall be called the Companies, Governance, Transparency and Beneficial Ownership Law.
Article 2 — Objectives
This Law aims to simplify company formation and doing business; modernise company forms, financing and governance; protect partners, shareholders and creditors; enable electronic registration and disclosure; strengthen beneficial ownership and related-party transaction transparency; provide modern merger, conversion, division and dissolution rules; and improve companies' capacity to attract investment, grow and obtain finance.
Article 3 — Scope of Application
This Law applies to Iraqi private and mixed companies and commercial legal persons established in its forms; foreign company branches and representative offices as governed by this Law and regulations; and public companies, banks, insurance and securities companies insofar as their special laws refer to it or do not conflict with it.
Article 4 — Special legislation
Special banking, insurance, securities, investment, competition, bankruptcy and regulated-profession legislation shall apply to their specific matters. This Law governs formation, governance, ownership, disclosure and legal personality where consistent.
Article 5 — Definitions
The following expressions mean: “Registrar”, the Companies Registrar in the Ministry of Trade; “Register”, the national electronic companies register; “company”, a legal person established under this Law; “joint-stock company”, a company whose capital is divided into shares; “limited liability company”, a company with limited liability whose capital is divided into ownership interests; “single-member company”, a limited liability company owned by one person; “general partnership”, a company whose partners are jointly liable within prescribed limits; “simple company”, a simplified commercial contractual arrangement under this Law; “beneficial owner”, the natural person ultimately owning or controlling the company or on whose behalf a transaction is conducted; “related party”, a person connected with the company, board, management or controlling owner under this Law; “listed company”, a company whose securities trade on a regulated market; and “control”, direct or indirect ability to direct financial or operational decisions, appoint a board majority or exercise decisive influence.
Article 6 — Legal personality
A company acquires legal personality upon registration, with separate assets and liabilities, a name, domicile and capacity within its objects and the law.
Article 7 — Limited liability
Partners or shareholders in limited liability or joint-stock companies shall be liable for company obligations only to the extent of unpaid contributions, unless fraud, abuse of legal personality, deliberate commingling of assets or another statutory ground is established.
Article 8 — Recognition of single-member companies
One natural or legal person may establish a limited liability company without impairing separate patrimony or limited liability.
Article 9 — Freedom of organisation
A company's articles and internal rules may regulate its affairs within mandatory provisions, third-party rights, minority protection and public policy.
Article 10 — Electronic dealings
All registration, filing, notification and extract procedures shall be capable of electronic completion. Electronic documents, signatures and registers shall have the evidentiary force established by applicable laws.
Chapter Two — Company forms
Article 11 — Forms
Private companies shall take one of the following forms: joint-stock company, limited liability company, single-member limited liability company, general partnership or simple company. Other forms may be established by special law.
Article 12 — Joint-stock company
Shareholder liability is limited to subscribed shares. The company operates through a general meeting, board and executive management and is subject to stricter capital, disclosure and governance requirements.
Article 13 — Limited liability company
A limited liability company comprises two or more persons. Regulations may set a maximum number of partners where necessary for regulation. Ownership interests shall not trade on the securities market.
Article 14 — Single-member company
A natural or legal person may establish a single-member company. The owner's and company's assets shall be separated, and decisions made in the capacity of the general meeting documented.
Article 15 — General partnership
A general partnership comprises two or more partners with joint and unlimited liability for its obligations. New partners may be admitted or interests transferred only under the company agreement and this Law.
Article 16 — Simple company
A simple company arises by authenticated contract between two or more persons for a specified project or activity and acquires legal personality if registered. Partners' liability and relations shall be defined contractually with due regard to third-party rights.
Article 17 — Mixed companies
A company is mixed where public and private sectors participate according to the proportion prescribed by public company law or state ownership policy. It shall follow its legal form's rules and special public-funds rules.
Article 18 — Professional companies
Members of regulated professions may establish professional companies where professional laws permit. Personal professional liability for fault remains within special-law limits.
Article 19 — Choice of form
The Registrar shall not refuse formation merely because an activity could be undertaken in another form unless special law requires a particular form.
Article 20 — Regulated companies
Banks, insurers, financial investment companies and others shall adopt the form required by sectoral laws. Registration does not replace sector licensing.
Chapter Three — Formation and electronic registration
Article 21 — Formation application
An electronic application to the Registrar shall state the form, name, purpose, address, capital, founders, directors, beneficial owners and other necessary data.
Article 22 — Articles of incorporation and internal rules
Articles and internal rules may use flexible or standard templates and be electronically signed. Paper authentication is required only where law specifies protection of a right in rem or another particular reason.
Article 23 — Business name
Company names shall be distinctive, non-misleading, consistent with public policy and free of descriptions implying nonexistent licensing or government status.
Article 24 — Name reservation
Names may be reserved electronically for a defined period. Reservation lapses if formation is not completed and creates no ownership right independent of trademark rights.
Article 25 — Objects
A company may have general objects covering lawful business unless an activity requires special licensing. Every subsidiary activity need not be enumerated in its articles.
Article 26 — Registered address
Every company shall have a registered address in Iraq suitable for service, which may be a professional office or lawful business address under applicable rules.
Article 27 — Registration deadline
The Registrar shall decide complete applications within five working days. If no decision is made, applicants may request urgent administrative review. Regulations shall identify cases requiring further verification.
