Order 64: Amendment to the Company Law No. 21 of 1997

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Order 64: Amendment to the Company Law No. 21 of 1997
L. Paul Bremer, Coalition Provisional Authority
Deficient OCR, possibly incomplete. Original PDF available at Commons:Category:Coalition Provisional Authority documents.

COALITION PROVISIONAL AUTHORITY ORDER NUMBER 64
AMENDMENT TO THE COMPANY LAW NO. 21 OF 1997


Pursuant to my authority as Administrator of the Coalition Provisional Authority (CPA) and
under the laws and usages of war, and consistent with relevant U.N. Security Council
resolutions, including Resolutions 1483 and 1511 (2003),

Having worked closely with the Governing Council to ensure that economic change as necessary
to benefit the people of Iraq occurs in a manner acceptable to the people of Iraq,

Acknowledging the Governing Council’s desire to bring about significant change to the Iraqi
economic system as necessary to improve the condition of the people of Iraq,

Determined to improve the conditions of life, technical skills, and opportunities for all Iraqis and
to fight unemployment with its associated deleterious effect on public security,

Recognizing that some of the rules concerning company formation and investment under the
prior regime no longer serve a relevant social or economic purpose, and that such rules hinder
economic growth,

Noting that Iraqi entrepreneurs and businesses will benefit from more streamlined requirements
for forming companies and investing in them,

Recognizing the CPA’s obligation to provide for the effective administration of Iraq, to ensure
the well-being of the Iraqi people and to enable the social and economic functions and normal
transactions of every day life,

Acting in a manner consistent with the Report of the Secretary General to the Security Council of
July 17, 2003, concerning the need for the development of Iraq and its transition from a nontransparent
centrally planned economy to a free market economy characterized by sustainable
economic growth through the establishment of a dynamic private sector, and the need to enact
institutional and legal reforms to give it effect,

Having worked closely with the Governing Council, international organizations and relevant
Ministries in developing policies that will organize and facilitate the infusion of capital into Iraqi
businesses, private sector investment, and transferability of interests,

I hereby promulgate the following:

Section 1
Amendments to the Company Law


1) Article 1 of the Company Law No. 21 of 1997 (“the Law”) is amended to read as follows:
“The objectives of this law are to:

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 1. organize companies;
2. protect creditors from fraud;
3. protect owners from conflicts of interest and related abuses by company officials,
majority owners, and others with practical control over the affairs of the company; and
4. promote the provision of full information to owners in connection with decisions
affecting their investment and their company.”
2)
Article 2 of the Law is suspended.

3)
Article 3 of the Law is amended to read as follows: “This law applies to mixed and private
companies and to all investors. Its provisions shall apply to banks to the extent they do not
conflict with Coalition Provisional Authority (CPA) Orders, including but not limited to CPA
Order No. 40, promulgating the Banking Law, and CPA Order No. 18, prescribing Measures
to Ensure the Independence of the Central Bank of Iraq, and regulations issued under such
CPA Orders. This law shall apply to securities transactions, financial investment companies
and insurance and re-insurance companies to the extent it does not conflict with the
legislation applicable to these transaction and entities or the jurisdiction of the competent
state authorities for those sectors. Decisions of the Registrar of Companies (hereinafter
"Registrar") hereunder shall be based upon this law and not upon considerations of economic
planning or development policy. Decisions by the Registrar shall not in general foreclose a
claim for compensation arising from violation of the law by an injured third party against
those responsible for the violation.”

4)
The heading of Sub-Section One of Section 2 of the Law is amended to read as follows: “The
Company's Contract and Owners’ Mutual Obligations”.

5)
Article 4, paragraph Second of the Law is amended to read as follows: “With the exception of
the provisions of paragraph First of this article:

1. A company may be established by one natural person in accordance with the
provisions of this law. Such a company will henceforth be referred to as a ‘sole owner
enterprise.’
2. A limited liability company may be formed with one owner in accordance with the
provisions of this law.”
6)
Article 4 of the Law is supplemented with the following paragraph Third, which shall read as
follows: “Owners of capital in a company may not exercise their voting or other authority in
the company to cause it to do or consent to acts that:

1. harm or disadvantage the company to benefit themselves or those associated with them
at the expense of other owners of the company; or
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2. jeopardize the rights of creditors by causing withdrawal of capital or transfer of assets
when insolvency is imminent or when prohibited by law.”
7)
Article 6, paragraph Second of the Law is amended to read as follows: “The mixed or private
limited liability company shall be formed by no more than 25 natural or juridical persons,
who will subscribe to its shares and will be responsible for the company’s debts insofar as the
nominal value of the shares to which they subscribed.”

8)
Article 6, paragraph Third of the Law is amended to read as follows: "The joint liability
company shall be formed by not less than two and not more than 25 persons, each owning a
quota of its capital. They shall jointly assume personal and unlimited responsibility for all of
its obligations."

9)
Article 7, paragraph First of the Law is amended to read as follows: "The mixed company
shall be formed by the agreement between one or more persons from the state sector and one
or more persons from outside this sector. The state sector's share in the mixed company's
capital must not initially be less than 25 percent. A mixed company may also be formed by
two or more persons from the mixed sector. When the state sector’s share falls below 25%,
the company shall be treated as a private company, as permitted in article 8, paragraph
Second, point 2."

10) Article 8, paragraph Second, subparagraph 1 of the Law is amended to read as follows:
“Form a sole owner enterprise of one natural person or a sole owner limited liability
company of one juridical or natural person.”

11) Article 9, paragraph First of the Law is amended to read as follows: “The Financial
Investment Company is a company organized in Iraq whose main activity is to direct savings
toward investment in Iraqi financial securities, including shares, bonds, treasury bills and
fixed deposits.”

12) Article 10, paragraph First of the Law is suspended.

13) Article 10, paragraph Second of the Law is amended to read as follows: “Companies
engaging in any of the following activities must become joint-stock companies:

1.
Insurance and re-insurance.
2.
Financial investment.”
14) Article 12, paragraph First of the Law is amended to read as follows: “A juridical or natural
person foreign or domestic has the right to acquire membership in the companies stipulated
in this law as founder, shareholder, or partner, unless such person is banned from such
membership under the law, or due to a decision issued by a competent court or authorized
governmental body.”

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15) Article 12, paragraphs Second and Third of the Law are suspended.

16) The chapeau paragraph of Article 13 of the Law, and paragraphs First through Third thereof
are amended to read as follows:

“Article 13: The founders shall prepare a contract for the company, which is signed by
them or their legal representative. The contract shall contain at a minimum:

First: The company's name, and corporate form, with the word "mixed" added if it is a
mixed sector company, and any other acceptable elements.

Second: The company's head office, which must be in Iraq.

Third: The purposes for which the company is established and the general nature of the
business to be transacted.”

17) Article 13, paragraph Fourth of the Law is suspended.

18) Article 14 of the Law is amended to read as follows: “The founder of a limited liability
company when there are no other founders, or the founder of a sole owner enterprise shall
prepare a statement, which shall serve the purpose of a company contract and shall be subject
to the provisions that are applicable to the contract whenever they occur in this law.”

19) Article 15 of the Law is amended to read as follows: “The founders of the company shall
subscribe to the company's capital in accordance with their agreed to contributions.”

20) Article 16, paragraph First of the Law is amended to read as follows: “The founders shall
deposit the company's capital specified in Article 28, paragraph First, of this law with one or
more banks authorized to operate in Iraq. It is permissible for the company capital also to
include contributions in kind as stipulated in Article 29 of this law.”

21) Article 16, paragraph Second of the Law is suspended.

22) Article 16, paragraph Third, subparagraph 1, items (b), (d) and (f) of the Law are amended to
read as follows:

"b. Follow up on the procedures for establishing the company and submit the contract of
association and the subscription document to the Registrar of Companies—including
the names, signatures, addresses and nationalities of the founders as well as other
requirements.”

“d. Open a joint account in the name of the committee with one or more banks authorized
to operate in Iraq.”

"f. Obtain a license, if necessary, for the project and conclude the necessary contracts for
its establishment, following the issuance of the decision approving its establishment.”

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23) Article 17, paragraph Third of the Law is amended to read as follows: “A statement from the
bank or banks proving that the capital required in Article 28 has been deposited.”

24) Article 18 of the Law is suspended.

25) Article 19 of the Law is amended to read as follows: “The Registrar shall approve
the application unless it finds it contrary to a specific provision of this law and shall issue the
approval or disapproval of the establishment application within 10 days from the date of
receiving it. Except for joint stock companies, the certificate shall be issued at the time of
the approval and shall be the evidence of the company's establishment. If the Registrar
disapproves an application, it shall issue a written decision stating the reasons for the
disapproval. In the case of a joint-stock company, the Registrar shall publish a written notice
of his or her decision at the time of the approval or disapproval. No certificate shall be
issued without payment of the applicable fee.”

26) Article 20 of the Law is suspended.

27) Article 21, paragraph First, subparagraph 1 of the Law is amended to read as follows: “The
Registrar shall publish the decision approving the establishment of the company in the
special bulletin published under the provisions of Article 206 of this law, which henceforth
will be referred to as "the Bulletin."

28) Article 21, paragraph Second of the Law is suspended.

29) Article 22 of the Law is amended to read as follows: “The company acquires corporate
status from the date of the issuance of its establishment certificate. This certificate is
considered proof of this status.”

30) Article 24 of the Law is amended to read as follows: "If the Registrar rejects the application
for the establishment of the company, it must state in writing the legal provisions violated
and the facts underlying each violation. The applicant for the establishment has the right to
contest the Registrar's rejection before the Minister of Trade within 30 days from the date of
notification. The Minister of Trade must consider the rejection within 30 days from the date
of its submission. If the Minister also rejects the application, the applicant has the right to
appeal the Minister’s decision before the competent court within 30 days."

31) Article 28 of the Law is amended to read as follows: “First: The capital of a joint stock
company shall not be less than two million (2,000,000) dinars. The capital of a limited
liability company shall not be less than one million (1,000,000) dinars. The capital of all
other companies shall not be less than fifty thousand (50,000) dinars.

Second: A joint stock company's liabilities may not exceed 300 percent of its total capital and
other equity rights.”

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32) Article 29, chapeau of paragraph Second of the Law is amended to read as follows: “In the
joint-stock company and the limited liability company, the capital may include shares that are
offered in exchange for tangible or intangible in-kind property contributions by one or more
of the founders.”

33) Article 29, paragraph Second, subparagraph 1 of the Law is amended to read as follows:
“In the case of a joint-stock company, property-in-kind shares shall be evaluated by a
committee approved by the Registrar as to expertise and objectivity, and including experts in
law, accounting and the company's line of business."

34) Article 29, paragraph Second, subparagraph 2 of the Law is amended to read as follows: "In
the case of the mixed joint-stock company, the committee established pursuant to
subparagraph 1 in this paragraph shall submit its report to the Registrar within 60 days from
the date of its formation. The Registrar shall submit its report to the Financial Control Bureau
for endorsement within 30 days from the date of its submission. In the case of non-approval,
the Registrar shall return the report to the committee for further consideration.”

35) Article 29, paragraph Second, subparagraph 3 of the Law is amended to read as follows. “In
the case of the private joint-stock company, all founders shall agree on the value of propertyin-
kind shares as assessed in the manner stipulated in subparagraph 1 of this paragraph. A
joint stock company’s or limited liability company’s contract must state the type of propertyin-
kind share and its value as approved by the rest of the founders, the name of the founder
who offered the share, and the percentage of his contribution to the capital through this share.
The founder offering the property in-kind shall be accountable to any person for its assessed
and accepted value. If it is proven that the assessed value is less than the actual value, he or
she must pay the difference in cash to the company. The other founders may be asked to
cooperate in paying the difference.”

36) Article 30 of the Law is amended to read as follows: “The nominal value of the share shall
be one dinar. It should not be issued higher or lower than that except as provided in Articles
54 through 56.”

37) Article 31 of the Law is suspended.

38) Article 32, paragraphs First and Second of the Law are suspended.

39) Article 37, paragraph Second of the Law is amended to read as follows: "The creditors of a
sole owner enterprise may take legal action against it or the owner of the quota in it. His or
her funds shall be considered as a guarantee for debts on the enterprise. It is permissible to
seize his or her funds without warning the enterprise and in accordance with applicable legal
procedures."

40) Article 39, paragraph First of the Law is amended to read as follows: "The founders in the
mixed joint-stock company shall subscribe by not less than 30 percent and not more than

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55 percent of its nominal capital, and this should include the minimum 25 percent fixed for

the state sector."

41) Article 39, paragraph Second of the Law is amended to read as follows: “At the
establishment of the company, the founders in the private joint-stock company shall
subscribe by not less than 20 percent in its nominal capital.”

42) Article 39, the chapeau portion of paragraph Third of the Law is amended to read as
follows: "The remaining shares shall be offered for public subscription within 30 days from
the date of the approval of the establishment of the company in a statement issued by the
founders and published in the bulletin and at least two daily papers, after obtaining the
approval of the Registrar, which shall be granted within that time unless the Registrar finds
the registration materials submitted would be materially misleading to investors. In the latter
case, it shall refer a matter within its jurisdiction to the competent state authority for the
securities markets. The statement shall include the following:"

43) Article 39, paragraph Fourth of the Law is amended to read as follows: “Founders shall not
subscribe to the shares while they are being offered for public subscription, except after the
end of 30 days from the beginning of the subscription or during the extended period
stipulated in Article 42 of this law.”

44) Article 41, paragraph First of the Law is amended to read as follows: “The subscription shall
take place in a bank authorized to operate in Iraq in a form bearing the name of the company
and containing the following:

1. The request to subscribe to a specific number of shares.
2. The subscriber’s approval of the company’s contract.
3. The subscriber’s name, address, profession, and nationality.
4. Any other information which the founders may want to add.
45) Article 41, paragraph Second of the Law is amended to read as follows: "The form shall be
submitted to the party handling the subscription signed by the subscriber or his legal
representative. The required payment shall be made against a receipt."

46) Article 41, paragraph Third of the Law is amended to read as follows: "The subscriber shall
be given a copy of the company's contract and its technical and economic feasibility study,
subject to Article 47, paragraph Third of this law."

47) Article 42 is amended to read as follows: "The subscription period shall not be less than 30
days or more than 60 days. If the subscription period expires without the subscribed shares
reaching 75 percent of the nominal capital, including the shares owned by the founders, it is
permissible to extend it for a further period of not more than 60 days. The founders shall
again publish the subscription statement and make the extension announcement."

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48) Article 43, paragraph First of the Law is amended to read as follows: “If the subscription
does not reach 75 percent of the nominal capital at the end of the extension period, the
founders must decrease the company’s capital, so that the value of the subscribed shares will
be equal to 75 percent of the decreased nominal capital, unless the founders cancel the
establishment of the company. The founders shall inform the Registrar of such a decision.”

49) Article 43, paragraph Second of the Law is suspended.

50) Article 43, paragraph Third of the Law is amended to read as follows: "If it is decided to
cancel the establishment of the company under the provisions of Paragraph First of this
article, the founders shall notify the bank and jointly bear the expenses for establishing the
company. The bank handling the subscription shall return the money paid by all subscribers
in full upon notification and within a period of not more than 30 days."

51) Article 44, paragraph Second of the Law is amended to read as follows: "If it transpires after
the closure of the subscription that the shares offered have been over-subscribed, the shares
must be distributed among the subscribers according to the percentage of subscription
allotted for each subscriber."

