Iraq · Guide
Companies Law No. 21 of 1997, as amended in 2004, provides eight entity types: the public joint stock company, the private joint stock company, the limited liability company, the general partnership, the limited partnership, the sole proprietorship, the branch office and the representative office.
Three of them account for almost all foreign entries: the LLC, the branch and the representative office. And the choice between those three is not made on size or cost. It is made on the ownership rule, because the LLC is subject to it and the other two are not.
Iraq Company Types: the Short Answer
| Form | Separate legal entity | Subject to the 51% rule | Can trade in its own name |
|---|---|---|---|
| LLC | Yes | Yes | Yes |
| Joint stock company | Yes | Yes | Yes |
| Branch office | No | No | Limited scope |
| Representative office | No | No | No |
| General or limited partnership | Yes | Practically unused by foreign investors | Yes |
| Sole proprietorship | No, an individual | Not applicable | Yes |
The entity question in Iraq is really the ownership question in disguise. Answer that first and the form follows.
Choosing, before the definitions
| Your situation | Likely form |
|---|---|
| Operating business, Iraqi partner acceptable | LLC at 49% foreign |
| Operating business, Kurdistan Region | LLC, full foreign ownership permitted |
| Delivering against a government contract | Branch of the foreign company |
| Capital project with land and a long horizon | LLC under an investment licence |
| Market presence, no contract yet | Representative office |
| Newly formed foreign parent | Not a branch, see the two-year rule below |
The LLC
The default vehicle, and the one the ownership rule bites on.
| Feature | Detail |
|---|---|
| Minimum capital | IQD 1,000,000, roughly USD 850, deposited in an Iraqi bank |
| Nominal value per share | One Iraqi dinar |
| Shareholders | Most sources give a minimum of two and a maximum of twenty-five |
| Foreign ownership | Capped at 49% in federal Iraq since 2019 |
| Management | A managing director and a deputy managing director |
| Resident manager | Required |
| Resident shareholder | Not required |
Three points worth pausing on.
The deputy managing director is a genuine requirement rather than an optional second signatory. The company appoints one alongside the managing director to exercise the powers when the managing director cannot, and it belongs in the incorporation pack.
Residency and nationality are different questions. A resident manager is required. There is no requirement that the manager be an Iraqi national, though appointing a foreign national needs Ministry of Interior approval. And a resident shareholder is not required at all, which is separate again from the 51% ownership rule.
Sources disagree on the shareholder minimum. Most practitioner sources give two to twenty-five. The Iraqi Commercial Attaché indicates a minimum of one, which appears to follow the 2004 amendment permitting single-shareholder companies. Confirm the position for your structure rather than relying on either figure.
The 51% rule, and who escapes it
- 1LLC and JSCIraqi shareholders must hold at least 51% of the capital. Foreign ownership is capped at 49% in federal Iraq.
- 2Branch and representative officeNot subject to the local shareholding rules, because they are the foreign parent operating directly rather than an Iraqi company.
- 3The Kurdistan RegionAmended its own companies and industry legislation in January 2022 to permit full foreign ownership of companies and industrial facilities.
That is why entity choice in Iraq runs backwards from most jurisdictions. Elsewhere you pick the form and the ownership follows. Here the ownership constraint picks the form.
The branch
The foreign parent operating in Iraq directly. Not a separate entity, so the parent carries full liability and the 51% rule does not apply in the same way.
Two conditions in federal Iraq, and the second closes the route for many:
- What unlocks it is generally a government contract or an investment licence, which makes the branch the natural vehicle for contractors rather than for general trading.
- The parent must have existed for at least two years. A branch cannot be established in federal Iraq by a newly formed company, so this is not available to anyone who created the parent for the purpose.
In the Kurdistan Region, Erbil does not require a government contract to register a branch, which is one of the sharper practical differences between the two systems. The Region does require that the manager, the legal agent and the authorised employee all hold residency there and appear before the Registrar.
The representative office
Presence without trading. It cannot contract in its own name or generate revenue in Iraq, and it exists for market research, liaison and promotion.
| Use it when | Do not use it when |
|---|---|
| Scoping the market, no contract yet | There is revenue to book in Iraq |
| Building relationships before committing | You need to invoice locally |
| Waiting on a licence or a tender outcome | You are hiring an operating team |
It converts badly. Deciding late that you needed a trading entity means starting the registration sequence from the beginning, which in federal Iraq is six to twelve weeks you did not budget.
The joint stock company
Public and private forms, used where shares must be issued to a wider body of holders or where a sector requires it. A JSC needs a minimum of five shareholders and carries heavier governance and reporting than an LLC, and it is subject to the same 51% requirement.