Article 28 — Grounds for refusal
Refusal shall be reasoned and limited to illegality, missing material data, a misleading name or failure to obtain prior licensing required by special law. Economic planning or market-need judgements shall not justify refusal.
Article 29 — Unified company number
Companies shall receive a unified national number used for tax, social security, banking, procurement and government licensing wherever electronic connectivity permits.
Article 30 — Government connectivity
The Companies Registration Department shall connect electronically with tax, national identity, social security, regulatory, land registration and other bodies to reduce repeated document requests.
Article 31 — Registration certificate
Registration certificates shall be issued electronically and verifiable through an official code or link. Paper copies are unnecessary where digital verification is possible.
Article 32 — Commencement of business
Companies may commence business after registration unless a separate sector licence or approval is required. Registration alone does not authorise such activities.
Article 33 — Subsequent changes
Material changes to name, address, capital, directors, beneficial ownership, merger, conversion and other matters shall be filed within statutory or regulatory periods.
Article 34 — Register accuracy
Published register data shall be effective against bona fide third parties from publication. A company shall not rely on unfiled information where filing is mandatory.
Article 35 — Objection and appeal
Registrar decisions shall be subject to grievance and appeal before the competent body or court through prompt procedures avoiding unjustified delay to business formation.
Chapter Four — Capital, ownership interests and shares
Article 36 — Capital
Founders shall set capital appropriate to the business. Sectoral laws or regulations may prescribe minimum capital for specified forms or activities for creditor protection or regulatory reasons.
Article 37 — Contributions
Contributions may be cash, in kind or a measurable financial right. Future services shall not constitute paid-up capital except in legally permitted forms and within prescribed limits.
Article 38 — Valuation of in-kind contributions
In-kind contributions shall be fairly valued. Independent valuation is mandatory in joint-stock companies or above the proportion prescribed by regulations.
Article 39 — Shares
Joint-stock companies may issue ordinary shares and other classes with different financial or voting rights if authorised by their internal rules and consistent with equality and legal limits.
Article 40 — Preference shares
Preference shares may carry dividend or liquidation priority or specified rights. No class may wholly deprive a shareholder of fundamental non-waivable rights.
Article 41 — No-par-value shares
Regulations may permit no-par-value shares where accounting and capital and creditor protection systems provide necessary safeguards.
Article 42 — Shareholder register
Companies shall maintain accurate shareholder or partner registers, electronically or through a central depository for listed companies where appropriate.
Article 43 — Share transfers
Joint-stock shares shall be transferable under the law and internal rules. Absolute transfer prohibitions are permitted only during an initial formation period or another legally authorised case.
Article 44 — Transfer of limited liability interests
Transfers of limited liability interests shall be subject to contractual pre-emption rights or reasonable restrictions. Restrictions shall not trap a partner indefinitely without a fair exit.
Article 45 — Pre-emption rights
Partners and shareholders shall have proportional pre-emption rights in capital increases unless removed or restricted by a qualified majority in the company's interest with due regard to minority rights.
Article 46 — Capital increases
The general meeting or competent body shall approve capital increases, specifying purpose, price, allocation method and effects on ownership percentages.
Article 47 — Capital reductions
Capital may be reduced to absorb losses, return surplus or restructure the company, with creditor protection, publication and a creditor right to object where claims are endangered.
Article 48 — Share buybacks
Companies may repurchase shares subject to solvency, reserves, disclosure and statutory or regulatory limits. Repurchased shares shall not manipulate voting or markets.
Article 49 — Distributions
Profits or funds shall not be distributed if, afterwards, the company cannot pay debts when due or assets fall below liabilities and protected capital under accounting rules.
Article 50 — Recovery of unlawful distributions
An unlawful distribution may be recovered from a recipient who knew or ought to have known of its illegality. Board members or managers unlawfully approving it shall be liable under liability rules.
Article 51 — Debt instruments
Joint-stock companies may issue bonds, debt instruments or convertible instruments under securities law and regulations, defining holders' rights and ranking.
Article 52 — Convertible financing
Convertible financing instruments may be issued if the general meeting approves their terms and protection of pre-emption rights or lawfully excludes those rights.
Chapter Five — Partner and shareholder rights
Article 53 — Equal treatment
Holders of securities or interests of the same class shall receive equal treatment. A controller shall not obtain special benefits at minorities' expense without a legal basis.
Article 54 — Information rights
Each partner or shareholder may inspect company articles, statements, reports, general meeting minutes and legally accessible records, subject to trade-secret protection.
Article 55 — General meeting
Within prescribed limits, the general meeting is the supreme shareholder authority, responsible for amendments to internal rules and capital, board election, statements, distributions, mergers, conversions and material transactions.
Article 56 — Annual meeting
The annual meeting shall occur within four months of financial year-end unless sectoral law requires less, addressing statements, reports, audit, distributions and board elections when due.
Article 57 — Notice
Adequate advance notice shall be sent by a provable method, stating time, venue or connection method, agenda, documents and proposed resolutions.
Article 58 — Electronic meetings
General meetings may be in person, virtual or hybrid if identity verification, simultaneous participation, voting and record retention are ensured.
Article 59 — Agenda items
Shareholders holding a proportion prescribed by regulation not exceeding five per cent may request an annual-meeting agenda item or proposed resolution.
Article 60 — Proxy voting
Proxy or electronic voting is permitted under controls against forgery and requiring conflict disclosure. Shareholders need not attend in person to exercise rights.