52) Article 45, paragraph First of the Law is amended to read as follows: "Any person whose
lawful rights would be infringed by violations of the subscription rules, the Registrar and
the competent state authority for the securities market has the right to contest the soundness
of the subscription process before the competent court and ask for its cancellation within 15
days from the closure of the subscription. The court must examine such cases urgently. The
court's decision can be contested before the court of appeal, which shall sit as a court of
cassation, and its decision in this capacity shall be final.”

53) Article 45, paragraph Second of the Law is amended to read as follows: "If the subscription
is ruled to be in violation of the law, the founders must carry it out anew.”

54) Article 47, paragraph First of the Law is amended to read as follows: “Once the company has
been established and some shares are still not subscribed for, the board of directors may, after
six months from the date of the issuance of the establishment certificate, pursue one of two
courses:

1. sell the shares on the Baghdad Stock Exchange market; or
2. place the shares for public subscription in accordance with the procedures followed
during the constituent subscription.”
55) Article 47, paragraph Second of the Law is amended to read as follows: “If the shares are not
sold in the market or subscribed by the public, the company’s nominal capital shall be
decreased by the value of the unsold shares. The company shall be liable for materially
misleading assertions or omissions in sales or subscriptions as shall be its responsible
directors, employees and agents.”

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56) Article 48, paragraph First of the Law is amended to read as follows: "In the joint-stock
company, the subscription shall require payment in full for issued shares. Unpaid shares
already outstanding under previous law shall be governed by this Article."

57) Article 48, paragraph Second of the Law is suspended.

58) Article 51 of the Law is amended to read as follows: "Every shareholder in a limited liability
company and every subscriber who has fully paid the value of his shares in a joint-stock
company shall be given a permanent certificate including the data contained in the temporary
certificate, plus a declaration that the shares have been paid. Any temporary certificate
should be cancelled.”

59) Article 54, paragraph Second of the Law is amended to read as follows: “In the joint-stock
company and the limited liability company, the increase of capital must be in accordance
with a general assembly decision to amend the contract and issue new shares.”

60) Article 54, paragraph Third of the Law is suspended.

61) Article 54, paragraph Fourth of the Law is amended to read as follows: “The Registrar shall
within fifteen days of a lawful request approve the increase. The Registrar shall be deemed
to approve the increase, and to give notice of the approval, unless it rejects the request,
giving the legal and factual basis for the determination in writing.”

62) Article 55, paragraph Second of the Law is amended to read as follows: “Transferring funds
from the accumulated surplus or the issuance allowance reserve into shares to be distributed
among the shareholders in the ratio of their subscription to the capital.”

63) Article 55 is supplemented by a paragraph Fourth, to read as follows: “In cases where the
shares will be offered in exchange for cash, such decision must specify the number of shares
to be issued and the price at which they will be offered for sale or the means of establishing
that price. Shares may be offered at a price equal to or greater than their nominal value in
accordance with the general assembly’s decision and priced in light of the company’s
performance and, where applicable, the prices of its shares in the Baghdad Stock Exchange
market. The proceeds reflecting the difference between the issue price and nominal price,
which is considered issuance allowance, shall be recorded in the account of the issuance
allowance reserve, after deducting all issuance expenses. This reserve may not be distributed
as profits. In the case of the joint-stock company, the company shall submit to the Registrar a
decision by its general assembly to increase the capital, backed by an economic study giving
the justifications for this increase and the fields in which it will be expended, as well as any
other essential data. It shall be furnished to purchasers, subject to the liability in the second
paragraph of article 47 of this law, unless the Registrar finds it materially misleading. In this
case, it shall refer a matter within its jurisdiction to the competent state authority for the
securities market.”

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64) Article 56, paragraph First of the Law is amended to read as follows: “In the joint-stock
company, the new shares must be placed for public subscription within 30 days from the date
on which the company is notified of the Registrar’s approval of the increase in the capital.
The subscription shall remain open for a period of not less than 30 days and not more than 60
days, which may be renewable once for a similar period, provided the value of the shares is
paid during subscription. The increase in the capital is achieved by the number of shares
subscribed and paid up on the closure of the subscription. Otherwise, and insofar as it does
not conflict with the nature of the increase in the capital, the original provisions on
subscription shall be applied on the new shares, including the provisions of Articles 44 and
47 of this law.”

65) Article 56, paragraph Third of the Law is amended to read as follows: “Every shareholder
has the priority right to buy shares at the subscription price proportional to the number of the
shares he owns. Shareholders shall be allowed to exercise this right within a period of 15
days from the date they are invited to do so. The invitation must state the beginning and end
of the subscription period and the nominal value of the shares. If some shares are not
subscribed after the period stipulated in paragraph First of this Article, the board of directors
may place the shares for sale in the Baghdad Stock Exchange market in the manner it deems
suitable.”

66) Article 56 is supplemented by a paragraph Fourth as follows: “Fourth. In the case of banks
increasing capital by a sale of shares for cash, the company may issue shares without public
subscription and/or without offering existing shareholders the right to participate, provided
the following conditions are met:

1. The issuance is approved by a majority of the votes of the subscribed shares whose due
installments have been paid; and
2. The Central Bank of Iraq concurs that the sale is for fair value, in view of all the
circumstances, and is fair to shareholders not entitled to participate, in view of the benefit
to the company as a whole.”
67) Article 58 of the Law is amended to read as follows: “A company may decrease its capital if
it exceeds its needs or incurs losses. A decrease in capital that is part of an arrangement to
achieve a net increase in capital through additional investments shall not be subject to the
requirements in Article 59, paragraph Third, and Articles 60-63.”

68) Article 59, paragraph Third, subparagraph 2 of the Law is suspended.

69) Article 59, paragraph Third, subparagraph 3 of the Law is amended to read as follows:
“If the Registrar finds the decrease lawful, it shall announce the decrease in the bulletin and
two daily papers. It shall also give every creditor to or claimant on the company the right to
object to the decision on the decrease within 30 days from the date of the publication of the
announcement.”

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70) Article 63 of the Law is amended to read as follows: “In the case of the joint liability
company and the sole owner enterprise, any decrease of the capital must take place through
a decision by the general assembly to amend the contract.”

71) Article 64, paragraph First of the Law is amended to read as follows: “Founders of joint-
stock companies may not transfer ownership of their shares except in the following
situations:

1. The lapse of at least one year since the establishment of the company.
2.
The distribution of dividends that are not less than five percent of the paid up nominal
capital.
72) Article 64, paragraph Second of the Law is suspended.

73) Article 65, paragraph Third of the Law is amended to read as follows: “If several
shareholders want to buy the shares at the same price, the shares shall be divided among
them in the ratio of their subscription, to the nearest correct share.”

74) The chapeau paragraph of Article 67 of the Law is amended to read as follows: “If an Iraqi
shareholder in a joint-stock company or a limited liability company dies, the ownership of
the shares shall revert to his or her heirs in accordance with the ratios specified by the Shari’a
law. In cases in which the shareholder is a citizen of another country, the shares shall revert
to the shareholder’s heirs in accordance with the applicable law of that country. In each case,
the following shall be taken into consideration:”

75) Article 67, paragraph Second of the Law is amended to read as follows: “If the distribution
of shares among the heirs will result in an increase in the number of partners in the limited
liability company over the number set by the law, the shares shall be considered a joint
ownership by the heirs in accordance with the ratios specified under the applicable
inheritance law and considered as one person. In such a case, one of the heirs will represent
the rest before the company. They shall be asked to choose this representative within 60
days from the date of the registration of the shares in the company's ledger.”

76) Article 74 of the Law is amended to read as follows: “First: The reserve shall be used for the
purposes of expanding and developing the company's business, and improving the conditions
of its workers, participating in projects relevant to the company's activity, and contributing to
the protection of the environment and social welfare programs. Dividends shall not be
distributed from the reserve.

Second: The reserve shall be used to meet the company's debts, provided they do not exceed
50 percent of the reserve. Any increase over that limit shall be subject to the approval of the
Registrar.”

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77) Article 76 of the Law is amended to read as follows: “First: If the company's losses amount
to 50 percent of its capital or more, it must notify the Registrar within 60 days from the day
the losses are established in the balance sheet.

Second: If the losses amount to 75 percent of the capital or more, the company must take one
of the following steps:

1. decrease or increase the capital of the company; or
2. recommend liquidation of the company.”
78) Article 78, paragraph Second of the Law is amended to read as follows: “The total amount
of the bond issue must not exceed the company’s capital.”

79) Article 79 of the Law is amended to read as follows: “The company shall submit to the
Registrar the general assembly's decision on the issuance of the credit bonds backed by an
economic study stating the reasons for the issue, the fields in which the credit will be
expended, and any other essential data. It shall be furnished to purchasers, subject to the
liability in the second paragraph of Article 47 of this Law, unless the Registrar finds it
materially misleading. In the latter case, it shall refer a matter within its jurisdiction to the
competent state authority for the securities markets.”

80) Article 80, paragraph Third of the Law is amended to read as follows: “Information on the
company’s financial condition and results of operations, including earnings.”

81) Article 86 of the Law is amended to read as follows: “The general assembly in the joint-
stock company shall meet at least once a year. In the other companies, it shall meet at least
once every six months.”

82) Article 87, paragraph Third of the Law is amended to read as follows: “The Registrar on its
own initiative or at the request of the accounts controller.”

83) Article 88, paragraph Second of the Law is amended to read as follows: “If the founders or
the chairman of the board of directors in the joint-stock company or the managing director in
the other companies fail to address the invitation to a meeting of the general assembly at the
legally scheduled date, the Registrar shall address them directly to the members--in the case
of the joint-stock companies—by announcing that in the bulletin, two daily papers, and the
Baghdad Stock Exchange Market and fixing the place and date of the meeting.”

84) Article 88 of the Law shall be supplemented by a paragraph Third, to read as follows: “It
shall be unlawful to manipulate notice of a meeting or dissemination of information
concerning it in order to bias the outcome of its decisions.”

85) Article 90 of the Law shall be amended to read as follows: “The meetings may be held at the
company's head office or any other place in Iraq if necessary, provided inconvenience to the
owners is minimized.”

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86) Article 91, paragraph Third, subparagraph 1 of the Law is suspended.

87) Article 92 of the Law is amended to read as follows: “First: The meeting of the general
assembly shall be held with the attendance of the members owning the majority of subscribed
shares whose installments have been paid, in the case of the joint-stock company; the
majority of paid-up shares in the limited liability company; and the majority of quotas in the
joint liability company. If a quorum is not reached, the meeting shall be postponed to the
same day on the following week and in the same place. A quorum is considered attained in
the second meeting if 25% of the number of such shares or quotas is represented. The
company may apply to the Registrar for waiver of the 25% minimum if, in view of the
agenda and other circumstances, the minimum requirement would disserve the interests of
the owners generally. The company’s contract may require more stringent conditions for a
quorum.

Second: If the agenda calls for amending the company's contract, increasing or decreasing its
capital, dismissing the chairman or a member of its board of directors; or deciding on its
merger, transformation, sale of more than half its assets in a transaction outside its ordinary
business, a transaction under paragraph Fourth of Article 56 or liquidation, the quorum
required for the first meeting must be attained.”

88) Article 93 of the Law is amended to read as follows: “In the case of the joint-stock company,
the meeting of the general assembly must be attended by the representatives of the Registrar.
It must also be attended by most members of the board. If representatives of the Registrar or
board members fail to attend after being notified, the meeting can be held in their absence
within half an hour after the scheduled time of the meeting. The representative of the
Registrar will withdraw after confirming that a quorum is present unless his or her continued
presence is requested by a shareholder.”

89) Article 94, paragraph First of the Law is amended to read as follows: “Prior to the beginning
of the meeting, the name of the participant in the meeting shall be recorded along with the
number of the shares he or she owns or represents, provided he or she produces the certificate
of the shares or the power of attorney if he or she represents a shareholder in the company.
Share certificates submitted to a depository for book-entry transfer need not be presented,
provided adequate evidence of ownership is furnished under the rules of the depository
approved by the competent state authority for the securities market. The participant shall put
his or her signature against the name of the shareholder he or she represents.”

90) Article 98, paragraph Second of the Law is amended to read as follows: “Unless the
company’s contract requires a higher proportion, decisions on amending the contract of the
company, increasing or decreasing its capital, selling more than half its assets in a transaction
outside its ordinary business, approving a transaction under paragraph Fourth of Article 56,
merging the company, transforming it, or liquidating it must be based on: the majority of the
votes of the subscribed shares whose due installments have been paid, in the case of the joint-
stock company; the majority of the votes of the paid-up shares at the time of calling the
meeting, in the case of the limited liability company; and the unanimous vote of the quotas,
in the case of the joint liability company. In the case of a tie vote in the limited liability

CPA/ORD/29 February 2004/64


company, and the impossibility of obtaining a unanimous vote in the joint liability company,
it is permissible to resort to the competent court to settle the matter. Decisions on other
matters shall be made on the basis of the majority of the votes of shares or quotas represented
in the meeting, unless the company’s contract requires a higher proportion.”

91) Article 101 of the Law is amended to read as follows: “In the sole owner enterprise, or a
limited liability company having one owner, the owner replaces the general assembly and the
provisions stipulated in this law, other than those pertaining to meetings, apply to him, her or
it.”

92) Article 102, paragraph Second is amended to read as follows: “Decide on the election of the
representatives of shareholders from outside the state sector in the board of directors of the
mixed company, and the representatives of all shareholders in the board of directors of the
private joint stock company, as well as on their dismissal.”

93) Article 102, paragraph Fourth is amended to read as follows: “Discuss the company’s final
accounts and approve them.”

94) Article 102, paragraph Tenth is amended to read as follows: “Approve employment rules in
the mixed joint-stock company as worked out by the board of directors.”

95) Article 102, paragraph Tenth of the Law is amended to read as follows: “Approve
employment rules in the mixed joint-stock company as worked out by the board of
directors.”

96) Article 103 of the Law is amended to read as follows: "First: The board of directors in the
mixed joint stock company shall consist of seven original members who are chosen as
follows:

1. Two members representing the state sector who are appointed under a decision by the
competent minister or his deputy in the sector to which the company belongs, unless
at the time of the selection, the state sector's share in the mixed company's capital
exceeds 50%. In such a case, the competent minister or his deputy in the sector to
which the company belongs shall appoint three members representing the state sector.
2. Five members representing shareholders from outside the state sector elected by the
company's general assembly, unless at the time of the selection, the state sector's
share in the mixed company's capital exceeds 50%. In such a case, the company's
general assembly shall elect four members representing shareholders from outside the
state sector.
Second: The board of directors in the mixed joint stock company shall have seven reserve
members, who will be selected in the manner and ratio used in the case of the original
members."

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97) Article 104, paragraph First of the Law is amended to read as follows: “The board of
directors in the private joint-stock company shall consist of not less than five and not more
than nine original members to be elected by the company’s general assembly.”

98) Article 105 of the Law is suspended.

99) Article 108, paragraph First of the Law is amended to read as follows: “If a vacancy occurs
in the membership representing the state sector in the board of directors, the council shall
invite a reserve member--in the order of the reserve list in the sector--to fill the vacancy and
attend the board meeting.”

100)
Article 110, paragraph First of the Law is amended to read as follows: “A person cannot be
a member in the boards of directors of more than six companies at the same time. But, he
can also assume the chairmanship of one or two other boards at the same time.”

101)
Article 113 of the Law is amended to read as follows: “The quorum shall be counted 30
minutes after the board has convened. It shall meet with the attendance of the majority of
its members.”

102) Article 114, paragraph Second of the Law is suspended.