For a foreign entry it is rarely the answer unless the project structure or the regulator dictates it.
The forms you will read about and not use
- General partnership, where partners carry unlimited liability.
- Limited partnership, mixing general and limited partners.
- Sole proprietorship, an individual rather than an entity, with no separation between business and personal assets.
All three exist under the Companies Law and none of them is a realistic vehicle for a foreign investor.
The Kurdistan Region uses the same law differently
The Kurdistan Region applies Companies Law No. 21 of 1997 as amended, and then legislated on top of it. In January 2022 the IKR Companies Law was amended to allow foreigners to own 100% of companies incorporated in the Region, and the IKR Industry Law was amended in the same month to allow full foreign ownership of factories and other industrial facilities.
So the form catalogue is the same. The ownership answer, the registry, the fee schedule and the timeline are not. The comparison is in foreign ownership in Iraq.
What every form requires
Worth knowing because it is consistent across the entity types and it surprises people coming from lighter jurisdictions.
- A resident director or manager, for every entity type.
- An accountant and a lawyer, treated as necessary rather than optional.
- An annual return to the tax authority.
- No tenancy agreement before incorporation, for any type.
- No visit to Iraq required for incorporation, for any type.
The bottom line
Iraq offers eight forms and answers most foreign entries with three. The LLC is the operating vehicle and it carries the 49% ceiling in federal Iraq. The branch escapes the ceiling but usually requires a government contract or a licence, and always requires a parent that is at least two years old. The representative office buys time and cannot trade.
Decide the ownership route first, in foreign ownership in Iraq, and let it choose the form. Then run the registration in how to register a company in Iraq.
Frequently asked questions
What is the most common company type in Iraq?
The limited liability company, alongside the branch office and the representative office. Those three cover almost all foreign entries, even though the Companies Law provides eight forms.
What is the minimum capital for an Iraqi LLC?
IQD 1,000,000, roughly USD 850, deposited in an Iraqi bank and verified at registration. Each share has a nominal value of one Iraqi dinar.
How many shareholders does an LLC need?
Most practitioner sources give a minimum of two and a maximum of twenty-five. The Iraqi Commercial Attaché indicates a minimum of one, which appears to follow the 2004 amendment permitting single-shareholder companies. Confirm the position for your structure.
Does the 51% rule apply to a branch?
No. Branches and representative offices are the foreign parent operating directly rather than Iraqi-incorporated companies, so the local shareholding requirement does not apply to them in the same way.
Can I open a branch instead of an LLC?
Only if two conditions hold in federal Iraq: the branch is generally unlocked by a government contract or an investment licence, and the parent company must have existed for at least two years. In the Kurdistan Region, Erbil does not require a government contract.
What can a representative office do?
Market research, liaison and promotion. It cannot contract in its own name or generate revenue in Iraq, and converting to a trading entity later means starting the registration sequence again.
Do I need an Iraqi manager?
You need a resident manager. There is no requirement that the manager be an Iraqi national, though appointing a foreign national requires Ministry of Interior approval. A resident shareholder is not required at all.
What is the deputy managing director?
A second officer appointed alongside the managing director to exercise the powers when the managing director cannot. It is part of the incorporation pack rather than a later filing, and it is frequently missed.
Are company types different in the Kurdistan Region?
The catalogue is the same, since the Region applies the same Companies Law. What differs is ownership, following the January 2022 amendments to the IKR companies and industry legislation, along with the registry, the fees and the timeline.
Which form should a foreign group choose?
It depends on the ownership route rather than on the business. A government contract points to a branch, a capital project points to an LLC under an investment licence, the Kurdistan Region points to a wholly owned LLC, and general trading in the federal south points to an LLC at 49% with a genuine local partner.
Sources
- Companies Law No. 21 of 1997, as amended in 2004: entity types and corporate obligations
- Law No. 17 of 2019 amending Article 12: the 51% Iraqi ownership requirement
- Iraqi Commercial Attaché: entity comparison and registration requirements
The entity types available follow Companies Law No. 21 of 1997 as amended in 2004. The requirement that Iraqi shareholders hold at least 51% of an LLC or JSC follows Law No. 17 of 2019 amending Article 12, and does not apply to branches and representative offices of foreign companies in the same way. Sources differ on the minimum number of LLC shareholders: most practitioner sources give two, while the Iraqi Commercial Attaché indicates one, which appears to follow the 2004 amendment permitting single-shareholder companies; that divergence is reported rather than resolved. The Kurdistan Region applies the same Companies Law but amended its own companies and industry legislation in January 2022 to permit full foreign ownership. Confirm entity choice with an Iraqi lawyer before filing. This is not legal advice.