Article 61 — Cumulative voting
Cumulative voting shall apply in public or listed joint-stock board elections where prescribed by regulation or the Securities Commission to strengthen minority representation.
Article 62 — Share classes
Material alteration of a share class's rights requires approval by a special class meeting with a qualified majority.
Article 63 — Purchase of minority interests
Unlisted companies may provide fair exit rights for partners objecting to conversion, merger or material change, using independent valuation and statutory conditions.
Article 64 — Company actions
A shareholder or partner with legal standing may ask the company to sue a director or board member. If it unlawfully refuses, a derivative action may be brought under court safeguards.
Article 65 — Abuse of majority power
Courts may invalidate resolutions or award compensation where the majority uses its powers to harm minorities or confer an unfair controller benefit.
Article 66 — Protection against abusive dilution
Shares or interests shall not be issued at unfair values or terms to dilute a particular shareholder or transfer control. Courts may suspend or correct the issue.
Article 67 — Ownership register access
Shareholders may inspect the shareholder register as necessary to exercise their rights. Data shall not be used for harassment or unlawful marketing.
Article 68 — Shareholder agreements
Shareholder agreements are valid where consistent with law and third-party rights. Control or voting agreements shall be disclosed in companies where law requires.
Chapter Six — Board and executive management
Article 69 — Board duties
The board shall direct the company, oversee management, approve strategy, budgets, risks, investments and internal controls, and appoint executive management.
Article 70 — Duty of care
Members shall exercise the care of an ordinarily competent professional in similar circumstances and decide on sufficient information after reasonable consideration.
Article 71 — Duty of loyalty
Members shall act in the company's interest and not exploit office, information or business opportunities for themselves or related parties at its expense.
Article 72 — Good-faith business judgement
Members shall not be liable merely because a business decision causes loss if taken in good faith, without conflicts, on reasonable information and within authority.
Article 73 — Joint-stock board composition
Internal rules shall set board size within statutory or regulatory limits, proportionate to company size and conducive to effective operation and oversight.
Article 74 — Independent members
Listed and public joint-stock companies shall include the independent-member proportion prescribed by the capital market authority. Proportionate independence requirements may extend to other large companies.
Article 75 — Board chair
Chair and chief executive roles shall be separate in listed and public joint-stock companies. A temporary exception may apply in an unlisted private company with general meeting approval and disclosure.
Article 76 — Board committees
Audit, nomination, remuneration and risk committees shall be formed in companies specified by law or the market authority, each with a clear charter and powers.
Article 77 — Audit committee
The audit committee shall oversee statements, internal and external audit, internal controls, related-party transactions and financial reporting of concerns.
Article 78 — Chief executive
The board shall appoint the chief executive and define powers, pay and performance indicators. Neither the general meeting nor controlling shareholders may manage daily operations outside legal frameworks.
Article 79 — Delegation of powers
The board may delegate powers to management or committees while retaining oversight responsibility. Decisions reserved by law to the board or general meeting may not be delegated.
Article 80 — Board minutes
Meetings, decisions, reasons for abstention, conflicts and dissent shall be documented, with electronic record retention.
Article 81 — Conflicts of interest
Members and managers shall immediately disclose direct or indirect interests in decisions or transactions and abstain from voting or participation where required by law.
Article 82 — Related-party transactions
Material related-party transactions require disinterested member approval and may require general meeting approval or independent valuation above regulatory thresholds.
Article 83 — Loans to management members
Loans or guarantees for board members, managers or related parties require market terms and independent approval and must remain within sectoral-law limits.
Article 84 — De facto director liability
Persons effectively directing management or acting as directors without formal appointment shall bear directors' duties and liabilities proportionate to their actual role.
Chapter Seven — Accounts, audit and disclosure
Article 85 — Financial year
The company's financial year shall be specified in its articles or internal rules under law and tax and accounting regulations. Regulated companies shall follow special rules.
Article 86 — Accounting records
Companies shall maintain orderly accounts enabling reliable financial statements and identification of transactions, assets, liabilities and cash flows, retained for the statutory period.
Article 87 — Accounting standards
Statements shall follow accounting standards adopted in Iraq. International Financial Reporting Standards shall apply to categories designated by competent bodies.
Article 88 — Annual statements
At each year-end, companies shall prepare statements of financial position, income, cash flows, changes in equity and notes under applicable standards.
Article 89 — Annual report
Joint-stock and large companies shall prepare annual reports on activities, risks, governance, performance, material transactions, and capital and ownership changes.
Article 90 — External audit
Companies specified by law or regulation shall undergo independent licensed audit. Exemptions for very small companies shall not prejudice taxation or partner rights.
Article 91 — Auditor independence
Auditors shall not be directors, employees or holders of material financial interests in the company. Regulations shall restrict non-audit services threatening independence.
Article 92 — Auditor appointment
The general meeting shall appoint auditors in joint-stock companies; partners may appoint them in other companies. The audit committee shall recommend appointments where applicable.
Article 93 — Audit report
Auditors shall express opinions under adopted auditing standards and report material violations and weaknesses under the law. Their reports do not relieve management of statement responsibility.
Article 94 — Filing statements
Statements and annual reports shall be electronically filed with the Registrar within prescribed periods. Basic data shall be public, protecting information lawfully withheld.