103) Article 117, paragraph Fourth (chapeau portion) of the Law is hereby amended to read as
follows: “Discuss and approve an annual plan for the company's activity in the following
year. This plan must be prepared by the managing director during the last six months of
the year in light of the company's aim. The plan shall include a full report on the
company's activity and a draft budget outlining:”

104)
Article 117 is supplemented by a new paragraph Eighth to read as follows: “The board of
directors shall establish committees of its members to make recommendations as to (a)
selection of the company’s external, independent auditors (audit committee); and (b)
compensation form and amount for the board and the managing director (compensation
committee). Members of these committees shall not be officers or employees of the
company nor holders of 10% or more of the company’s shares, nor related to any of these
by blood, marriage or personal or economic interest in a degree likely to materially bias
their judgment. Any departure from the recommendation of such a committee, and the
reasons for it, shall be announced at the general assembly and recorded in its minutes. The
audit committee shall meet privately with the company’s external auditors and have special
responsibility for ensuring the accuracy and reliability of their work. It shall ensure that a
record is kept in the course of the year of all material related-party transactions, within the
meaning of international accounting standards, for discussion with the company’s external
auditors.”

105 ) Article 119 of the Law is amended to read as follows: “First. It is impermissible for the
chairman or a member of the board to have direct or indirect interests in deals that are
concluded with the company, except after obtaining the permission of the general assembly
with full disclosure of the nature and extent of such interests. The chairman or board

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member shall be liable to the company for any damage to it arising from violation of this
Article. Compliance with this Article shall not exclude liability under Article 4, paragraph
Third.

Second. It is impermissible for the chairman or a member of the board to vote upon or
participate in a matter in which he or she has direct or indirect interests without disclosing
the nature and extent thereof to disinterested members and receiving the permission of a
majority of them. If no members are disinterested, all may act. In either case, however, the
details of the matter shall be recorded in the minutes of the board and made available to the
general assembly and the company’s external auditors.”

106)
Article 124 of the Law is amended to read as follows: “In the exercise of his jurisdictions
and powers, the managing director is subject to the provisions of Articles 119 and 120 of
this Law. In addition, the compensation of the five most highly compensated employees of
the company, in whatever form received, shall be disclosed in writing to the general
assembly.”

107) Article 125 of the Law is amended to read as follows: “Control is aimed at guaranteeing
that the company is applying the provisions of its contract and the law.”

108) Article 127 of the Law is amended to read as follows: “First: A copy of the invitation to the
general assembly meeting held to discuss the final accounts shall be sent to the Registrar.
The following shall be attached to the invitation:

1. the annual list;
2. the final accounts for the previous year and the accounts controller's report on them;
and
3. the managing director's report on the company’s progress in implementing its plan for
the previous year.
Second: In the case of the joint-stock company, the invitation shall be sent to the Registrar,
along with the statements and reports mentioned in subparagraphs 1 and 2 of paragraph
First in this Article as well as the board of directors' report on the company’s progress in
implementing its plan for the previous year. As for members, they have the right to obtain
copies of the annual report and other statements and reports.”

109) Article 128 of the Law is amended to read as follows: “The Registrar has the right to obtain
any statements, clarifications or documents from the company in order to implement its
duties under the law.”

110)
Article 133, paragraph First of the Law is amended to read as follows: “The accounts of the
mixed company shall be subject to control and audit by the Financial Control Bureau. As
for the accounts of the private company, they shall be subject to control and audit by
auditors appointed by the company's general assembly. Accounts should be consolidated

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with those of related companies in accordance with international accounting standards

unless specifically modified by standards in force in Iraq.”

111)
Article 134, paragraphs First and Second of the Law are amended to read as follows:

“First: The significant contracts concluded by the company during the previous year and
the businesses in which owners of 10% or more of the company’s shares, the members of
the board or the managing director had interests, including interests of their families,
entities under their control and any other interest that would render the transaction a
related-party transaction under international accounting standards insofar as permissible to
apply these in Iraq.

Second: The results of operations (including earnings) and distribution of net profit.”

112) Article 139 of the Law is amended to read as follows: “Copies of the final accounts, the
annual plan, and the reports on them as well as the general assembly's decisions on them
shall be sent to the Registrar.”

113) Article 140, paragraph First of the Law is suspended.

114) Article 141 is amended to read as follows: “The Registrar has the right to appoint an
inspector when necessary without asking the permission of any quarter. If the company
believes that the Registrar has exercised its powers under this section for improper
purposes, it may apply to the competent court to prove this and obtain an order restraining
any improper action.”

115) Article 142, paragraph Second of the Law is amended to read as follows: “The appointed
inspector shall submit his or her report on the inspection to the Registrar, who shall send
copies of the report to the company and the person making the claim referred to in Article
140.”

116) Article 149, paragraphs First and Fourth of the Law are suspended.

117) Article 150, paragraph Third of the Law is amended to read as follows: “If, within 15 days
of receiving them, the Registrar has not found that the decisions are inconsistent with the
law, it will promptly issue its permission and inform the companies concerned of this
decision; the companies will then cause it to be published in the Bulletin and one daily
paper.”

118)
Article 150, paragraphs Fourth and Fifth of the Law are suspended.

119)
Article 150, paragraph Sixth of the Law is amended to read as follows: “The companies
receiving the Registrar's permission for their merger will call their general assemblies to a
joint meeting within 60 days from the date of the publication of the merger decision in
order to amend the contracts of the existing companies or draw up a new contract for the

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merger company, depending on the circumstances. The contract shall be sent to the
Registrar within 10 days for endorsement and publication in the bulletin and one daily
paper.”

120) Article 155, paragraph First of the Law is amended to read as follows:

“If, within 15 days of receiving them, the Registrar does not find that the transformation
decision and the amended contract are inconsistent with the law, it shall promptly endorse
the transformation decision and the amended contract. It shall also notify the company of
the permission; the company shall publish the permission in the Bulletin and a daily paper.”

121)
Article 155, paragraphs Second and Third of the Law are suspended.

122)
Article 158, paragraph First, subparagraph 1 of the Law is amended to read as follows: “If
the general assembly decides to liquidate the company, or if any of the reasons stipulated in
paragraphs First, Second, Third, and Fifth of Article 147 of this Law materialize and the
general assembly recommends liquidation of the company, the company must appoint one
or more liquidator, specify his or her jurisdictions and remuneration, and send the decision
or recommendation to the Registrar.”

123)
Article 158, paragraph Second of the Law is suspended.

124)
Article 159 of the Law is amended to read as follows: “The liquidation decision or
recommendation shall be backed by reasons and sent to the Registrar within 14 days of its
adoption. The latter has the right to request additional information or discuss matters with
the company's general assembly to ascertain the reasons.”

125) Article 160 of the Law is amended to read as follows: “If the Registrar has verified that the
reasons for the liquidation are not fraudulent or unlawful, it shall issue the company’s
liquidation decision and appoint a liquidator within ten days of the verification. The
Registrar shall communicate this information to the company; the company shall then
cause the information to be published in the Bulletin and one daily newspaper.”

126)
Articles 161,162 and 169 of the Law are suspended.

127)
Article 175, paragraph Fourth, shall be amended to read as follows: “Any sequestration of
company funds after the initiation of the liquidation process shall not be valid except under
a decision by the competent court, except for sequestrations that are carried in the interest
of the state, the state sector or employees in order to pay their wages.”

128) Article 178 of the Law shall be designated as Article 178, paragraph First, and the
following paragraph Second shall be added:

“Second. Distributions to foreign investors in the company shall conform to CPA Order
Number 39, section 12(2).”

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129)
Article 203 of the Law is amended to read as follows: “The company’s contract is not
considered valid until it has been endorsed by the Registrar in accordance with Article 19.

130)
Article 204 of the Law is amended to read as follows: “It is permissible to object to the
decisions of the Registrar before the Minister of Trade within 30 days from the date of
notification. The Minister’s decision may be appealed as provided in article 24 of this
law.”

131) Article 208 of the Law shall be designated as Article 208, paragraph First, and the
following paragraph Second shall be added:

“Second. The Agency Registration Law No. 4 of 1999 shall be inapplicable to the
registration of a company, and a company is not required to retain a commercial agent to
register, though it may choose to do so. Furthermore, no certification of tax compliance or
of the absence of tax delinquency shall be required for the registration of a company. The
Minister of Trade is hereby authorized to issue instructions to coordinate the activities of
the Registrar of Companies and the Chamber of Commerce regarding the registration and
approval of commercial trade names, notwithstanding anything to the contrary in The Law
on Establishment of Chambers of Commerce No. 43 of 1989.”

132) Article 209 is amended to read as follows: “The fees for the paperwork pertaining to this
law shall be charged in accordance with the chart attached to this law. The Ministry of
Trade may amend the chart in accordance with changes in costs and to align the fees with
processing costs. ”

133) Article 211, paragraph First of the Law is amended to read as follows: “The branches and
offices of foreign companies and establishments shall be subject to the provisions of CPA
Order No.39 and regulations and administrative instructions issued thereunder.”

134) Article 213, paragraph Second of the Law is amended to read as follows: “The punishment
stipulated in paragraph First of this Article shall apply to every company branch or office
that must be re-registered or liquidated, for every day of delay after the periods stipulated
in regulations and administrative instructions issued under CPA Order No. 39.”

135) Article 215 of the Law is amended to read as follows: “First: Anyone carrying out a
business in the name of a joint-stock company, limited liability company, joint liability
company, or sole owner enterprise without obtaining registration of its establishment shall
be subject to a fine of not more than 3,000,000 dinars, while taking into consideration the
severity of the violations and the provisions of paragraph First of Article 21 of this law.

Second: Anyone carrying out a business in the name of a branch or an office for a foreign
company or economic establishment without obtaining the registration required shall be
subject to the penalties provided in paragraph First of this Article unless otherwise
provided in applicable legislation.”

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136) Article 216 of the Law is amended to read as follows: “Any company that does not prepare
the records stipulated under this law shall be subject to a fine of not more than 10,000,000
dinars, depending on the severity of the violation.”

137) Article 217 of the Law is amended to read as follows: “Any company failing to submit the
required statements and information to a competent official quarter at the times fixed under
the provisions of this law shall be subject to punishment of a fine of not more than 300,000
dinars for every day of delay, depending on the severity of the violation.”

138) Article 218 of the Law is amended to read as follows: “Any company official who
purposely gives inaccurate statements or information to an official quarter on the
company’s business, results of operations, financial condition, member shares and quotas,
or distribution of dividends shall be subject to punishment of imprisonment for a period of
not more than one year, or a fine of not more than 12,000,000 dinars, or both, depending on
the severity of the violation.”

139) Article 219 of the Law is amended to read as follows: “Any company official who bars a
competent quarter from seeing the company's records and documents shall be subject to
punishment of imprisonment for a period of not more than six months or a fine of not more
than 12,000,000 dinars, or both, depending on the severity of the violation.”

Section 2
General Provisions


1) All references in the Law to “him,” “he” or “his” not specifically amended in this Order shall
hereby refer to both male and female genders, and things, where appropriate.

2) All references to an “Iraqi Bank” not specifically amended in this Order are hereby amended
to read: “bank authorized to operate in Iraq.”

3) All references in the Law to the "socialist sector" not specifically amended in this Order are
hereby amended to read "state sector."

4) The increase of penalties in Section Three of Chapter VIII of the Law shall take effect 90 days
from the date this Order enters into force.

5)
The provisions of this Order requiring action by the general assembly or board of directors of
a company shall be implemented within the later of (a) 90 days from the date this Order
enters into force; or (b) the next meeting of the body concerned or the time of its next legally
required meeting if it should fail to convene one. The reduction in state sector board
members effected in Section 1, paragraph 91, of this Order shall occur at the end of the
current terms of the members affected, as shall the elimination of members under paragraphs
91 and 92 of Section 1. The additional member allowed under Section 1, paragraph 91, to
shareholders outside the state sector may, however, be elected at the next general assembly,

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ANNEX A

LAW No. 21 of 1997 (as amended in 2004)

In the name of God the merciful, the compassionate

The Republic of Iraq

In the name of the people

Company Law No. 21 of 1997

Chapter I: Main Rules

Section One: The Aims, Bases, and Validity Scope of the Law

Article 1: The objectives of this law are to.

1. organize companies;
2. protect creditors from fraud;
3. protect shareholders from conflicts of interest and related
abuses by company officials, majority owners, and others with
practical control over the affairs of the company; and
4. promote the provision of full information to owners in
connection with decisions affecting their investment and their
company.”
Article 2: Suspended.

Article 3: This law applies to mixed and private companies and to all
investors. Its provisions shall apply to banks to the extent they do not
conflict with Coalition Provisional Authority (CPA) Orders including
CPA Order No. 40 promulgating the Banking Law, CPA Order No. 18
prescribing Measures to Ensure the Independence of the Central Bank of
Iraq, the Central Bank of Iraq Law No. 64 of 1976, as amended, and
regulations issued under the foregoing orders. This law shall apply to
securities transactions, financial investment companies and insurance and
re-insurance companies to the extent it does not conflict with legislation
applicable to these transactions and entities or the jurisdiction of the
competent state authorities for those sectors. Decisions of the Registrar of
Companies (hereinafter “Registrar”) hereunder shall be based upon this
law and not upon considerations of economic planning or development
policy. Decisions by the Registrar shall not in general foreclose a claim


for compensation arising from violation of the law by an injured third
party against those responsible for the violation.

Section Two: The Company in General
Sub-Section One: The Company's Contract and Owners’ Mutual
Obligations


Article 4: First: The company is a contract binding two or more persons.
Each person shall subscribe to the economic project by a quota of the
capital or service in order to share the resulting profit or loss.

Second: With the exception of the provisions of Paragraph First of this
article:

1. A company may be established by one natural person in
accordance with the provisions of this law. Such a company will
henceforth be referred to as a "sole owner enterprise.”
2. A limited liability company may be formed with one owner in
accordance with the provisions of this law.
Third: Owners of capital in a company may not exercise their voting or
other authority in the company to cause it to do or consent to acts that:

1. harm or disadvantage the company to benefit themselves or
those associated with them at the expense of other owners of the
company; or
2. jeopardize the rights of creditors by causing withdrawal of
capital or transfer of assets when insolvency is imminent or when
prohibited by law.
Article 5: The company shall acquire the corporate status in accordance
with the provisions of this law.

Sub-Section Two: Types of Companies

Article 6: First: The mixed or private joint-stock company shall be
formed by not less than five persons, who will participate in it by owning
shares through public subscription and will be responsible for the
company's debts in so far as the nominal value of the shares to which they
subscribed.


Second: The mixed or private limited liability company shall be formed
by no more than 25 natural or juridical persons, who will subscribe to its
shares and will be responsible for the company's debts in so far as the
nominal value of the shares to which they subscribed.

Third: The joint liability company shall be formed by not less than two
and not more than 25 persons, each owning a quota of its capital. They
shall jointly assume personal and unlimited responsibility for all of its
obligations.

Fourth: The sole owner enterprise is a company formed by one person,
who owns the one quota in it and assumes personal and unlimited
responsibility for all of its obligations.

Article 7: First: The mixed company shall be formed by the agreement
between one or more persons from the state sector and one or more
persons from outside this sector. The state sector's share in the mixed
company's capital must not initially be less than 25 percent. A mixed
company may also be formed by two or more persons from the mixed
sector. When the state sector’s share falls below 25%, the company shall
be treated as a private company, as permitted in article 8, paragraph
Second, point 2.

Second: The mixed sector company can be a joint-stock company or a
limited liability company.

Article 8: First: The private sector company shall be formed by the
agreement between two or more persons from outside the state sector
with private capital.

