Iraq is the new Middle East destination for business and investments. Being one of the richest countries in oil and gas, as well as emerging from years of war, the economic growth being experienced all together puts Iraq under the spot light, says Khaled Saqqaf at Al Tamimi & Company.
Most foreign companies wishing to do business in Iraq are interested in investing and establishing a legal presence in the country. There are several options they may wish to consider regarding their incorporation. Some of them may want to extend into Iraq using a representative office, or conduct business through a branch; others may wish to incorporate a new Iraq entity or partner with locals. All of these options are available under the current Iraqi law depending on the needs, business, governmental contacts, and activities to be exercised in Iraq.
Representative Office or Branch
A representative office is the simplest way to establish a presence in Iraq for exploring, marketing, negotiations and feasibility study activities. The representative office is not allowed to engage in commercial activities or transactions.
The advantages of setting up a representative office include establishing a legal presence, the ease in converting it into a branch once a governmental contract is obtained, being able to keep the name of the parent company, and reducing the time required to register it as it usually takes about a month to a month and a half to be registered from the date of submission of the application to the Registrar of Companies (http://www.investorsiraq.com/).
Initially, all applications are registered as representative offices, with no ability to engage in commercial trade until the foreign company has negotiated a contract with either the Iraqi or the US government. Once a foreign company has a governmental contract, it may apply to transfer its status from representative office to branch. The company will maintain branch status and be authorised to do business in Iraq for the duration of the contract.
Therefore, foreign companies may benefit from the use of their brand in Iraq; however, the parent companies assume all legal and financial liability for their branch or representative offices in Iraq. Some investors may consider this to be a drawback.
New Iraqi Entity
Another legal path to consider is incorporating a new company in Iraq, whether with 100% ownership or with an Iraqi national.
Except for some specific activities, the current Iraqi Companies’ law allows 100% foreign ownership of companies without any restrictions to nationalities, individuals or companies. The shareholder may be a natural person (business law terminology for a human being), a juristic one (a legally recognised entity – such as a firm – having a distinct identity, duties and rights), Iraqi or other.
Furthermore, some company types may be owned by one person, which means that a foreign company or natural person may solely own 100% of an Iraqi company.
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