Article 95 — Proportionate exemptions
Regulations may exempt some small companies from disproportionate disclosure or audit requirements. Identity, beneficial ownership, tax and statutory obligation data remain mandatory.
Article 96 — Immediate disclosure by public or listed companies
Listed companies and companies with traded securities shall meet continuous and immediate market-regulator disclosure requirements, which take precedence in their field over this Law's minimum requirements.
Article 97 — Remuneration disclosure
Public joint-stock and listed companies shall disclose board and senior executive remuneration policies and aggregate or individual amounts under market authority rules.
Article 98 — Related-party disclosure
Material related-party transactions shall appear in statements, notes and annual reports under accounting standards and governance rules.
Article 99 — Structured electronic reporting
The Registrar and Securities Commission may adopt structured digital statement and reporting formats enabling automated analysis and government data linkage.
Chapter Eight — Beneficial ownership and transparency
Article 100 — Beneficial owner identification
Every company shall identify its beneficial owner or owners, retain adequate, accurate and current information, and provide it to the Registrar under this Law.
Article 101 — Ownership or control test
Beneficial owners shall be identified through direct or indirect ownership, voting rights, ability to appoint a management majority or control through other means. Regulations may use an indicative quantitative threshold not exceeding twenty-five per cent, without allowing it to conceal effective control.
Article 102 — Tracing to the natural person
Where the direct owner is a legal person, the ownership and control chain shall be traced to the ultimate natural person. Naming an intermediary company is insufficient.
Article 103 — Control through other means
If no natural person holds above the threshold, the company shall identify control through agreements, voting rights, financing, decisive influence or other means.
Article 104 — Senior managing official
If no natural person can be identified after ownership and control tests are exhausted, the senior managing official shall be recorded under applicable rules, with reasons documented for identifying no other beneficial owner.
Article 105 — Shareholder disclosure
Shareholders, partners and persons acting for others shall provide information needed to identify beneficial owners and shall not submit misleading data.
Article 106 — Nominee shareholders or directors
Nominee shareholders or directors and those for whom they act shall be disclosed where such arrangements are lawful. Nominee relationships shall not conceal control.
Article 107 — Company beneficial ownership register
Companies shall maintain an internal register of name, identifying data, nationality, residence, nature and proportion of ownership or control, commencement and end dates of status, and verification source.
Article 108 — Filing with the Registrar
Beneficial ownership information shall be filed at formation and every material change. Companies shall confirm accuracy at least annually.
Article 109 — Updating deadline
The Registrar shall be notified of beneficial ownership changes within fifteen working days after the company knew or should have known through reasonable diligence.
Article 110 — Information verification
The Registrar may verify beneficial ownership using national identity, tax and banking records, supervisors and other lawful sources.
Article 111 — Mandatory inquiries
The Registrar may require a company, shareholder or intermediary to explain ownership and control chains and provide supporting documents within a specified period.
Article 112 — Conflicting records
Where company data conflicts with reliable government or financial-institution information, the discrepancy shall be flagged and the company notified to correct it. The register shall not be treated as accurate until resolved.
Article 113 — Competent authority access
The anti-money laundering office and authorised judicial, investigative, tax, supervisory and other bodies shall have rapid direct or on-request access to beneficial ownership information.
Article 114 — Public access
The register shall publish minimum basic information on companies, directors and registered owners under the law. Regulations shall determine public beneficial ownership access, balancing transparency, privacy and security.
Article 115 — Protection of persons at risk
A reasoned decision may restrict public access to some beneficial ownership data where serious safety risks affect the person, a minor or a protected person, without limiting competent-authority access.
Article 116 — Non-disclosure sanctions
Failure to submit or update beneficial ownership information shall entail warnings, fines and suspension of some registration transactions. Deliberate concealment or false data may attract stronger sanctions.
Article 117 — False-data liability
Anyone intentionally submitting forged data or using intermediaries or sham structures to conceal beneficial owners shall be punished under the law, without prejudice to forgery or money-laundering offences.
Article 118 — No automatic loss of ownership
An administrative disclosure error alone shall not extinguish ownership or confiscate shares. Measures shall be proportionate to the violation and bona fide third-party rights.
Article 119 — Integration with anti-money laundering
The beneficial ownership register shall support anti-money laundering, counter-terrorist financing and counter-proliferation financing. It does not relieve financial institutions of independent verification when establishing company relationships.
Article 120 — Structured open data
The Registrar shall publish unprotected data in machine-readable, searchable, linkable formats to help markets, investors and supervisors verify existence, governance and ownership.
Chapter Nine — Groups, subsidiaries and control
Article 121 — Parent and subsidiary
A company is a subsidiary where another directly or indirectly controls it. The controlling company is the parent for this Law.
Article 122 — Group disclosure
Parents shall file updated subsidiary lists, ownership and control percentages and registration countries, including them in annual reports.
Article 123 — Consolidated statements
Parents shall prepare consolidated statements under applicable accounting standards where required size or control criteria are met.
Article 124 — Separate company liability
Each group company retains separate personality and patrimony. Parents are not liable for subsidiary obligations merely through control, except under law, guarantees or abuse of legal personality.
Article 125 — Intra-group instructions
Parents may set group policy, but subsidiary boards shall consider their company's interests, creditors and minority shareholders and refuse directions causing unlawful harm.
Article 126 — Intra-group transactions
Material group transactions shall be documented, on justifiable terms and subject to disclosure and related-party standards.