Second: With the exception of the provisions of Paragraph First of this
article, it is permissible to:

1. Form a sole owner enterprise of one natural person or a sole
owner limited liability company of one juridical or natural person.
2. Include the state sector in the private joint-stock company or
limited liability company with a share of less than 25 percent of
the capital. Those excluded from this percentage are: Government
insurance and reinsurance companies, the Labor and Social
Security Department, and any other investment quarter which the
cabinet may add under this sub-paragraph.
Third: The private sector company can be a joint-stock company, a
limited liability company, a joint liability company, a sole owner
enterprise, or a simple company.


Article 9: First: The Financial Investment Company is a company
organized in Iraq whose main activity is to direct savings toward
investment in Iraqi financial securities, including shares, bonds, treasury
bills and fixed deposits.

Second: The Financial Investment Company is considered one of the
intermediary financial establishments for the purposes of Iraqi Central
Bank Law No. 64 of 1976. The bank is the sectoral quarter, which will
be concerned with its activity and exercise the authority of its supervision
and control, in accordance with an ordinance which will be issued for this
purpose within 180 days from the date of the publication of this law in
the Official Gazette.

Article 10: First: Suspended.

Second: Companies engaging in any of the following activities must
become joint-stock companies:

1. Insurance and re-insurance.
2. Financial investment.
Article 11: Any economic project, which is not covered under the
provisions of Article 10 of this law can take the form of one of the
companies stipulated in this law.

Section Three: Membership in the Company

Article 12: First: A juridical or natural person, foreign or domestic, has
the right to acquire membership in the companies stipulated in this law as
founder, shareholder, or partner, unless such person is banned from such
membership under the law, or due to a decision issued by a competent
court or authorized governmental body.

Second: Suspended. Third: Suspended.

Chapter II: Establishment of the Company
Section One: Requirements of Establishment


Article 13: The founders shall prepare a contract for the company which
is signed by them or their legal representative. The contract shall contain
at a minimum:

First: The company's name and corporate form, with the word "mixed"
added if it is a mixed sector company, and any other acceptable elements.


Second: The company's head office, which must be in Iraq.

Third: The purposes for which the company is established and the general
nature of the business to be transacted.

Fourth: Suspended. Fifth: The company's capital divided in quotas and
shares.

Sixth: The method of distributing profits and losses in the joint liability
company.

Seventh: The number of elected members in the board of directors of the
private joint-stock company.

Eighth: The names of the founders and their nationalities, professions,
permanent addresses, and the number of shares they own as well as their
percentage of the capital.

Article 14: The founder of a limited liability company when there are no
other founders, or the founder of a sole owner enterprise shall prepare a
statement, which shall serve the purpose of a company contract and shall
be subject to the provisions that are applicable to the contract whenever
they occur in this law.

Article 15: The founders of the company shall subscribe to the company's
capital in accordance with their agreed to contributions.

Article 16: First: The founders shall deposit the amounts of the
company's capital specified in Article 28, paragraph First of this law with
one or more banks authorized to operate in Iraq. It is permissible for the
company capital to include contributions in kind as stipulated in Article
29 of this law.

Second: Suspended.
Third:

1. The joint-stock company's members, who must not be more
than 100, shall elect from among themselves a committee which
shall be called the "Founders Committee." The committee, which
will consist of not less than three and not more than seven
members, will undertake the following duties and tasks:
a. Conclude a contract with specialized and experience for
the purpose of conducting an economic and technical
feasibility study of the business to be carried out by the
company.

b. Follow up on the procedures for establishing the
company and submit the contract of association and the
subscription document to the Registrar of Companies
including the names, signatures, addresses, and
nationalities of the founders as well as other requirements.
c. Disburse expenditures until the procedures for the
establishment of the company are completed.
d. Open a joint account in the name of the committee with
one or more banks authorized to operate in Iraq.
e. Keep the records, including the decisions that have been
made and the duties and tasks that have been fulfilled.
f. Obtain a license, if necessary, for the project and
conclude the necessary contracts for its establishment,
following the issuance of the decision approving its
establishment.
g. Prepare the founders' report, specify the establishment
expenditures, and call a meeting of the General Assembly.
2. The Founders Committee's duties shall end with the election of
the board of directors.
3. The members of the Founders Committee shall be jointly
answerable to the founders.
Section Two: Establishment Procedures

Article 17: The application for establishment shall be submitted to the
Registrar with the following attachments:

First: The company's contract.

Second: The subscription document of the joint-stock company signed by
the founders.

Third: A statement from the bank or banks proving that the capital
required in Article 28 has been deposited.

Fourth: The technical and economic feasibility study on the joint-stock
company.


Article 18: Suspended.
Article 19: The Registrar shall approve the application unless it finds it
contrary to a specific provision of this law and shall issue the approval or
disapproval of the establishment application within 10 days from the date
of receiving it. Except for joint stock companies, the certificate shall be
issued at the time of the approval and shall be the evidence of the
company’s establishment. If the Registrar disapproves an application, it
shall issue a written decision stating the reasons for its disapproval. In
the case of a joint stock company, the Registrar shall issue a written
notice of its decision at the time of approval or disapproval. No
certificate shall be issued without payment of the applicable fee.
Article 20: Suspended.

Article 21: First:

1. The Registrar shall publish the decision approving the
establishment of the company in the special bulletin published
under the provisions of Article 206 of this law, which henceforth
will be referred to as "the Bulletin.".
2. In the case of the joint-stock company, the certificate of
establishment shall be issued after the public subscription to its
shares and within 15 days from the date on which the founders
submit the data stipulated in Article 46 of this law.
Second: Suspended.

Article 22: The company acquires corporate status from the date of the
issuance of its establishment certificate. This certificate is considered
proof of this status.

Article 23: A company which is established in Iraq in accordance with
the provisions of this law is considered an Iraqi company.

Article 24: If the Registrar rejects the application for the establishment of
the company, it must state in writing the legal provisions violated and the
facts underlying each violation. The applicant for the establishment has
the right to contest the Registrar's rejection before the Minister of Trade
within 30 days from the date of notification. The Minister of Trade must
consider the rejection within 30 days from the date of its submission. If
the Minister also rejects the application, the applicant has the right to
appeal the Minister's decision before the competent court within 30 days.

Article 25: The founders may submit a new application for the
establishment of the company once the reason for its rejection has been
eliminated.


Chapter III: The Company's Funds
Section One: The Capital


Article 26: The company's capital shall be specified in Iraqi dinars.

Article 27: The capital shall be allocated to carry out the business
specified in the company's contract and to fulfill its obligations. It is
impermissible to dispose of the capital in any other way.

Article 28: First: The capital of a joint stock company shall not be less
than two million (2,000,000) dinars. The capital of a limited liability
company shall not be less than one million (1,000,000) dinars. The
capital of all other companies shall not be less than fifty thousand
(50,000) dinars.
Second: A joint stock company’s, liabilities may not exceed 300 percent
of its total capital and other equity rights .

Section Two: Division of Capital
Sub-Section One: Division of Capital in the Joint-Stock Company
and the Limited Liability Companies


Article 29: First: The capital of the joint-stock company and the limited
liability company shall be divided into shares of equal cash value. The
shares shall be indivisible.

Second: In the joint-stock company and the limited liability company, the
capital may include shares that are offered in exchange for tangible or
intangible in-kind property contributions by one or more of the founders.

1. In the case of a joint stock company, property-in-kind shares shall
be evaluated by a committee approved by the Registrar as to expertise
and objectivity, and including experts in law, accounting and the
company’s line of business.
2. In the case of the mixed joint-stock company, the committee
established pursuant to sub-paragraph 1 of this paragraph shall submit
its report to the Registrar within 60 days from the date of its
formation. The Registrar shall submit its report to the Financial
Control Bureau for endorsement within 30 days from the date of its
submission. In the case of non-approval, the Registrar shall return the
report to the committee established pursuant to subparagraph 1 for
further consideration.
3. In the case of the private joint-stock company, all founders shall
agree on the value of property-in-kind shares as assessed in the

manner stipulated in sub-paragraph 1 of this paragraph. A joint-stock
company’s or limited liability company's contract must state the type
of property-in-kind share and its value as approved by the rest of the
founders, the name of the founder who offered the share, and the
percentage of his contribution to the capital through this share. The
founder offering the property-in-kind shall be accountable to any
person for its assessed and accepted value. If it is proven that the
assessed value is less than the actual value, he or she must pay the
difference in cash to the company. The other founders may also be
asked to cooperate in paying the difference.

4. In the case of the joint-stock company, the committee's report must
be submitted to the constituent meeting of its general assembly,
provided the founders deposit the aforementioned report with the
quarter conducting the subscription so the subscribers can read it. And,
if the assessment is higher, the subscriber of the property-in-kind share
must pay the difference in cash. The other founders may also be asked
to cooperate in paying this difference.
Article 30: The nominal value of the share shall be one dinar. It should
not be issued higher or lower than that except as provided in Articles 54
through 56.

Article 31: Suspended.
Article 32: First: Suspended. Second: Suspended. Third: It is
impermissible for the Investment Company to invest more than 5 percent
of its capital in the shares of any company. It is also impermissible for it
to own more than 10 percent of the capital of any company, while taking
the previous percentage into consideration. Its cash liquidity must not, at
any time, be less than 10 percent of the paid-up capital.

Article 33: The shareholder is answerable to the company's debts to the
extent of the nominal value of the shares he owns.

Sub-section Two: Division of capital in the Joint Liability Company
and the Sole Owner Enterprise

Article 34: The capital of the joint liability company is divided into
quotas among the partners according to the company's contract. The sole
owner enterprise consists of one quota.

Article 35: Whoever has a share in the joint liability company or the sole
owner enterprise assumes personal and unlimited responsibility for the
debts of the company. His responsibility is collective in the joint liability
company.


Article 36: If the company becomes insolvent, every partner in it
becomes insolvent.

Article 37: First: The creditors of a joint liability company may take legal
action against the company or any partners who were members when the
obligation occurred. The partners are obligated to honor the joint liability.
It is impermissible to sequester the partner's funds before warning the
company.

Second: The creditors of a sole owner enterprise may take legal action
against it or the owner of the quota in it. His or her funds shall be
considered as a guarantee for debts on the enterprise. It is permissible to
seize his or her funds without warning the enterprise and in accordance
with applicable legal procedures.

Section Three: Public Subscription in the Capital

Article 38: Public subscription shall take place in the capital of a joint-
stock company only.

Article 39: First: The founders in the mixed joint-stock company shall
subscribe by not less than 30 percent and not more than 55 percent of its
nominal capital, and this should include the minimum 25 percent fixed
for the state sector.

Second: At the establishment of the company, the founders in the private
joint-stock company shall subscribe by not less than 20 percent in its
nominal capital.

Third: The remaining shares shall be offered for public subscription
within 30 days from the date of the approval of the establishment of the
company in a statement issued by the founders and published in the
bulletin and at least two daily papers, after obtaining the approval of the
Registrar, which shall be granted within that time unless the Registrar
finds the registration materials submitted would be materially misleading
to investors. In the latter case, it shall refer a matter within its jurisdiction
to the competent state authority for the securities markets.
The statement shall include the following:

1. The text of the company's contract.
2. The number of shares offered for subscription, the value of
each share, and the sum which must be paid toward each share.

3. The minimum and maximum number of shares one can
subscribe for.
4. The place and period of subscription.
5. The expenses of the establishment of the company.
6. The contracts and agreements which the founders have
undertaken in the interest of the company.
7. Any other information which the founders may want to add.
8. The report of the committee formed under Paragraph Second of
Article 29 of this law in the case of the existence of a property-inkind
share.
Fourth: Founders shall not subscribe to the shares while they are being
offered for public subscription, except after the end of 30 days from the
beginning of the subscription or during the extended period stipulated in
Article 42 of this law.

Article 40: The founders are jointly responsible for any damages caused
to any subscriber due to an error or shortcoming in the subscription
statement.

Article 41: First: The subscription shall take place in a bank authorized to
operate in Iraq in a form bearing the name of the company and containing
the following:

1. The request to subscribe to a specific number of shares.
2. The subscriber's approval of the company's contract.
3. The subscriber's name, address, profession, and nationality.
4. Any other information which the founders may want to add.
Second: The form shall be submitted to the party handling the
subscription signed by the subscriber or his legal representative. The
required payment shall be paid against a receipt.

Third: The subscriber shall be given a copy of the company's contract and
its technical and economic feasibility study, subject to Section 47,
paragraph Third of this law.


Article 42: The subscription period shall not be less than 30 days or more
than 60 days. If the subscription period expires without the subscribed
shares reaching 75 percent of the nominal capital, including the shares
owned by the founders, it is permissible to extend it for a further period
of not more than 60 days. The founders shall again publish the
subscription statement and make the extension announcement.

Article 43: First: If the subscription does not reach 75 percent of the
nominal capital at the end of the extension period, the founders must
decrease the company's capital, so that the value of the subscribed shares
will be equal to 75 percent of the decreased nominal capital, unless the
founders cancel the establishment of the company. The founders shall
inform the Registrar of such a decision.

Second: Suspended. Third: If it is decided to cancel the establishment of
the company under the provisions of Paragraph First of this article, the
founders shall notify the bank and jointly bear the expenses for
establishing the company. The bank handling the subscription shall return
the money paid by all subscribers in full upon notification and within a
period of not more than 30 days.

Article 44: First: The bank shall be responsible for the soundness of the
subscription process and undertake the following:

1. Close the subscription at the end of its period, announcing the
closure in two daily papers, and also notify the Founders
Committee.
2. Keep all the money received from the subscribers and not give
any to the founders.
3. Return any surplus funds to the subscribers within 15 days from
the distribution of the shares among the subscribers in accordance
with Paragraph Second of this article.
Second: If it transpires after the closure of the subscription that the shares
offered have been over-subscribed, the shares must be distributed among
the subscribers according to the percentage of subscription allotted for
each subscriber..

Article 45: First: Any person whose lawful rights would be infringed by
violations of the subscription rules, the Registrar and the competent state
authority for the securities market has the right to contest the soundness
of the subscription process before the competent court and ask for its
cancellation within 15 days from the closure of the subscription. The
court must examine such cases urgently. The court's decision can be


contested before the court of appeal, which shall sit as a court of
cassation, and its decision in this capacity shall be final.

Second: If the subscription is ruled to be in violation of the law, the
founders must carry it out anew.

Article 46: The founders shall, within 30 days from the end of the period
for contesting the subscription, provide the Registrar with all data on the
subscription process, including the names of subscribers, the number of
shares subscribed by each one of them, their addresses, professions,
nationalities, and the sums they paid against the value of the shares.

Article 47: First: Once the company has been established and some
shares are still not subscribed for, the board of directors may, after six
months from the date of the issuance of the establishment certificate,
pursue one of two courses:

1. Sell those shares in the Baghdad Stock Exchange market; or
2. place the shares for public subscription in accordance with the
procedures followed during the constituent subscription.
Second: If the shares are not sold in the market or subscribed by the
public, the company's nominal capital shall be decreased by the value of
the unsold shares.

Third: The company shall be liable for materially misleading assertions
or omissions in sales or subscriptions as shall be its responsible directors,
employees and agents.

Section Four: Payment of Capital

Article 48: First: In the joint-stock company, the subscription shall
require payment in full for issued shares. Unpaid shares already
outstanding under previous law shall be governed by this Article.Second:
Suspended. .

Third: The outstanding installments are considered a privileged debt
which must be paid to the company. A deferment interest of not less than
5 and not more than 7 percent shall be charged on the debt annually for
any delay in paying the installment on the date set by the board of
directors. No dividends shall be paid on the debt.

Fourth: The company shall continue to withhold the dividends due to the
shareholder in order to cover the value of the overdue installments and


the interest on them until all installments and their interest have been
paid.

