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LLCs and Joint Stock Companies in Iraq General Overview

LLCs and Joint Stock Companies in Iraq General Overview. March 2009. Companies Legislation. This presentation will cover:. 1- Companies Legislation 2- State / Mixed / Private Companies 3 - Types of companies 4- Mixed / Private Joint Stock Companies

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LLCs and Joint Stock Companies in Iraq General Overview

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  1. LLCs and Joint Stock Companies in Iraq General Overview March 2009

  2. Companies Legislation

  3. This presentation will cover: 1- Companies Legislation 2- State / Mixed / Private Companies 3- Types of companies 4- Mixed / Private Joint Stock Companies 5- Mixed / Private Limited Liability Companies

  4. Companies Legislation in Iraq: Historically The Ottoman law • The Civil Code was issued in 1951 => Articles 636 to 683 stipulated general rules for companies. • Was enacted on 1951 => This Law abolished all the other provisions and established new rules according to the • Latin system (romano-germanique). • (because of the dominance of the Ottoman Empire) • => Commercial Law of 1950 quoted from the French Code of 1807 known as Napoleon Code • Introduced major amendments => Concerning the types, objectives and the establishment of companies. Indian Companies Act of 1913 • A statement issued by the British governor in 1919 (after the occupation) required the • application of the Indian Companies Act of 1913, which was quoted from the • English Code of 1906. Civil Code Companies Act No. 31 Companies Act No. 36

  5. Companies Legislation in Iraq: Historically • In 1997 two new Company Laws were enacted • 1- Law No. 21 for Mixed and Private Companies • 2- Law No. 22 for Public Companies Law No. 21 Law No. 22 • Law No.21 of 1997 was amended by Coalition Provisional Authority (CPA) Order • No. 64 of 2004 • =>The regulatory framework for setting up and registering companies in Iraq has • been in effect in its current from since 2004. It provides the framework for foreign companies to establish themselves and to conduct commercial activities in Iraq. • CPA Order • No. 64 of 2004

  6. State / Mixed / Private Companies

  7. State / Mixed / Private Companies Iraqi companies can be classified into three categories

  8. Types of companies

  9. Types of companies • Iraqi Company Law No. 21/1997 as amended regulates five different types of companies: • 1- Limited Liability Company • Number of Shareholders: 1 to 25. • Minimum Capital: 1,000,000 Iraqi Dinars. • Liability: the liability of the shareholders is limited to their capital contribution in the company. • 2- Joint Stock Company • Number of Shareholders: Minimum of 5 members who participates by owning shares through a public subscription. However the number of founding members is capped at 100 members. • Minimum capital: 2.000,000 Iraqi Dinars. • Liability: the liability of the shareholders is limited to the nominal value of the shares to which they have subscribed.

  10. Types of companies • 3- Sole Owner Company • Number of shareholders: one person. • Minimum Capital Share: 500,000 Iraqi Dinars. • Liability: Personal and Unlimited Liability. • 4- Simple Company • Number of shareholders: Partnership between 2 to 5 persons. • Minimum Capital: 500,000 Iraqi Dinars. • Liability: limited to their capital contribution , if not otherwise agreed between the partners. • 5- Joint Liability Company • Number of Shareholders: Partnership between 2 and 25 persons. • Minimum Capital: 500,000 Iraqi Dinars. • Liability: Partners have a personal and unlimited liability in respect of the obligations of the company.

  11. Main differences between the Private and Mixed Companies

  12. Mixed / Private Joint Stock Company

  13. Mixed / Private Limited Liability Company (LLC) • The most significant difference between a Mixed and a Private LLC is the requirement to have the accounts of a Mixed LLC audited by the Iraqi Financial Control Audit instead of a private auditor. • It is worth noting that in practice, we are not aware of any Mixed LLC being established. The reason for this may be that the LLC is thought to be more suitable for small-scale business especially given its relatively low capital requirements. State parties entering into a partnership with the private sector are commonly in favor of Mixed Joint Stock companies.

  14. This presentation contains a random selection of information. This presentation and its content should not be taken, and are not intended to be taken, as a legal advice by any recipient or reader. Al-Jad does not provide any warranties or guarantees in relation to any information or material provided in this presentation. Should you wish to receive formal legal advice, please contact one of our team leaders. • www.al-jad.com

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