Article 127 — Cross-guarantees
No company shall guarantee or lend to another group company if this threatens its own ability to pay or contravenes its interests without necessary approval and disclosure.
Article 128 — Complex control structures
The Registrar may require simplification or explanation of highly complex ownership structures obstructing beneficial ownership identification or enforcement, but may not invalidate lawful structures merely for complexity.
Article 129 — Holding companies
Holding companies may be formed to own and manage interests in other companies, subject to group accounting and disclosure requirements.
Article 130 — Joint control
Joint ventures and joint-control agreements shall disclose parties' rights, beneficial owners, obligations and guarantees.
Chapter Ten — Foreign companies and branches
Article 131 — Foreign company branch
Foreign companies may open Iraqi branches after meeting foreign-branch regulation conditions and registering. A branch extends the foreign person rather than constituting a separate legal person unless incorporated as an Iraqi company.
Article 132 — Branch regulation
Foreign Company Branches Regulation No. (2) of 2017, amended by Regulation No. (4) of 2023 and No. (1) of 2025, shall continue where consistent until replaced or updated under this Law.
Article 133 — Registration conditions
Branches shall provide parent formation documents, proof of continuing existence, board details, branch manager, authorised persons, address, activity, beneficial owners and any legally required licence or contract.
Article 134 — Resident manager
Branches shall have an authorised resident manager or effective service address in Iraq and notify the Registrar of changes within prescribed periods.
Article 135 — Financial statements
Branches shall file parent or branch statements as regulations and activities require, with a report on Iraqi operations, taxes and obligations.
Article 136 — Representative office
Non-commercial representative offices may open under regulations. They shall not routinely sell or enter commercial contracts without conversion to a branch or appropriate company form.
Article 137 — Conversion into an Iraqi company
Foreign branches may transfer business into an Iraqi company wholly or partly parent-owned, following asset, contract, employment, tax and licence transfer procedures.
Article 138 — Parent liability
Parents are directly liable for Iraqi branch obligations. Branches shall not shield parents from debts arising from branch activity.
Article 139 — Branch closure
Branches shall not be deregistered before taxes, employment, creditors and obligations are settled or suitable guarantees provided. Regulations shall prescribe closure and liquidation procedures.
Article 140 — Recognition of foreign companies
Foreign legal persons validly formed under their home law shall be recognised insofar as consistent with Iraqi public policy and mandatory laws.
Chapter Eleven — Merger, division and conversion
Article 141 — Merger
Two or more companies may merge by absorption or consolidation, transferring rights and obligations to the legal successor under an approved, registered merger plan.
Article 142 — Merger plan
The plan shall identify participating companies, share or interest exchange ratios, asset and liability valuation, and effects on workers, creditors, shareholders and beneficial owners.
Article 143 — Board report
Each board shall explain the economic and legal rationale, exchange ratio, risks and effects of merger. Small companies may be exempt with unanimous partner consent.
Article 144 — Independent valuation
Independent valuation is required for joint-stock mergers or where related parties or material information asymmetry exist. Regulations shall specify other cases.
Article 145 — General meeting approval
Mergers require the qualified majority prescribed by law and internal rules. Dissenting interest holders shall have fair-value exit rights in statutory cases.
Article 146 — Creditor protection
Merger proposals shall be published, with a period for creditors to object or seek security upon showing a serious transaction-related risk to their rights.
Article 147 — Effect of registration
Mergers take effect upon registration. Assets, rights and obligations pass by operation of law to the resulting company without renewing each contract unless special law prevents this.
Article 148 — Division
Companies may divide and transfer some or all assets and liabilities to two or more companies under a plan allocating rights and debts and protecting creditors and shareholders.
Article 149 — Conversion between forms
Companies may convert between forms upon meeting the new form's conditions. Conversion creates no new person and does not interrupt rights or obligations unless law provides otherwise.
Article 150 — Conversion into a joint-stock company
Conversion requires capital and asset valuation, a governance system and securities-rule compliance where a public offering is involved.
Article 151 — Conversion from a general partnership
Conversion from general partnership to limited liability does not release partners from personal liability for earlier debts except with creditor consent or under the law.
Article 152 — Cross-border merger
Cross-border mergers may be regulated by regulation or treaty, ensuring legal recognition and protection of creditors, workers, taxes and beneficial ownership transparency.
Chapter Twelve — Dissolution and voluntary liquidation
Article 153 — Grounds for dissolution
Companies dissolve on expiry of a fixed term, achievement or impossibility of their purpose, partner or general meeting decision, merger, judicial ruling or another statutory ground.
Article 154 — Voluntary dissolution
Solvent companies may resolve on voluntary liquidation by qualified majority after declaring sufficient assets to pay obligations within the expected period.
Article 155 — Insolvent companies
Companies unable or likely to become unable to pay debts shall not use voluntary liquidation to circumvent bankruptcy and insolvency law. They shall be referred to POL-41 procedures when effective or to existing law.
Article 156 — Liquidator
The general meeting shall appoint a qualified independent liquidator, replacing management for liquidation purposes, whose name shall enter the Register.
Article 157 — Liquidator powers
The liquidator shall inventory assets and debts, collect receivables, discharge obligations and dispose of assets to obtain best value with due regard to creditor and partner rights.
Article 158 — Creditor protection
Liquidation decisions shall be published and known creditors notified. Partners shall receive no funds before debts are paid or sufficient reserves set aside for disputed claims.
