Foreign Ownership in Iraq 2026: the 49% Cap Explained

Iraq is one of the few jurisdictions in this cluster where the honest answer to "can I own it outright" is no, and where that no has an exact date attached to it.

Law No. 17 of 2019 amended Article 12 of the Companies Law to require Iraqi shareholders to hold at least 51% of a limited liability company or a joint stock company. Foreign ownership is capped at 49%. That reversed the position that had applied since the CPA era, when full foreign ownership was permitted, which is why so much material online still says the opposite.

There are routes that open more than 49%. There is also a route that does not exist, and telling them apart is the whole value of this page.

Foreign Ownership in Iraq: the Short Answer

The question is not how to get around 51%. It is which lawful structure gives you the economics and the control your project actually needs.

Where the cap comes from, and where it does not apply

Federal Iraq. Article 12 of Companies Law No. 21 of 1997, as amended by Law No. 17 of 2019, requires Iraqi individuals or entities to hold at least 51% of the capital of an LLC or a JSC.

The Kurdistan Region did not follow. It never adopted the 2019 amendment, and it went further: 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 100% foreign ownership of factories and other industrial facilities.

That is worth stating precisely, because "Kurdistan is more open" is usually asserted without a source. It is not a habit or a practice, it is legislation with a date.

1. 1Before 2019Full foreign ownership of an Iraqi LLC was permitted. A great deal of published material still describes this position.
2. 2Law No. 17 of 2019Amends Article 12 of the Companies Law. Iraqi shareholders must hold at least 51%, capping foreign ownership at 49%.
3. 3The Kurdistan RegionNever adopted the amendment. Full foreign ownership of licensed projects continues, under its own investment law and board.

49%maximum foreign ownership of a federal LLC or JSC

2019the year the rule reversed, which is why older guidance says the opposite

6 to 12 weeksfederal registration, driven by a security clearance with no published timeline

The three routes past 49%, ranked by how solid they are

1. Register in the Kurdistan Region

The cleanest answer when the project belongs there. Full foreign ownership of licensed projects, a separate registry, no government contract required to register a branch, and two to four weeks rather than six to twelve.

The constraint is real rather than legal:

• The entity operates from the Region. That is where its registration, its address and its regulator sit.
• If your customers are in the federal south, you have moved the company away from the market.
• If your licensing regulator is federal, the Region does not change who licenses you.
• If the site is federal, the ownership rule you were escaping still governs the entity that must contract there.

The Region has its own registry, its own investment law and its own tax instructions, so it is a separate entry decision rather than a variant of this one. It is set out in full foreign ownership in the Kurdistan Region.

2. An investment licence from the National Investment Commission

Investment Law No. 13 of 2006 established the National Investment Commission as a one-stop shop for licences, incentives and land. Practitioners understand a licensed project to permit majority or full foreign ownership, and the licence carries substantial exemptions covered in Iraq corporate tax.

The honest caveat. The relationship between the Investment Law and the Companies Law on majority foreign ownership is understood to permit it and is not fully settled. That tension is well known among Iraqi practitioners, it is why this is a question for local counsel rather than a formation agent, and no page should present it as resolved.

3. A branch of the foreign company

A branch is not a separate entity, so the ownership cap does not apply to it in the same way. The parent operates directly and carries full liability.

Two catches in federal Iraq, and the second one disqualifies a lot of people:

• What unlocks the branch is generally a government contract or an investment licence, which makes it the natural route for contractors delivering against a public contract and an awkward one for general trading.
• The parent must be at least two years old. A branch cannot be established in federal Iraq by a newly formed company, so this route is closed to anyone who set up the parent for the purpose.

In the Kurdistan Region, Erbil does not require a government contract for a branch, which is one of the sharper differences between the two systems.

The route that is not a route

A shareholders' agreement between the foreign holder and the Iraqi majority holder, allocating voting rights, veto rights, board seats, dividend entitlements and exit terms.

What it genuinely does: protects a minority holder's economics and governance within the 49%. Approval thresholds for material transactions, reserved matters, deadlock mechanics, pre-emption and transfer restrictions are all normal and worth paying for.

What it does not do: convert 49% into ownership. The register says what it says, and an arrangement designed to make the Iraqi holder a nominee for the foreign one is not a structure, it is an exposure. It fails at the bank, it fails on any due diligence, and it fails at the moment the relationship with the local partner sours, which is precisely when you need it to work.

Treat the local shareholder as a real shareholder with real economics, or do not use this route.

The Ministry of Interior clearance

Independent of ownership percentage, and it applies to everyone.

Every foreigner, whether a natural person or a legal entity, must pass a Ministry of Interior security clearance before being permitted to become a shareholder in an Iraqi company. The Companies Registrar obtains that approval before issuing the certificate.

The same requirement reaches management. There is no requirement for managers to be Iraqi nationals, but appointing a foreign national as manager needs MOI approval.

There is no published service standard, which is exactly why federal registration is quoted as a range rather than a period. It is the single largest variable in your timeline and no provider can compress it.

Sectors with their own rules

Check your sector before you fix the shareholding structure, not after. Sector rules can make the ownership question moot in either direction.

Which structure fits which project

Common mistakes

• Reading pre-2019 material. Plenty of pages still describe full foreign ownership as available in federal Iraq. It has not been since Law No. 17 of 2019.
• Treating the investment licence as settled law. It is understood to permit majority ownership, and the tension with the Companies Law is unresolved.
• Using a nominee arrangement. It fails at the bank, on due diligence and in any dispute.
• Budgeting a fixed timeline for federal registration. The MOI clearance has no clock.
• Fixing the shareholding before checking the sector. Oil and gas, banking and insurance have their own regimes.
• Choosing the Kurdistan Region for the ownership rule alone, when the project and its customers sit in the south.

What to settle before you choose a route:

• Where the revenue is. Federal south or the Region, because that decides which system you must sit in.
• Who your regulator is. A federal licence is not obtained from Erbil.
• Whether you need control or protection. They are not the same thing, and only one of the three routes gives you both.
• How long you can wait. The clearance has no clock, and that is a commercial fact rather than an administrative one.

The bottom line

Iraq caps foreign ownership of a federal LLC at 49%, and has done since 2019. The Kurdistan Region does not. Between those two poles sit an investment licence that practitioners treat as opening majority ownership without the point being fully settled, and a branch route that generally depends on holding a government contract.

Every one of those is a lawful structure with a real trade-off. What is not available is a version of 49% that behaves like 100% because a private agreement says so. Structure the entry with an Iraqi lawyer, price the Ministry of Interior clearance into the schedule, and pick the route from the project rather than from the ownership percentage.