Article 49: If the shareholder does not pay the installment on his shares
on the set date without a legitimate reason, the board of directors may
take steps to sell those shares as follows:

First: The company shall notify the shareholder in two daily papers, the
bulletin, and the Baghdad Stock Exchange Market, to pay the overdue
installment within 30 days from the date of publication. The notification
shall state the number of shares he owns and the amount of the
installment which must be paid and its due date.

Second: If the shareholder does not pay the installment within the above
respite, the company shall offer his shares for sale by public auction in
the Baghdad Stock Exchange Market.

Third: The company shall announce the sale in the bulletin, one daily
paper, and the Baghdad Stock Exchange Market, its date and place, and
the number of shares offered for auction, provided the period between the
announcement and the sale is not more than 15 days.

Fourth: The shareholder whose shares have been announced for sale can
pay the debt up to one day before the auction date. In such a case the sale
will be canceled and the shareholder will bear all the company's expenses
on the sale procedures.
Fifth: The shares shall be sold at the highest price reached at the auction.
The company shall deduct from this price its debts, including the
installments, the interest, and the expenses, and return the remainder to
the shareholder. But, if the price of the sold shares does not cover the
debt, the company shall obtain the difference from the shareholder.

Sixth: The company's records on the sale shall be considered correct
unless they are proven otherwise.

Article 50: The subscriber to the joint- stock company shall be given-after
paying all due installments and producing the receipts as proof--a
temporary certificate with a serial number signed by an authorized person
in the company. The certificate shall state the name of the shareholder,
the number of shares he owns, the amount paid toward their value, and
the remaining installments and their due dates. The installments paid
shall be ticked in this certificate.

Article 51: Every shareholder in a limited liability company and every
subscriber who has fully paid the value of his shares in a joint-stock
company shall be given a permanent certificate including the data


contained in the temporary certificate, plus a declaration that the shares
have been paid. Any temporary certificate should be cancelled.

Article 52: The shareholder may pay one or more installments toward the
value of his shares before their due date. In such a case, they will be
considered as still due even if the same installments have not yet been
paid by the other shareholders. No dividends will be paid for installments
which are paid before their due date.

Article 53: In the case of the limited liability company, the joint liability
company, and sole owner enterprise, the capital must be paid up before
the issuance of the certificate of establishment.

Section Five: Increase and Decrease of Capital
Sub-Section One: Increase of Capital


Article 54: First: A company may increase its paid-up capital.


Second: In the joint-stock company and the limited liability company, the
increase of capital must be in accordance with a general assembly
decision to amend the contract and issue new shares.
Third: Suspended.
Fourth: The Registrar shall within fifteen days of a lawful request
approve the increase. The Registrar shall be deemed to approve the
increase, and to give notice of the approval, unless it rejects the request,
giving the legal and factual basis for the determination in writing.


Article 55: The general assembly of the joint-stock company and the
limited liability company may cover the increase in the capital by any of
the following methods:


First: Issuing new shares whose value is paid in cash.


Second: Transferring funds from the accumulated surplus or the issuance
allowance reserve into shares to be distributed among the shareholders in
the ratio of their subscription to the capital.


Third: Withholding part of the company's profits as a reserve for
expanding and developing the enterprise instead of distributing them as
dividends. When this reserve is added to the capital and new shares
equivalent to it are issued, the shares shall be distributed among
shareholders in the ratio of their subscription to the capital.


Fourth: In cases where the shares will be offered in exchange for cash,
such decision must specify the number of shares to be issued and the
price at which they will be offered for sale or the means of establishing



that price. Shares may be offered at a price equal to or greater than their
nominal value in accordance with the general assembly’s decision and
priced in light of the company’s performance and, where applicable, the
prices of its shares in the Baghdad Stock Exchange market. The proceeds
reflecting the difference between the issue price and nominal price, which
is considered issuance allowance, shall be recorded in the account of the
issuance allowance reserve, after deducting all issuance expenses. This
reserve may not be distributed as profits. In the case of the joint-stock
company, the company shall submit to the Registrar a decision by its
general assembly to increase the capital, backed by an economic study
giving the justifications for this increase and the fields in which it will be
expended, as well as any other essential data. It shall be furnished to
purchasers, subject to the liability in the second paragraph of article 47 of
this law, unless the Registrar finds it materially misleading. In this case, it
shall refer a matter within its jurisdiction to the competent state authority
for the securities market.

Article 56: First: In the joint-stock company, the new shares must be
placed for public subscription within 30 days from the date on which the
company is notified of the Registrar’s approval of the increase in the
capital. The subscription shall remain open for a period of not less than
30 days and not more than 60 days, which may be renewable once for a
similar period, provided the value of the shares is paid during
subscription. The increase in the capital is achieved by the number of
shares subscribed and paid up on the closure of the subscription.
Otherwise, and in so far as it does not conflict with the nature of the
increase in the capital, the original provisions on subscription shall be
applied on the new shares, including the provisions of Articles 44 and 47
of this law.

Second: In the limited liability company, the value of the new shares
must be paid within 30 days from the issuance of the general assembly's
decision to increase the capital. The increase is achieved by the number
of shares whose value is paid up at the end of the period.

Third: Every shareholder has the priority to buy shares at the subscription
price proportional to the number of the shares he owns. Shareholders
shall be allowed to exercise this right within a period of 15 days from the
date they are invited to do so. The invitation must state the beginning and
end of the subscription period and the nominal value of the shares. If
some shares are not subscribed after the period stipulated in paragraph
First of this Article, the board of directors may place the shares for sale in
the Baghdad Stock Exchange market in the manner it deems suitable.

Fourth. In the case of banks increasing capital by a sale of shares for
cash, the company may issue shares without public subscription and/or


without offering existing shareholders the right to participate, provided
the following conditions are met:

1.
The issuance is approved by a majority of the votes of the
subscribed shares whose due installments have been paid; and
2.
The Central Bank of Iraq concurs that the sale is for fair value,
in view of all the circumstances, and is fair to shareholders not
entitled to participate, in view of the benefit to the company as
whole.
Article 57: In the case of the joint liability company and sole owner
enterprise, the increase of the capital occurs in accordance with a decision
by the general assembly to amend the contract, provided the increase is
paid within 30 days from the date of the issuance of the decision.

Sub-section Two: Decrease of Capital

Article 58: A company may decrease its capital if it exceeds its needs or
incurs losses. A decrease in capital that is part of an arrangement to
achieve a net increase in capital through additional investments shall not
be subject to the requirements in Article 59, paragraph Third, and
Articles 60-63.

Article 59: First: In the case of the joint stock company and the limited
liability company, the capital is decreased by canceling shares which are
equivalent in value to the sum to be deducted from the capital. The
cancellation shall be in the ratio of each member's subscription in the
company, to the nearest correct share.

Second: The decision to decrease the capital shall be made by the
company's general assembly which shall state the reasons for the
decrease.

Third: After making the decision on the decrease, the following steps
shall be taken:

1. The chairman of the board of directors in the joint-stock
company and the managing director in the limited liability
company shall refer the decision on the decrease to the Registrar
coupled with a certified statement by the chief accountant
including the company's debts and the names and addresses of the
creditors, as well as an economic and technical study on the
reasons for the decrease.
2.
Suspended.

3. If the Registrar finds the decrease lawful, it shall announce the
approval in the bulletin and two daily papers. It shall also give
every creditor to or claimant on the company the right to object to
the decision on the decrease within 30 days from the date of the
publication of the announcement.
Article 60: First: If an objection is made during the legal respite by a
creditor to or a claimant on the company, the Registrar must seek an
amicable settlement of the objection in the manner he deems suitable
within 30 days from the end of the objection period.

Second: If the Registrar is unable to settle the objection, he must refer it
with all the pertinent documents and papers to the competent court within
15 days from the end of the amicable settlement period. The examination
of such objections is an urgent matter.

Article 61: First: If the court reaches a settlement on the objections, or if
it is satisfied that the assurances given by the company are adequate, it
shall issue its decision supporting the decision on the decrease. But, if a
settlement is not reached on the objections and the assurances given by
the company are not adequate, the court shall decide on canceling the
decrease or approving only a partial decrease that does not adversely
affect the rights of the objectors. Its decision shall be final.

Second: Irrespective of the decision made by the court, the company must
deposit a copy of the decision with the Registrar within 15 days of its
issuance.

Article 62: If there is no objection to the decision on the decrease, or the
decision has been signed and settled before the Registrar or the court, the
company's contract shall be considered amended by law. A copy of the
amendment shall be sent to the Registrar for registration and publication
in the bulletin and one daily paper.

Article 63: In the case of the joint liability company and the sole owner
enterprise, any decrease of the capital must take place through a decision
by the general assembly to amend the contract. .

Section Six: Disposal of Shares and Quotas
Sub-section One: Transfer of Ownership


Article 64: In the case of the joint-stock company and the limited liability
company, the shareholder may transfer ownership of his shares to another


shareholder or outsiders, while bearing in mind the following
considerations:

First: Founders of joint-stock companies may not transfer ownership of
their shares except in the following situations:

1. The lapse of at least one year since the establishment of the
company.
2. The distribution of dividends that are not less than five percent
of the paid up nominal capital.
Second: Suspended.
Third: The shareholder from the private sector cannot transfer ownership
of his or her shares:


1. If they are mortgaged, seized, or sequestered under a court
decision.
2. If their certificate is lost and a replacement has not been issued.
3. If the shares to be transferred owe debts to the company.
4. If the transferee is prohibited to own shares in the company
under a law or a decision issued by a competent quarter.
Article 65: Shareholders in a limited liability company prefer to sell their
shares to outsiders. If a shareholder wishes to sell his or her shares, he or
she must follow the following steps:

First: The seller must notify the other shareholders through the managing
director of his desire to sell his or her shares. He or she must mention the
number of shares, the number of their certificate, and the price he wants
or that has been offered by a buyer supported by evidence.

Second: If after 30 days of notification, none of the other shareholders
have come forth to buy the shares, or have offered a price lower than the
required one, the buyer shall be free to sell his or her shares to others at a
price higher than the one offered by the shareholders. If he sells the
shares at the lower price offered by the shareholders, the sale shall be
considered null and void.

Third: If several shareholders want to buy the shares at the same price,
the shares shall be divided among them in the ratio of their subscription,
to the nearest correct share.


Article 66: First: The sale of shares in a joint-stock company or a limited
liability company shall take place at a meeting between the seller and the
buyer, or their legal representatives, in the presence of the representative
of the managing director. A contract shall be made mentioning the names
of the seller and the buyer and their addresses, the number of the
certificate of the shares, the date of the transaction, the price, a statement
from the seller that he received the price, and a pledge by the buyer that
he approves of the company's contract. The transaction contract shall be
recorded in the company's special register for transferred shares along
with the signatures of the contractors and the representative of the
company. Any transaction that is concluded outside the board shall be
considered null and void and shall not be recorded in the company's
register.

Second: Ownership of shares in the joint-stock companies trading in the
Baghdad Stock Exchange market shall be transferred in accordance with
the market's by-laws and the guidelines issued on its basis.

Article 67: If an Iraqi shareholder in a joint-stock company or a limited
liability company dies, the ownership of the shares shall revert to his or
her heirs in accordance with the ratios specified by the Shari’a law. In
cases in which the shareholder is a citizen of another country, the shares
shall revert to the shareholder’s heirs in accordance with the applicable
law of that country. In each case, the following shall be taken into
consideration:

First: If the heir is prohibited to own shares in the companies or has
received more than the maximum limit of shares allowable under the law,
he or she must take steps to transfer their ownership within 90 days from
the date they become transferable. If he or she fails, the board of
directors in the joint-stock company and managing director in the limited
liability company shall announce their sale through public auction.

Second: If the distribution of shares among the heirs will result in an
increase in the number of partners in the limited liability company over
the number set by the law, the shares shall be considered a joint
ownership by the heirs in accordance with the ratios specified under
applicable inheritance law and considered as one person. In such a case,
one of the heirs will represent the rest before the company. They shall be
asked to choose this representative within 60 days from the date of the
registration of the shares in the company's ledger.

Article 68: Any transfer of ownership of shares other than through the
sale method must be recorded in the company's register on the basis of a
decision issued by the competent court.


Article 69: First: In the joint liability company, the partner may transfer
ownership of his share of the capital to another partner. It is
impermissible to transfer ownership to outsiders without the unanimous
approval of the general assembly. In all cases, this is done by amending
the company's contract.

Second: In the sole owner enterprise, the owner can transfer ownership to
another person by amending the company's statement. If it is to be
transferred to more than one person, or if only a part of the ownership is
to be transferred, this can be done only by changing the enterprise into
another type of company, such as those stipulated in this law.

Article 70: First: If a partner in a joint liability company dies, the
partnership shall continue through his heirs. But, if the heir, or his legal
representative if he is underage, or the other partners in the company
object to that; or if that is prevented by any legal obstacle, the company
shall continue among the remaining partners. The heir shall get only the
share of his inheritor. This share shall be determined on the basis of its
value on the day of the death and shall be paid in cash. The heir shall not
have any rights on the company afterward except those resulting from
operations prior to the death. In all cases, the company's contract must be
changed to a sole owner enterprise, if only one partner remains.

Second: If the owner of the single quota in the sole owner enterprise dies
and he has several heirs wishing to join the enterprise and there is no
legal objection to that, the enterprise must be changed to any of the types
of companies stipulated in this law.

Third: If a partner becomes insolvent or if his assets in the joint liability
company are sequestered, the company shall continue among the
remaining partners and the share of the insolvent and sequestered partner
shall be liquidated. His share shall be assessed on the basis of its value on
the day the insolvency or sequestration ruling is issued. He shall not have
any rights on the company, other than those resulting from operations
prior to the insolvency or sequestration. In all cases, the company's
contract must be changed in accordance with its new condition or
transformed into a sole owner enterprise, if there is one owner left.

Sub-Section Two: Mortgage and Sequestration of Shares and Quotas

Article 71: First: It is permissible to mortgage shares owned by the
private sector in a joint-stock company or a limited liability company,
provided the mortgage contract is recorded in the company's special
register. The mortgage will only be deleted from the register after the
mortgagee acknowledges its release, or after the competent court has
issued its decision on it.


Second: It is impermissible to mortgage quotas in the capital of a joint
liability company, sole owner enterprise, or a simple company.

Article 72: First: It is permissible to sequester the shares owned by the
private sector in a joint-stock company or limited liability company as a
security against a debt on their owner, provided the sequestration
decision issued by a competent quarter is recorded in the company's
special register. The sequestration will only be deleted from the register
after a decision by a competent quarter.

Second: It is impermissible to seize the quotas in the capital of a joint
liability company, simple company or a sole owner enterprise except
against a privileged debt. It is permissible to seize its dividends.

Section Seven: Profits and Losses

Article 73: The company's net profit shall be distributed after making all
the legal deductions as follows:

First: At least five percent as compulsory reserve until it reaches 50
percent of the paid-up capital. It is permissible under a decision by the
general assembly to continue deducting for the compulsory reserves even
if it exceeds 100 percent of the paid-up capital. .

Second: The remainder of the profit or part of it shall be distributed
among the members according to their quotas or shares.

Article 74: First: The reserve shall be used for the purposes of expanding
and developing the company's business, and improving the conditions of
its workers, participating in projects relevant to the company's activity,
and contributing to the protection of the environment and social welfare
programs. Dividends shall not be distributed from the reserve.

Second: The reserve shall be used to meet the company's debts, provided
they do not exceed 50 percent of the reserve. Any increase over that limit
shall be subject to the approval of the Registrar. .