Article 159 — Final distribution
After obligations are paid, surplus shall be distributed according to each share or interest class's economic rights. Final accounts shall be audited where mandatory.
Article 160 — Deregistration
The Registrar shall deregister the company after receiving the liquidation report, tax clearances and necessary data. Deregistration does not bar claims against those responsible for later-discovered fraud or concealment within limitation periods.
Article 161 — Restoration to the Register
Courts may restore deregistered companies within a statutory period where necessary to resolve an outstanding right, asset or claim.
Article 162 — Abandoned companies
After public warnings, the Registrar may begin administrative deregistration of companies with several years of missing filings and no apparent activity, allowing restoration and protecting creditors.
Chapter Thirteen — Small companies, start-ups and simplification
Article 163 — Proportionality
Governance, audit and disclosure shall be proportionate to size, risks, shareholders and business nature. Listed joint-stock requirements shall not apply to small companies without justification.
Article 164 — Simplified formation template
The Registrar shall provide a unified electronic formation template for limited liability and single-member companies, usable without bespoke legal drafting where founders accept standard provisions.
Article 165 — Auditor exemption
Small companies may be exempt from external auditor appointment below regulatory thresholds if not sector-regulated and if no materially interested shareholder or contractual financier requests audit.
Article 166 — Written resolutions
Companies other than public joint-stock companies may adopt written or electronic partner resolutions without meetings if required majorities and record retention are satisfied.
Article 167 — Employee equity and incentives
Start-ups and joint-stock companies may adopt employee and director share or option plans under valuation, disclosure and tax rules, protecting shareholders against undisclosed dilution.
Article 168 — Investment agreements
Start-ups may issue convertible instruments or future investment agreements where regulations govern them, investor rights and conversion conditions are clear, and securities law is observed.
Article 169 — Simplified liquidation
Small companies without debts or disputes may undergo simplified liquidation under a declaration carrying responsibility and streamlined electronic procedures.
Article 170 — No duplicate documents
The Registrar shall not request documents verifiable electronically in connected government databases, except where access fails or discrepancies require evidence.
Article 171 — Fees
Registration and service fees shall cover reasonable costs without obstructing small-business formation. All fees shall be officially published.
Article 172 — Service indicators
The Registrar shall publish aggregate average formation, amendment and closure times, electronic transaction rates, refusals and their reasons.
Chapter Fourteen — Supervision, investigation and enforcement
Article 173 — Registrar powers
The Registrar may request necessary information and documents, verify the Register, issue corrective orders, impose legally authorised administrative sanctions and refer offences to competent bodies.
Article 174 — Risk-based examination
Verification shall target higher-risk companies, structures and transactions. Universal manual examination shall not be required where electronic verification is feasible.
Article 175 — Corrective orders
For remediable violations, the Registrar shall allow a suitable correction period before stronger sanctions, unless fraud or urgent effects on beneficial ownership or third-party rights are involved.
Article 176 — Administrative fines
Graduated fines may apply to late filing, outdated data or register requirement breaches, proportionate to seriousness and company size.
Article 177 — Suspension of registration services
Registration of capital increases, transfer of some rights or issuance of a legal-status certificate may be suspended pending correction of material violations. This power shall not prevent self-defence or fulfilment of obligations.
Article 178 — Invalidity of fraudulent entries
Courts may invalidate registrations or amendments obtained by fraud or forgery, protecting bona fide third parties and specifying the ruling's temporal effect.
Article 179 — Investigation of management abuse
Shareholders holding the statutory proportion, the Registrar or supervisor may request judicial or independent investigation where serious indications of fraud, concealment or abuse exist.
Article 180 — Court orders
Upon proven violation, courts may order disclosure, restoration of records, suspension of decisions, expert appointment, restitution, compensation or other proportionate measures.
Article 181 — Offences
Company-record forgery, intentional false information to the Registrar, fraudulent beneficial owner concealment, destruction of records to obstruct investigation and criminal use of company funds shall be punishable under the law.
Article 182 — Legal-person liability
Companies may be liable under criminal laws for offences committed in their name or interest without precluding liability of responsible natural persons.
Article 183 — Reporting-person protection
Reporting-person protection laws shall cover good-faith reports of corruption, forgery or material company violations. Unlawful retaliation is prohibited.
Article 184 — Grievances
Registrar sanctions and administrative decisions shall be subject to grievance and appeal under the law. Appeals do not preclude justified provisional measures protecting the Register or public.
Chapter Fifteen — Transitional and Final Provisions
Article 185 — Existing companies continue
Companies registered before this Law's effective date continue with their personality, rights and obligations and need no re-establishment.
Article 186 — Adaptation to new forms
Companies shall align articles and internal rules with mandatory provisions within twenty-four months. A reasoned decision may extend this for a specified category by no more than twelve months.
Article 187 — Existing single-owner businesses
Existing sole proprietorships or single-owner companies may convert to single-member limited liability companies through simplified procedures preserving creditor rights.
Article 188 — National electronic register
Within eighteen months, the Ministry of Trade shall complete a unified electronic register supporting formation, amendments, filing, extracts, public verification and government connectivity.
Article 189 — Beneficial ownership register
Mandatory beneficial ownership filing shall begin within six months of system readiness and no later than twelve months after entry into force. Existing companies shall receive six additional months for initial filing.
Article 190 — Register cleansing
The Ministry of Trade shall clean records of inactive companies and outdated addresses and owners, using warnings and deregistration and restoration procedures preserving rights.
Article 191 — Foreign company branches
Foreign Company Branches Regulation No. (2) of 2017 and its 2023 and 2025 amendments shall continue where consistent until a new or updated regulation issues within eighteen months.
Article 192 — Standard rules
Within six months, the Registrar shall issue free electronic formation and internal-rule templates for limited liability, single-member and joint-stock companies.
Article 193 — Joint-stock company governance
Within one year of entry into force, the securities market regulator, with the Ministry of Trade, shall issue updated governance rules for listed and public joint-stock companies.
Article 194 — Anti-money laundering connectivity
During transition, the Ministry of Trade shall technically connect beneficial ownership records to the anti-money laundering office and authorised bodies, with access logs and data safeguards.
Article 195 — Related legislative amendments
Within one year, the government shall submit amendments to laws and regulations referring to Companies Law No. (21) of 1997 or conflicting with new forms and rules.
Article 196 — Continuation of rules and decisions
Instructions and decisions under the previous law remain effective where consistent for no more than eighteen months or until replaced, whichever is earlier.
Article 197 — Repeal of the previous Companies Law
Companies Law No. (21) of 1997, as amended, is repealed from this Law's effective date. Other legislative references to it shall refer to corresponding provisions here until amended.
Article 198 — Review of the Law
After four years, the government shall review effects on company formation, investment, minority protection, beneficial ownership and digital transformation, reporting to the Council of Representatives.
Article 199 — Regulations and instructions
The Council of Ministers, ministers and supervisors shall issue necessary regulations and instructions within their remit within one hundred and eighty days unless this Law specifies otherwise.
Article 200 — Entry into force
This Law shall take effect ninety days after Official Gazette publication, subject to specific electronic-register and beneficial ownership transition periods.
Statement of reasons
This Law is enacted to modernise Iraq's company legal environment and simplify business formation and digital registration; develop company forms, financing and governance; strengthen partner, shareholder and creditor rights; ensure accurate, current beneficial ownership transparency against legal-person abuse risks; regulate merger, division, conversion and voluntary liquidation; and create conditions more conducive to investment, finance and growth while preserving integrity and anti-money laundering requirements.
Explanatory memorandum
1. Why a new law?
The existing law received important amendments but predates digital transformation and major developments in governance, beneficial ownership and financing instruments. Replacement allows the system to be reorganised rather than adding modern provisions to a multilayered structure.
2. Single-member limited liability companies
Individual entrepreneurs should not have to choose between unlimited liability and a nominal partner. Recognition of single-member limited liability companies clearly separates personal and business patrimony while preventing abuse of legal personality.
3. Capital and creditor protection
The proposal does not rely on low or high nominal capital as the sole creditor safeguard. Modern protection rests on disclosure, solvency, prohibiting distributions during inability to pay, management liability, audit and creditor rights on capital reduction and merger.
4. Proportionate governance
A small family limited liability company does not need the same committees and independence as a public joint-stock company. The law therefore sets basic duties for all and allows the market authority to raise listed-company requirements.
5. Beneficial ownership
A registered shareholder may be another company or a nominee. The aim is to identify the natural person ultimately owning or controlling the entity. The 25% threshold is therefore not an exemption; it is an indicative regulatory limit, while control through other means must still be examined.
6. Public access and privacy
Competent authorities need full, rapid access, but not every personal detail must be public. The proposal distinguishes a complete government register from a public information layer and protects seriously endangered persons from unnecessary disclosure.
7. Minority rights
Investors need more than a right to attend meetings. The proposal adds information rights, derivative actions, challenges to abuse, protection against share issues designed to dilute particular holders, and fair-value exit rights in statutory material transactions.
8. Foreign companies
The latest foreign-branch regime is the 2017 regulation amended in 2023 and 2025. Its provisions are therefore not all repeated in the law. It continues temporarily while core principles enter the new legislation, then is updated during transition.
Governance and shareholder rights
The proposal follows an approach close to the 2023 G20/OECD Principles: fair shareholder rights, reliable disclosure, boards responsible for strategy and management oversight, and independent decisions where controllers have an interest. It translates these into an Iraqi environment dominated by closely held companies rather than large capital markets.
Loyalty and care duties matter as much in family and controlled companies as in listed ones: minority investors' greatest risk may be a transaction with the controller rather than weak market information. Material related-party transactions therefore require independent approval, disclosure and valuation where needed.
Beneficial ownership
FATF placed Iraq under increased monitoring on 19 June 2026. One action-plan element is stronger risk-based implementation of beneficial ownership measures. The proposal addresses this within company law itself rather than solely through bank instructions, because the legal person and register should be the primary information sources.
Modern FATF rules require adequate, accurate, current information and efficient authority access. The proposal therefore adds three verification layers: a company duty, a central Registrar record, and comparison with government databases and information from anti-money laundering regulated entities. Register data does not exempt banks from independent verification when risks are high or contradictions appear.
Company formation and doing business
Registration moves to a once-only data principle. Entities receive a unified number, while tax, social security and regulators use connectivity rather than requiring investors to carry copies of identical documents between institutions. Sector licensing remains: forming a pharmaceutical company does not approve a medicine, and forming a bank does not grant a banking licence.