Article 75: The losses of the joint liability company shall be divided
according to the ratios stipulated in its contract which are similar to the
ratios for the distribution of profits.

Article 76: First: If the company's losses amount to 50 percent of its
capital or more, it must notify the Registrar within 60 days from the day
the losses are established in the balance sheet.


Second: If the losses amount to 75 percent of the capital or more, the
company must take one of the following steps:

1. decrease or increase the capital of the company or
2. recommend liquidation of the company.
Section Eight: Credit Bonds

Article 77: The joint-stock company can seek a loan by issuing nominal
bonds in accordance with the provisions of this law and inviting the
public to buy these bonds. The subscriber shall be issued bonds against
the sums of money he loans to the company. He has the right to charge an
interest, which shall be paid to him at fixed periods. The value of the
bonds shall be re-paid from the company's funds. These bonds will be of
one nominal value. They will also be exchangeable, but not divisible.
Each bond issue will have separate serial numbers and shall be stamped
with the company's seal.

Article 78: It is impermissible to issue credit bonds before meeting the
following conditions:

First: The company's capital must be fully paid.

Second: The total amount of the bond issue must not exceed the
company's capital.

Third: The general assembly's approval of the issuance on the
recommendation of the board of directors must be obtained in advance.

Article 79: The company shall submit to the Registrar the general
assembly's decision on the issuance of the credit bonds backed by an
economic study stating the reasons for the issue, the fields in which the
credit will be expended, and any other essential data. It shall be furnished
to purchasers, subject to the liability in the second paragraph of Article
47 of this Law, unless the Registrar finds it materially misleading. In the
latter case, it shall refer a matter within its jurisdiction to the competent
state authority for the securities markets.

Article 80: The invitation to subscription to the credit bonds shall be
published in the bulletin and two daily papers and shall include the
following details, which shall also be noted in the credit bond upon its
issuance:

First: The company's name and capital.


Second: The date of the general assembly's decision approving the
issuance of the credit bonds.


Third: Information on the company's financial condition and results of
operations, including earnings.


Fourth: The rate of interest and its due dates.


Fifth: The value of the issue, its maturity date, and nominal value of each
bond.


Sixth: Method and duration of subscription and method of payment.


Seventh: Maturity dates of the nominal bonds.


Eighth: Purpose of the loan.
Ninth: Guarantees of re-payment.
Tenth: Credit bonds previously issued by the company.


Eleventh: Any other details and information.


Article 81: The bank undertaking the subscription process for the credit
bonds must close the subscription at the end of its period, or once all
bonds have been subscribed and announced in two daily papers. It shall
then immediately provide the Registrar with the full information on the
subscription process, including the names of subscribers; the number of
bonds subscribed by each of them; their addresses, professions, and
nationalities; the sums paid; and the value of the bonds.


Article 82: First: The subscriber to the credit bonds has the right to
contest before the competent court the soundness of the subscription
process and ask for cancellation of the payment if the company did not
comply with the procedures for the issuance of bonds or the subscription
to them, or if it invited subscription seven days before the closing date.
The court must consider the appeal urgently. Its decision can be appealed
before the court of appeal, which shall sit as a court of cassation, and its
decision in this capacity shall be final.


Second: If the court decision is to cancel the subscription to the credit
bonds, the bank must, as soon as it is notified of the cancellation, return
the money to the subscribers in full within a period of not more than 30
days.


Article 83: The company shall sell the outstanding bonds in the Baghdad
Stock Exchange Market at less than the nominal value.



Article 84: The debtor company must re-pay the value of the credit bonds
in accordance with the conditions set during or before the issuance. It is
impermissible to delay the maturity date.

Chapter IV: The Company's Management


Section One: The General Assembly
Sub-Section One: The Formation of the General Assembly and its
Meetings


Article 85: The general assembly shall consist of all the members of the
company.

Article 86: The general assembly in the joint-stock company shall meet at
least once a year. In the other companies, it shall meet at least once every
six months.

Article 87: The invitation to a meeting of the general assembly shall be
issued by one of the following bodies or persons:

First: The founder of the company for the purpose of holding the
constituent meeting within 30 days from issuance of the company's
certificate of establishment.

Second: The chairman of the board of directors of the joint- stock
company under a decision by the board, and the managing director in
other companies; or at the request of company members who own not
less than 10 percent of its paid-up capital.

Third: The Registrar on its own initiative or at the request of the accounts
controller.

Article 88: First: In the case of the joint-stock company, the invitation to
attend a meeting of the general assembly must be announced in the
bulletin, two daily papers, and the Baghdad Stock Exchange Market. The
invitation in the case of the other companies shall be sent out in
registered letters through the members' postal addresses or by informing
them through the company's administrative office. The invitation shall fix
the place and date of the meeting. The period between the date of the
invitation and the day of the meeting must not be less than 15 days.

Second: If the founders or the chairman of the board of directors in the
joint-stock company or the managing director in the other companies fail
to address the invitation to a meeting of the general assembly at the
legally scheduled date, the Registrar shall address them directly to the
members--in the case of the joint-stock companies—by announcing that


in the bulletin, two daily papers, and the Baghdad Stock Exchange
Market and fixing the place and date of the meeting.

Third: It shall be unlawful to manipulate notice of a meeting or
dissemination of information concerning it in order to bias the outcome
of its decisions.

Article 89: Every invitation to a meeting of the general assembly must
include the agenda of the meeting. It is impermissible to overlook the
agenda during the meeting unless it is proposed by the representatives of
at least 10 percent of the company's capital and approved by the majority
of the voices represented in the meeting and the unanimity of all the
members in the joint liability company. The provisions stipulated in
Paragraph Second of Article 92 of this law are excepted.

Article 90: The meetings may be held at the company's head office or any
other place in Iraq if necessary, provided inconvenience to the owners is
minimized.

Article 91: First: The member may, under a certified power of attorney,
appoint a proxy to attend, speak, and vote on his behalf in the meetings of
the general assembly. He can also appoint another member for this
purpose.

Second: The Registrar shall issue guidelines specifying the form to be
used for the power of attorney, its contents, and the method of its
preparation.

Third: In the case of the joint-stock company:

1. Suspended.
2. The representational power of attorney must be deposited at the
company's administrative office at least three days before the
meeting. The company's administrative office shall check them to
make sure that they are correct. The power of attorney will remain
valid for any other meeting to which the first is adjourned.
Article 92: First: The meeting of the general assembly shall be held with
the attendance of the members owning the majority of subscribed shares
whose installments have been paid, in the case of the joint-stock
company; the majority of paid-up shares in the limited liability company;
and the majority of quotas in the joint liability company. If a quorum is
not reached, the meeting shall be postponed to the same day on the
following week and in the same place. A quorum is considered attained
in the second meeting if 25% of the number of such shares or quotas is
represented. The company may apply to the Registrar for waiver of the


25% minimum if, in view of the agenda and other circumstances, the
minimum requirement would disserve the interests of the owners
generally. The company’s contract may require more stringent conditions
for a quorum.

Second: If the agenda calls for amending the company's contract,
increasing or decreasing its capital, dismissing the chairman or a member
of its board of directors; or deciding on its merger, transformation, sale of
more than half its assets in a transaction outside its ordinary business, a
transaction under paragraph Fourth of Article 56,or liquidation, the
quorum required for the first meeting must be attained.

Article 93: In the case of the joint-stock company, the meeting of the
general assembly must be attended by the representative of the Registrar.
It must also be attended by most members of the board. If representatives
of the Registrar or board members fail to attend after being notified, the
meeting can be held in their absence within half an hour after the
scheduled time of the meeting. The representative of the Registrar will
withdraw after confirming that a quorum is present unless his or her
continued presence is requested by a shareholder.

Article 94: First: Prior to the beginning of the meeting, the name of the
participant in the meeting shall be recorded along with the number of the
shares he or she owns or represents, provided he or she produces the
certificate of the shares or the power of attorney if he or she represents a
shareholder in the company. Share certificates submitted to a depository
for book-entry transfer need not be presented, provided adequate
evidence of ownership is furnished under the rules of the depository
approved by the competent sectoral quarter for the securities market. The
participant shall put his or her signature against the name of the
shareholder he or she represents.

Second: A member of the board of directors shall be entrusted with
recording the names of the participants in the meeting. The board shall be
responsible for what is recorded in the minutes.

Third: The participant shall be given a card to enable him to join the
meeting. The card shall state number of votes he is allowed to cast.

Article 95: First: The meeting shall be headed by the chairman of the
board of directors or the chairman of the Founding Committee in the case
of the joint-stock companies--and the managing director in the other
companies—until the president of the general assembly is elected.


Second: The chairman of the meeting shall choose from among the
participants a reporter to record the minutes and a controller to establish
the quorum and collect the votes.

Third: The quorum must be established within 30 minutes from the start
of the meeting. If the chairman of the meeting finds that the quorum has
been attained, he shall declare the meeting open and call for electing the
president of the general assembly.

Fourth: The elected president shall assume his responsibilities
immediately after being elected. He will immediately call for a discussion
of items in the order in which they are listed in the agenda.

Article 96: First: The meeting's discussions, proposals, and decisions,
including the conflicting opinions shall be recorded in the special minutes
book. The minutes shall be signed by the president of the general
assembly, the reporter, the controller, and the representative of the
Registrar if present. It shall be stamped with the company's stamp and a
copy shall be sent to the Registrar.

Second: The general assembly's decisions shall be recorded in a special
record book, stamped with the company's seal, and signed by the
president of the general assembly.

Third: Any member of the general assembly has the right to contest the
soundness of the meeting's procedures-from the date of the issuance of
the invitations to the meeting to the date of the issuance of the decisions-before
the Registrar within three days after the end of the meeting. The
Registrar must consider the context within seven days from the date of its
submission. He has the power to cancel those procedures, if they conflict
with the law, and compel the company to repeat the procedures. His
decision in this respect is final.

Article 97: First: In the joint-stock company and the limited liability
company, every shareholder shall have a number of votes equal to the
number of shares he owns.

Second: In the joint liability company, the votes are calculated on the
basis of each partner's quota in the capital.

Article 98: First: The voting shall be open except on matters relating to
the election or dismissal of the chairman or a member of board of
directors, in the case of the joint-stock company, and the dismissal of the
managing director in the case of other companies; or when requested by
several members who own not less than 10 percent of the shares or


quotas and are represented in the meeting, regardless of the subject to be
voted on. In such a case the voting will be secret.

Second: Unless the company’s contract requires a higher proportion,
decisions on amending the contract of the company, increasing or
decreasing its capital, selling more than half its assets in a transaction
outside its ordinary business, approving a transaction under paragraph
Fourth of Article 56, merging the company, transforming it, or
liquidating it must be based on: The majority of the votes of the
subscribed shares whose due installments have been paid, in the case of
the joint-stock company; the majority of the votes of the paid-up shares at
the time of calling the meeting, in the case of the limited liability
company; and the unanimous vote of the quotas, in the case of the joint
liability company. In the case of a tie vote in the limited liability
company, and the impossibility of obtaining a unanimous vote in the joint
liability company, it is permissible to resort to the competent court to
settle the matter. Decisions on other matters, shall be made on the basis
of the majority of the votes of shares or quotas represented in the
meeting, unless the company’s contract requires a higher proportion.

Article 99: The general assembly's decisions shall be sent to the Registrar
within four days from their adoption. The certified copy issued by the
Registrar shall be an acceptable document to any quarter.

Article 100: Holders of five percent of the shares of the company can
object to the general assembly's decisions before the Registrar within
seven days from their adoption. The Registrar shall issue his decision 15
days from the submission of the objection. His decision can be contested
before the competent district court within seven days from the date of
notification. The court must examine such objections urgently, and its
decision on them shall be final.

Article 101: In the sole owner enterprise, or a limited liability company
having one owner, the owner replaces the general assembly and the
provisions stipulated in this law, other than those pertaining to meetings,
apply to him, her or it.

Sub-Section Two: The Jurisdictions and Powers of the General
Assembly


Article 102: The general assembly is the highest authority in the
company. It decides on all matters that serve its interest; and, it is
empowered to do the following:

First: Discuss and approve the founders' report on procedures pertaining
to the establishment of the company at the constituent meeting.


Second: Decide on the election of the representatives of shareholders
from outside the state sector -in the board of directors of the mixed
company, and the representatives of all shareholders in the board of
directors of the private joint stock company, as well as on their dismissal.

Third: Discuss the reports of the board of directors of the joint-stock
company, the managing director of the other companies, and the accounts
controller, as well as any other reports reaching it from competent
quarters and make the necessary decisions on them.

Fourth: Discuss the company's final accounts and approve them.

Fifth: Discuss and approve the proposed annual plan and the budget for
the following year in other than joint-stock companies.

Sixth: Appoint the accounts controller and specify his remuneration in the
case of private companies.

Seventh: Discuss proposals pertaining to loans, mortgage, and securities
and make decisions on them in the case of the limited liability company
and joint liability company.

Eighth: Approve the percentage of profit to be distributed among the
members and specify the percentage of compulsory reserve and any other
reserves it deems appropriate.

Ninth: Fix the remuneration of the chairman and members of the board of
directors in the mixed and private joint-stock companies commensurate
with their efforts in fulfilling their tasks and achieving company plans
and profits.

Tenth: Approve employment rules in the mixed joint-stock company as
worked out by the board of directors.

Section Two: The Board of Directors in the Joint-Stock Company
Sub-Section One: Formation of the Board of Directors


Article 103: First: The board of directors in the mixed joint- stock
company shall consist of seven original members who are chosen as
follows:

1. Two members representing the state sector who are appointed
under a decision by the competent minister or his deputy in the
sector to which the company belongs, unless at the time of the
selection, the state sector's share in the mixed company's capital

exceeds 50%. In such a case, the competent minister or his
deputy in the sector to which the company belongs shall appoint
three members representing the state sector.

2. Five members representing shareholders from outside the state
sector elected by the company’s general assembly, unless at the
time of the selection, the state sector's share in the mixed
company's capital exceeds 50%. In such a case, the company’s
general assembly shall elect four members representing
shareholders from outside the state sector.3. Suspended.
Second: The board of directors in the mixed joint-stock company shall
have seven reserve members, who will be selected in the manner and
ratio used in the case of the original members.

Article 104: First: The board of directors in the private joint-stock
company shall consist of not less than five and not more than nine
original members to be elected by the company’s general
assembly.

Second: The board of directors in the private joint-stock company shall
have reserve members, who will be chosen in the manner and ratios used
in the case of the original members.


Article 105: Suspended.
Article 106: First: The member of the board of directors must:


1. Enjoy legal qualification.
2. Not be banned from managing companies under the law or any
decision issued by a legal quarter.
3. Be owner of not less than 1,000 shares, if he represents the
private sector. If his shares drop below this level, he must make
up the difference within 30 days from the date of becoming
member of the board of directors. Otherwise, he will be deemed
as having lost the board membership at the end of the above
respite.
Second: If a member of the board of directors loses any of the conditions
stipulated in Paragraph First of this article, he shall lose his membership
in the board as of the date of losing that condition. Any decision made
during his attendance shall be considered null and void, if his vote has
influenced the decision.


Third: The period of membership in the board of directors is three years
from the date of the first board meeting. This period is renewable.

Article 107: First: If the elected shareholder declines to accept
membership in the board of directors, he should inform the board within
seven days from his election to the board, if he was present during the
election meeting; and, from the date of being notified, if he was absent.

Second: If a member of the board of directors resigns, his resignation
must be in writing. The resignation will be considered valid only from the
date of its acceptance by the board.