The proposal sets a decision deadline and specific refusal grounds because registration is a legal procedure rather than a tool to limit market competitors. Free standard templates prevent legal representation from becoming a practical prerequisite for every small company, while advice remains important for complex arrangements.
Merger, conversion and exit
Merger rules permit universal legal succession instead of separately re-registering each asset and contract, protecting creditors and dissenting shareholders. The proposal also adds division as a reorganisation tool and conversion between forms without ending legal personality.
Closure distinguishes solvent from insolvent companies. Companies able to pay debts may voluntarily liquidate through orderly procedures; if inability to pay emerges, bankruptcy, insolvency and corporate restructuring law applies so two systems do not compete over creditor priorities and rescue.
Legislative alignment
| Framework | Treatment |
|---|---|
| Companies Law No. (21) of 1997, as amended | Repeal and replacement. |
| Commercial Law No. (30) of 1984 | Continues for general commercial matters, with references updated as needed. |
| Foreign Company Branches Regulation No. (2) of 2017, as amended | Transitional continuation, then update within 18 months. |
| Anti-Money Laundering, Counter-Terrorist Financing and Counter-Proliferation Financing Law — POL-39 | Direct integration of beneficial ownership definitions, authority access and verification. |
| Bankruptcy, Insolvency and Corporate Restructuring Law — POL-41 | Governs insolvency, rescue and judicial liquidation; this Law covers solvent voluntary liquidation. |
| Banking, insurance and securities laws | Take precedence for special sector licensing and governance requirements. |
| State-Owned Enterprises Governance and Restructuring Law — POL-37 | Governs state-owned companies; company law applies to converted or mixed entities according to form. |
Financial and Implementation Implications
The proposal creates no new authority. Implementation falls primarily to the Ministry of Trade's Companies Registration Department and existing sector bodies. Main costs are a modern electronic register, verifiable beneficial ownership records, links to identity, tax and competent bodies, cybersecurity, staff training and conversion of historical archives.
No total financial estimate is given before system design, the number of records to digitise and current infrastructure condition are established, since this would imply false precision. The Ministry of Trade must prepare a multi-year estimate distinguishing system development, digitisation, maintenance and security.
Expected benefits include shorter formation times and lower compliance costs, better investor and financier information, fewer sham companies, improved revenue collection and supervision, and easier implementation of FATF beneficial ownership measures. They shall be measured after implementation through actual indicators rather than an unsubstantiated predetermined percentage.
Transition and Implementation
Millions of existing records and transactions are not required to undergo re-establishment. Current companies continue, then align internal rules with mandatory provisions. Electronic registration and beneficial ownership begin in stages with time for existing companies to submit data.
The first phase cleans the Register by identifying inactive companies, incorrect addresses and conflicting data, with warnings before deregistration and restoration options protecting creditors and assets. Priority goes to links with the anti-money laundering office, taxation and identity records rather than multiplying inconsistent databases.
International Standards Relevant to Iraq
The 2023 G20/OECD Principles of Corporate Governance identify six main areas, including shareholder rights and equitable treatment, disclosure and transparency, and board responsibilities. The proposal draws particularly on board independence, minority rights, disclosure and related-party transactions, proportionately applied to unlisted Iraqi companies.
FATF's 2023 beneficial ownership guidance stresses adequate, accurate, current information held by a public body or effective mechanism enabling authority access. The proposal therefore goes beyond self-declaration to verification, record discrepancy handling and annual updates.
Sources and references
- Ministry of Justice — Companies Law Amendment No. (17) of 2019, Iraqi Official Gazette issue 4554Documents the latest major officially published legislative amendment to Companies Law No. (21) of 1997.
- National Investment Commission — Companies Law No. (21) of 1997, as amendedPublished text of the existing Companies Law, company forms, and formation, membership and management rules.
- National Investment Commission — Iraq Investor Guide 2025Documents continued use of Companies Law No. (21) of 1997, as amended, for registration and business activity.
- Ministry of Justice — Simple-company contract template, 26/3/2025Documents continued application of Article (183) of the amended Companies Law and adoption of a uniform simple-company template.
- Ministry of Justice — First Amendment to the Foreign Company Branches Regulation, No. (4) of 2023Documents amendment of Foreign Company Branches Regulation No. (2) of 2017.
- Ministry of Justice — Second Amendment to the Foreign Company Branches Regulation, No. (1) of 2025Documents the latest official amendment of Foreign Company Branches Regulation No. (2) of 2017.
- National Investment Commission — Doing-business guide and proceduresAn official reference for Ministry of Trade Companies Registration Department procedures and subsequent obligations.
- Ministry of Justice — Commercial Law No. (30) of 1984A supplementary reference for business names, books and commercial transactions.
- FATF — Iraq under Increased Monitoring, 19 June 2026Iraq's 2026 plan expressly includes stronger risk-based implementation of beneficial ownership measures.
- FATF — Guidance on Beneficial Ownership of Legal Persons, 2023An international reference for adequate, accurate, current beneficial ownership information and efficient authority access.
- MENAFATF — Mutual Evaluation Report of Iraq, 2024The latest regional assessment of Iraq's anti-money laundering system and legal-person transparency.
- OECD — G20/OECD Principles of Corporate Governance 2023The latest international standard for shareholder rights, disclosure, board responsibilities, sustainability and governance.
Proposed legislation within Ali Zuweid's Political Programme · Prepared by Ali Zuweid