Article 108: First: If a vacancy occurs in the membership representing the
state sector in the board of directors, the council shall invite a reserve
member--in the order of the reserve list in the sector--to fill the vacancy
and attend the board meeting.

Second: If a vacancy occurs in the membership representing the private
sector in the board of directors, the chairman shall invite the reserve
member with the majority of votes to attend. And, if several reserve
members have an equal number of shares, the chairman shall choose one
of them.

Third: If several vacancies occur in the membership representing the
private sector in the board of directors and the reserve members are not
enough to fill all the vacancies, the chairman of the board shall call a
meeting of the general assembly in order to elect original members to fill
any vacancies in the board of directors, after including the reserve
members; and, to also elect reserve members in their place within 60 days
from the occurrence of the vacancies.

Fourth: If the board of directors in a private joint-stock company loses
half of its members at once, it shall be considered as dissolved. In such a
case, a meeting of the general assembly shall be convened within 30 days
from this loss to elect a new board.

Article 109: If a member of the board of directors fails to attend
meetings, the steps outlined in Paragraphs First and Second in Article 108
of this law shall be applied, depending on the circumstances. A reserve
member shall replace the original member during his absence.

Article 110: First: A person cannot be a member in the boards of
directors of more than six companies at the same time. But, he can also
assume the chairmanship of one or two other boards at the same time.


Second: The chairman or member of a board of directors of a company
cannot become a chairman or member in the board of directors of another
company that engages in similar business, unless he has been authorized
by the general assembly of his company.

Sub-Section Two: The Meeting of the Board of Directors

Article 111: The board of directors shall meet within seven days of its
formation. It shall elect from among its members by secret ballot its
chairman and his deputy, who will replace him in his absence, for a one-
year term, which is renewable.


Article 112: First: The board of directors shall meet at least once every
two months at the invitation of its chairman or at the request of any of its
other members.


Second: The board meetings shall be held at the company's head office or
any other place in Iraq that is chosen by the chairman, if it is not possible
to hold the meeting at the head office.


Article 113: The quorum shall be counted 30 minutes after the board has
convened. It shall meet with the attendance of the majority of its
members.


Article 114: First: Board decisions shall be made on the basis of the
absolute majority of the members present. In the case of a tie, the side
supported by the board chairman shall prevail.
Second: Suspended.


Article 115: If the chairman of the board or his deputy fails to attend
three consecutive meetings without a legitimate reason, or if he fails to
attend successive meetings for a period of more than six months without
a legitimate reason, he shall be considered as having resigned.


Article 116: First: The minutes of the board meeting shall sum up the
subjects discussed, the proposals made, and the opposite opinions
expressed. The minutes shall be signed by the members.


Second: The board's decisions shall be entered in the records book and
signed by the chairman.


Third: Certified copies of the board's decisions from the records book are
valid documents to present to any quarter, provided the Registrar keeps
his copies of these decisions.



Sub-Section Three: The Jurisdictions and Powers of the Board of
Directors


Article 117: The board of directors shall handle the necessary
administrative, financial, planning, organizational, and technical duties
for running the company's business, other than those that fall within the
jurisdiction of the general assembly. It shall, in particular, assume the
following jurisdictions:

First: Appoint the managing director, specify his wages, remunerations,
jurisdictions, and powers, supervise and guide his work, and also decide
on his dismissal.

Second: Carry out the general assembly's decisions and follow up on their
implementation.

Third: Prepare the final accounts of the previous year within the first six
months of each year, write up a report on them and on the results of
implementing the annual plan, and submit them all to the general
assembly for discussion and approval. These shall include:

1. The general budget.
2. The profit and loss account.
3. Any other statements requested by the competent quarters.
Fourth: Discuss and approve an annual plan for the company's activity in
the following year. This plan must be prepared by the managing director
during the last six months of the year in light of the company's aim. The
plan shall include a full report on the company's activity and a draft
budget outlining:

1. Cash reserves.
2. Sales.
3. Purchases.
4. Manpower.
5. Capital investments.
6. Production.

Fifth: Follow up on the implementation of the annual plan and submit
periodic reports to the accounts controller and an annual report to the
general assembly on the results of the implementation.

Sixth: Prepare statistical studies with the view to developing the
company's business.

Seventh: Make the decisions on loans, mortgages, and securities.

Eighth. The board of directors shall establish committees of its members
to make recommendations as to (a) selection of the company’s external,
independent auditors (audit committee); and (b) compensation form and
amount for the board and the managing director (compensation
committee). Members of these committees shall not be officers or
employees of the company nor holders of 10% or more of the company’s
shares, nor related to any of these by blood, marriage or personal or
economic interest in a degree likely to materially bias their judgment.
Any departure from the recommendation of such a committee, and the
reasons for it, shall be announced at the shareholders meeting and
recorded in its minutes. The audit committee shall meet privately with the
company’s external auditors and have special responsibility for ensuring
the accuracy and reliability of their work. It shall ensure that a record is
kept in the course of the year of all material related-party transactions,
within the meaning of international accounting standards, for discussion
with the company’s external auditors.

Article 118: First: Any decision made by the board of directors must be
signed by its chairman and stamped with the company's seal.

Second: The decisions of the board of directors must be carried out as
soon as they are issued in accordance with the provisions of the law.

Third: The majority members of the board of directors in a mixed joint-
stock company have the right to object to the cabinet against any
measures or guidelines that are not consistent or harmonious with the
provisions of the law.

Fourth: The chairman of the board of directors is responsible for
following up on the implementation of the board's decisions.

Article 119: First. It is impermissible for the chairman or a member of the
board to have direct or indirect interests in deals that are concluded with
the company, except after obtaining the permission of the general
assembly with full disclosure of the nature and extent of such interests.
The chairman or board member shall be liable to the company for any


damage to it arising from violation of this article. Compliance with this
Article shall not exclude liability under Article 4, paragraph Third.

Second. It is impermissible for the chairman or a member of the board to
vote upon or participate in a matter in which he or she has direct or
indirect interests without disclosing the nature and extent thereof to
disinterested members and receiving the permission of a majority of
them. If no members are disinterested, all may act. In either case,
however, the details of the matter shall be recorded in the minutes of the
board and made available to the general assembly and the company’s
external auditors.

Article 120: The chairman and members of the board of directors shall do
their best to serve the interests of the company as they would serve their
own personal interests, and run the company in a sound and legal manner.
They are responsible before the general assembly for any work they
undertake in this capacity.

Section Three: The Managing Director
Sub-Section One: The Appointment and Dismissal of the Managing
Director:


Article 121: First: Each company shall have a managing director, who
can be from within the company or an outsider who is specialized and
experienced in the company's activity. The managing director shall be
appointed and his jurisdictions, powers, wage, and remunerations shall be
fixed by the board of directors in the joint- stock company, and the
general assembly in the other companies.

Second: It is impermissible to combine the post of chairman or deputy
chairman of the board of directors of a joint-stock company with the post
of managing director in it. It is also impermissible for a person to serve as
managing director in more than one joint- stock company.

Article 122: The managing director is dismissed under a decision by the
quarter that appointed him, while citing the reasons for the dismissal.

Article 123: First: The managing director shall undertake all the
necessary tasks for the management of the company and its activity
within the jurisdictions and powers assigned to him by the quarter that
appointed him and according to its directives.

Second: Taking into consideration the provisions of Paragraph First in
this article, the managing director in the limited liability company, the
joint liability company, or the sole owner enterprise shall enjoy the
jurisdictions of the board of directors in the joint-stock company, as


stipulated in Paragraphs Second, Third, Fourth, Fifth, and Sixth of Article
117 of this law.

Article 124: In the exercise of his jurisdictions and powers, the managing
director is subject to the provisions of Articles 119 and 120 of this Law.
In addition, the compensation of the five most highly compensated
employees of the company, in whatever form received, shall be disclosed
in writing to the general assembly.

Chapter V: Control of Companies
Section One: The Aim of Control and its Requirements


Article 125: Control is aimed at guaranteeing that the company is
applying the provisions of its contract and the law.

Article 126: The board of directors in the joint-stock company, and the
managing director in the other companies, shall prepare in the first month
of each year a list containing the following data:
First: The name of the company; the address of its head office; and the
addresses of its branches, if they exit.

Second: The amount of capital and the quotas and shares making up this
capital.

Third: The installments which were paid from the value of the shares in
the joint stock company; the shares which were paid during the year; and
the shares which were not paid, but are due for payment.

Fourth: The total number of shares whose owners have no right to hold.

Fifth: The names, nationalities, professions, and shares or quotas held by
the following:

1. The members of the company and the members who have
gained membership or whose membership has expired since the
preparation of the last annual list, or since the registration of the
company, when preparing the first annual list.
2. The chairman and members of the board of directors and the
managing director in the joint-stock company, and the managing
director in the other companies.
Article 127: First: A copy of the invitation to the general assembly
meeting held to discuss the final accounts shall be sent to the Registrar.
The following shall be attached to the invitation:


1. The annual list;
2. The final accounts for the previous year and the accounts
controller's report on them;and
3. The managing director's report on the company’s progress in
implementing its plan for the previous year.
Second: In the case of the joint-stock company, the invitation shall be
sent to the Registrar , along with the statements and reports mentioned in
sub-paragraphs 1 and 2 of paragraph First in this Article as well as the
board of directors' report on the company’s progress in implementing its
plan for the previous year. As for members, they have the right to obtain
copies of the annual report and the other statements and reports.

Article 128: The Registrar has the right to obtain any statements,
clarifications or documents from the company in order to implement its
duties under the law.

Article 129: The joint-stock company, the limited liability company, and
the joint liability company shall each prepare a register for its members,
which shall be kept in its head office. The register shall contain the
following information:

First: The names, nationalities, professions, and addresses of the
members, the number of quotes or shares they own, and the dates of their
ownership.

Second: The shares owned by each member, the sum paid for each share
in the joint-stock company or limited liability company.

Third: The expiration of membership and the reasons.

Article 130: If a person's name has been erroneously entered in or deleted
from the members' register, or if there has been an undue failure or delay
in entering those who qualify for membership or deleting those whose
membership has expired, that person or member has the right to demand
the rectification of the records. And, if the company declines, he has the
right to ask the Registrar to oblige the company to make the rectification,
without also prejudicing his right to demand compensation from the
company for any damages.

Article 131: All that is included in the members' register is considered
correct unless proved otherwise.

Article 132: First: A company member has the right of access to the
members' register. If he is prevented from doing so, he has the right to


ask the Registrar to oblige the company to permit him to have such
access.

Second: In the joint-stock company, the limited liability company, and
joint liability company, records must be made accessible to members for
10 days prior to the meeting of the general assembly and also while the
assembly in session.

Section Two: Financial Control

Article 133: First: The accounts of the mixed company shall be subject to
control and audit by the Financial Control Bureau. As for the accounts of
the private company, they shall be subject to control and audit by auditors
appointed by the company's general assembly. Accounts should be
consolidated with those of related companies in accordance with
international accounting standards unless specifically modified by
standards in force in Iraq.

Second: The accounts controller shall submit a report to the company on
the accounts within 30 days from the accomplishment of these accounts.

Article 134: The board of directors' report on the final accounts in the
case of the joint-stock company, and managing director's report in the
case of the other companies shall include detailed statements on the
company's activities, especially on the following:

First: The significant contracts concluded by the company during the
previous year and the businesses in which owners of 10% or more of the
company’s shares, the members of the board or the managing director
had interests, including interests of their families, entities under their
control and any other interest that would render the transaction a related-
party transaction under international accounting standards insofar as
permissible to apply these in Iraq.

Second: The results of operations (including earnings) and distribution of
net profit.

Third: The reserve balance and its uses.

Fourth: The sums received by current and previous members of the board
of directors and the managing director in the form of wages or awards in
cash or in kind, which they enjoy

Fifth: The sums which have been spent on publicity, travel,
entertainment, and donations.


Article 135: The general assembly shall hold a meeting to discuss and
approve the final accounts within 60 days from the date the audit is
complete.

Article 136: The accounts controller shall give his opinion on the final
accounts of the joint-stock company before its general assembly. The
same can be done in the other companies. In all cases, the controller must
give his opinion on the following:

First: The soundness of the company's accounts, the correctness of the
statements in the final accounts, the access allowed to the data on the
company's activity, and the board of directors' report.

Second: The extent of the company's application of modem accounting
procedures, especially those dealing with book-keeping, accountancy,
and stocktaking of company assets and liabilities.

Third: The extent to which the final accounts express the true financial
status of the company and the results of its business at the end of the year.

Fourth: The extent to which the accounts comply with the provisions of
this law and the company's contract.

Fifth: Violations of the provisions of this law or the company's contract
which have adversely affected the company's business and financial
status, including a statement indicating if the violations still existed at the
time of auditing the final accounts.

Article 137: The accounts controller shall be questioned about the truth of
the statements contained in his report in his capacity as the company's
agent for controlling and auditing its accounts.

Article 138: The final accounts shall be signed by the chairman of the
board of directors and the managing director in the case of the joint-stock
companies and by the managing director in the case of the other
companies. Each signatory shall be responsible for the truth of the
statements contained in these accounts.

Article 139: Copies of the final accounts, the annual plan, and the reports
on them as well as the general assembly's decisions on them shall be sent
to the Registrar.

Section Three: Inspection

Article 140: The company shall be subject to inspection by one or several
professional inspectors, who will be chosen by the Registrar, in the case


of a justifiable claim made by any of the following quarters that the
company has violated the provisions of this law, its contract, or the
decisions of its general assembly:

First: Suspended.

Second: Members of the company who hold at least 10 percent of the
value of subscribed quotas or shares.

Third: A member of the board of directors in the joint-stock company and
the managing director in the other companies.

Article 141: The Registrar has the right to appoint an inspector when
necessary without asking the permission of any quarter. If the company
believes that the Registrar has exercised its powers under this section for
improper purposes, it may apply to the competent court to prove this and
obtain an order restraining any improper action.

Article 142: First: The Registrar shall specify the inspector's task and
scope of work in detail and the kind of report to be prepared on the
subject.

Second: The appointed inspector shall submit his or her report on the
inspection to the Registrar, who shall send copies of the report to the
company and the person making the claim referred to in Article 140.

Article 143: The company's general assembly can appoint its own
inspector to inspect the company's work. It shall also specify his task, the
scope of his work, and the type of report he must submit, provided a copy
of the report is sent to the Registrar.

Article 144: Company employees must allow the inspector to have access
to all of their books, documents, and records. The inspector may also
interview the employees and those connected with the company on the
case which is being investigated.

Article 145: If the inspector's report shows that a member of the board of
directors, the managing director, or any other company official is
questionable on something, now or in the past, the Registrar must inform
the responsible authorities so that appropriate action can be taken.

Article 146: The Registrar shall carry out the appropriate steps to steer
and guide the company in light of the proposals contained in the
inspector's report.

Chapter VI: Termination of the Company


Section One: Reasons for Termination

Article 147: A company is terminated in accordance with the provisions
of this law for the following reasons:

First: Failure to start its activity without any legitimate reason despite the
lapse of one year since its establishment.

Second: Suspension of its activity for more than one year without any
legitimate reason.

Third: Completion of the project for which it was established or the
impossibility of completing it.

Fourth: Merger with another company or transformation into another type
of company under the provisions of this law.

Fifth: Loss of 75 percent of its nominal capital and its failure to take the
steps stipulated in sub-paragraph 1 of Paragraph Second of Article 76 of
this law within 60 days from the time the loss is established in the budget.

Sixth: The general assembly's decision to liquidate it.

Section Two: Merger of Companies

Article 148: It is permissible to merge one company into another
company or several companies in order to form one company.

Article 149: For the merger to be valid:

First: Suspended.
Second: It should not lead to:


1. The joint-stock company losing its corporate status in favor of a
limited liability company or joint liability company.
2. The limited liability company losing its corporate status to a
joint liability company.
3. The joint-stock company, the limited liability company, the
joint liability company, or the sole owner enterprise losing its
corporate status in favor of a simple company.
Third: It should not increase the members of the merged company above
the limits set under the law for different types of companies.


Fourth: Suspended.
Article 150: For the purposes of the merger, the following measures shall
be taken:


First: An economic and technical study shall be made of the joint-stock
companies to be merged, including the aims, reasons, conditions of the
merger, and any other studies. The studies shall be submitted to the
general assembly of each company.


Second: The merge decision shall be made by the general assembly of
each company separately. The decision shall specify the name and type of
the merger company as well as its capital, members, and activity. The
decisions and the studies shall be sent to the Registrar within 10 days
from their adoption.


Third: If, within 15 days of receiving them, the Registrar has not found
that the decisions are inconsistent with the law, it will promptly issue its
permission and inform the companies concerned of this decision; the
companies will then cause it to be published in the Bulletin and one daily
paper.


Fourth: Suspended.


Fifth: Suspended.


Sixth: The companies receiving the Registrar's permission for their
merger will call their general assemblies to a joint meeting within 60 days
from the date of the publication of the merger decision in order to amend
the contracts of the existing companies or draw up a new contract for the
merger company, depending on the circumstances. The contract shall be
sent to the Registrar within 10 days for endorsement and publication in
the bulletin and one daily paper.


Article 151: The merger shall be considered effective as of the last
publication date of the amended or new contract, depending on the
circumstances. On this date, the corporate status of the companies
merging into the new company shall be terminated. The Registrar's
endorsement of the contract is tantamount to a license of establishment


Article 152: All the rights and commitments of the merger shall be
transferred to the company with which it was merged, or the company
resulting from the merger.


Section Three: Transformation of a Company


Article 153: A company can be transformed to any of the types stipulated
in this law, with the following exceptions:

First: It is impermissible to transform a joint-stock company into a
limited liability company, a joint liability company, or sole owner
enterprise; or the limited liability company into a joint liability company.

Second: It is impermissible to transform the limited liability company or
the joint liability company into a sole owner enterprise, except when they
are short of one member.

Third: It is impermissible to transform the joint-stock company, the
limited liability company, the joint liability company, or the sole owner
enterprise into a simple company.

Article 154: First: The company shall prepare an economic and technical
study containing the aims and reasons for the transformation and submit
them to the general assembly.

Second: The transformation shall take place under a decision to be issued
by the company's general assembly which will also amend the contract
consistent with the new status. The decision, coupled with the study and
the amended contract, shall be sent to the Registrar within 10 days of its
issuance.

Third: The transformation to a joint stock company can take place by
including new members, issuing new shares for public subscription, and
applying the original subscription provisions to the new shares, including
the provisions of Articles 44 and 47 of this law.

Article 155: First: If, within 15 days of receiving it, the Registrar does not
find that the transformation decision and the amended contracts are
inconsistent with the law, it shall Second: Suspended. Third:
Suspended. promptly endorse the transformation decision and the
amended contract. It shall also notify the company of the permission ; the
company shall publish the permission in the Bulletin and a daily paper.

Article 156: The transformation shall be considered valid as of the last
date of publication of the transformation decision and the amended
contract.

Article 157: In the case of the transformation of a joint liability company
or a sole owner enterprise into a joint stock company or a limited liability
company, the responsibility of the members for its obligations before the
transformation shall be an unlimited personal responsibility. The


obligations shall be a joint liability responsibility in the case of the
members of the joint liability company.

Article 158: First:

1. If the general assembly decides to liquidate the company, or if
any of the reasons stipulated in paragraphs First, Second, Third,
and Fifth of Article 147 of this Law materialize and the general
assembly recommends liquidation of the company, the company
must appoint one liquidator--or more--and specify his
jurisdictions and remuneration and send the decision or
recommendation to the Registrar.
2. The liquidator shall be considered the representative of the
company within the limits of his jurisdictions during the
liquidation period.
Second: Suspended.

Article 159: The liquidation decision or recommendation shall be backed
by reasons and sent to the Registrar within 14 days of its adoption. The
latter has the right to request additional information or discuss matters
with the company's general assembly to ascertain the reasons.

Article 160: If the Registrar has verified that the reasons for the
liquidation are not fraudulent or unlawful, it shall issue the company's
liquidation decision and appoint a liquidator within 10 days of the
verification. The Registrar shall communicate this information to the
company; the company shall then cause the information to be published
in the Bulletin and one daily newspaper.

Article 161: Suspended.

Article162: Suspended.

Article 163: Once notified of the liquidation decision, the company must
stop making any changes in its membership or assuming any new
obligations. But, it will continue to operate in so far as fulfilling its
obligations under the liquidation process.

Article 164: First: The company shall retain its corporate status during
the liquidation period, provided it states that it is under liquidation
whenever its name is mentioned.


Second: The company's general assembly shall continue to function
throughout the liquidation period, its board of directors, if it still exists,
shall be considered dissolved, and the managing director's duty shall stop
from the date of receiving the liquidation decision.

Article 165: The liquidation does not acquit the company founders,
members, or management staff of any responsibility resulting from the
exercise of their functions in the company.

Article 166: Any interested party has the right to confirm before a
competent . court any financial obligation that the company has taken
upon itself within the last six months prior to the issuance of the
liquidation decision.

Article 167: If the company's general assembly does not appoint a
liquidator within 30 days from its notification of the liquidation decision,
or if the liquidation decision has been issued by the Registrar in
accordance with Paragraph Second of Article 158 of this law, the
Registrar has the right to appoint the liquidator and specify his
jurisdictions and remunerations, which must be borne by the company.

Article 168: As soon as he is appointed, the liquidator shall seize all the
company's assets, including records, documents, and papers, make an
inventory, and write a full report on the company's condition including its
debts and rights as well as other parties' rights on it, and send a copy to
the Registrar.

Article 169: Suspended.

Article 170: The liquidator shall, within 10 days of his appointment, call
the company's creditors and whoever has claims on it through an
advertisement in two local papers to meet with him at a fixed date and
place in order to settle the debts and claims on the company, without
impinging on the right of any party to take legal proceedings.

Article 171: The liquidator shall submit a report to the Registrar on the
progress of the liquidation process every three months at least. The
Registrar may call the liquidator for deliberations on any legal matter
relating to the liquidation process.

Article 172: If the quarter which appointed the liquidator finds that he is
failing in his assignment, it has the right to dismiss him and appoint
another one. It also has the right to appoint another liquidator or more at
any stage of the liquidation process, if it thinks that the liquidation
process demands that, provided the dismissal or appointment decision is
published in the bulletin and one daily newspaper.


Article 173: The liquidator shall call the company's general assembly to
meet during the first two months of each fiscal year in order to discuss
and approve the previous year's annual budget and accounts, the accounts
controller's report, the annual report on the progress of work, and the
appointment of an accounts controller for the new year. He may also call
the assembly at any time, if the liquidation process demands that.

Article 174: The liquidator shall settle the company's debts in the
following order, after deducting the liquidation expenses:

First: The sums that are due to the company employees.
Second: The sum that is due to the state.

Third: Any other sums that are due under existing laws, in the order of
priority.

Article 175: First: Submission of the request for liquidation, and the
liquidation decision itself, are considered a declaration of the debtor's
insolvency with regard to safeguarding the rights of creditors.

Second: Any transfer, concession, or disposal of the funds of the
company, which is under liquidation, shall be considered null and void, if
it is an attempt to favor some creditors at the expense of others by way of
fraud.

Third: All mortgage contracts or contracts which constitute a lien on the
company's property and assets that have been concluded only three
months prior to the beginning of the liquidation process, shall be
considered null and void, unless it is proven that the company will again
be solvent after the liquidation process. In such a case, the provision on
the nullity of those contracts shall only apply to anything extra to the
sums paid to the company for the said contracts during its establishment
or afterward, and the legal interest on them.

Fourth: Any sequestration of company funds after the initiation of the
liquidation process shall not be valid except under a decision by the
competent court, except for sequestrations that are carried in the interest
of the state, the state sector, or employees in order to pay their wages.

Article 176: As soon as the liquidation process is accomplished, the
liquidator shall prepare the final report and final accounts backed by the
report of the accounts controller. He shall then call a meeting of the
general assembly to discuss and approve them. He shall send a copy of
the meeting's minutes and decisions, coupled with the final report, the
final accounts, and the accounts controller's report to the Registrar.


Article 177: First: The Registrar shall issue his decision to delete the
company's name from his records and publish the decision in the bulletin
and one daily newspaper within 10 days, under one of these two
conditions:

1. If it has been established that the liquidation has been completed in
accordance with the law.
2. If the liquidation process has continued for more than five years
after the issuance of the liquidation decision and that the Registrar has
become certain that it will be impossible to finalize it.
Second: The company's corporate status shall be considered expired as of
the issuance of the decision to delete its name.

Article 178: First. The liquidator shall distribute the rest of the company's
funds among its members in accordance with their shares and quotas
within 30 days from being notified of the decision on the deletion of the
company's name. But, he may disburse some of these to the members
even during the liquidation phase, provided that this will not affect the
company's obligations.

Second. Distributions to foreign investors in the company shall conform
to CPA Order Number 39, section 12(2).

Article 179: It is impermissible to claim a debt or right on the company
after the issuance of the decision on the deletion of its name. If a creditor
shows up with a claim and the liquidator has no knowledge of it, the
creditor may ask the company members to honor it according to the ratio
of their quotas and shares in the capital within three years from the date
of the deletion. Any claim after this period shall not be considered.

Article 180: The liquidator shall keep the company's records for five
years from the date of the deletion of its name.

Chapter VII: The Simple Company

Article: 181: The simple company shall consist of several partners, who
are not less than two and not more than five and who have contributed
shares to the capital. In such a company, one or more may contribute
services, and others funds.


Article 182: The simple company's contract must be notarized by the
public notary. A copy of the contract must be deposited with the
Registrar, otherwise the contract will be considered null and void.

Article 183: The simple company shall acquire a corporate status as of
the date of the deposition of a copy of its contract with the Registrar.

Article 184: The contract shall specify the share of each partner in the
simple company's capital. Otherwise, the shares shall be considered
equal. If the share is service, then its nature must be stated in the contract.

Article 185: First: If the contract specifies the partners' share in the profit
only, then this shall be considered as their share in the loss also. And, if it
specifies it in the loss only, this shall be considered as their share in the
profit also. But, if the contract does not specify the share in the profit or
loss, the share of each partner shall be in the ratio of his subscribed share
in the company's capital.

Second: If the contract does not specify the share of the partner who
contributes with service, his share in the profit or loss shall be assessed
on the basis of the company's profit in that service. If, in addition the
service, he contributed funds, he will have a share of profit for the service
and a share for the funds.

Article 186: First: If it is agreed that one of the partners will not have a
share in the profit or loss, the company's contract shall be considered null
and void.

Second: It is possible to agree on excluding the partner, who has
contributed with service only, from the loss, provided it has not been
agreed to pay him a wage for his service.

Article 187: The company's contract shall specify the method of
management and the appointment of the managing partner. It shall also
specify his powers, otherwise the contract shall be considered null and
void.

Article 188: The managing partner shall assume the management of the
company within these powers under the guidance of the quarter that
appointed him.

Article 189: The managing partner will do his best to take care of the
company's interests the way he takes care of his own interests.

Article 190: The simple company can be terminated for any of the
reasons stipulated in Paragraphs First, Second, Third, or Fourth of Article


147 of this law. It can also be terminated for any of the following
reasons:
First: A unanimous decision by the partners to dissolve it.


Second: The withdrawal of either partner from a company consisting of
two partners.


Third: The issuance of a final decision by a competent court.


Article 191: The partners may ask for a court decision to exclude a
partner, whose behavior could be a cause for dissolving the company,
provided the company can continue to exist with the remaining partners.


Article 192: If a partner withdraws, he has the right to transfer his share
of the capital to another person with the approval of the remaining
partners. If they do not approve, they must accept the value of the
withdrawing partner's share as decided by the court.


Article 193: In the case of the death, insolvency, or interdiction of a
partner, the provisions stipulated in Article 70 of this law shall be
applied, depending on the circumstances.


Article 194: The simple company shall be liquidated in accordance with
the provisions of its contract. If there are no such provisions, it shall be
liquidated in the manner agreed upon unanimously by the partners.
Otherwise, it shall be liquidated in accordance with a decision by the
court.


Article 195: The powers of the managing partner are terminated with the
dissolution of the company. However, the corporate status of the
company shall remain as long as necessary and until the liquidation is
accomplished.


Article 196: First: When necessary, the liquidation will be carried out by
all the partners or by one or more liquidators appointed by the majority of
the partners. If they cannot agree on appointing a liquidator, the court
shall undertake his appointment.


Second: In the cases where the company is considered null and avoid, the
court shall automatically, or at the request of the interested party, appoint
a liquidator and specify the method of liquidation.


Third: The managing partner shall be considered the liquidator before
others until a liquidator is appointed.



Article 197: First: The liquidator has no right to initiate any new work in
the company except what is essential to complete previous work.

Second: The liquidator may sell the company's movable and immovable
property directly or through an auction, unless he is restricted by his
appointment order. He has no right to sell the company's property except
to the extent that it is necessary to honor its debts, with the approval of
the partners.

Article 198: First: After paying the creditors and deducting the sums
needed to honor other undisputed debts or cover expenses and loans,
which any partner may have undertaken in the name of the company, the
remaining funds shall be divided among the partners.

Second: Each partner shall get a share equivalent to the value of the quota
he contributed to the capital as stated in the contract, or equivalent to the
value of this quota at the time of its payment if it is not stated in the
contract, unless the partner has contributed services only. The remainder
shall be divided among the partners according to each one's share in the
profit. If the company's net funds are not sufficient to cover the shares of
the partners, the loss shall be divided among them.

Article 199: The division of the simple company's funds shall be in
accordance with the procedures that are followed in dividing common
property.

Chapter VIII: Miscellaneous Rules
Section One: General Rules


Article 200: The company's registered address shall be deemed the
official address for correspondence and notification. The company must
notify the Registrar about any change in the address within seven days of
the change.

Article 201: The company must state its full name and capital, with all its
descriptions, in the head office, the branches if there are any, and the
other businesses. These must also be printed on the letterheads,
certificates, documents, and any statements that are issued by it. All these
should be in Arabic. However, it is permissible to use a foreign language
as an addition.

Article 202: The company shall have a special seal with which to stamp
its , businesses, correspondence, documents, certificates, and any other
statements it issues. The stamp can only be used by an authorized person.

Article 203: The company's contract is not considered valid until it has


been endorsed by the Registrar in accordance with Article 19, except as
otherwise provided in this law. .

Article 204: It is permissible to object to the decisions of the Registrar
before the Minister of Trade within 30 days from the date of notification.
The Minister's decision may be appealed as provided in article 24 of this
law.

Article 205: If the company members are less than what is stipulated in
the law for its type, the number must be completed within 60 days from
the occurrence of the shortage. If this period expires and the Registrar
does not grant a respite, the company must be transformed into a type that
is permitted by the law.

Article 206: The Registrar shall issue a special bulletin for the companies
in which he will publish, at their expense, everything that pertains to their
affairs in accordance with the provisions of this law.

Article 207: The Ministry of Trade, in cooperation with the Ministry of
Finance, the Financial Control Bureau, and the Planning Board, shall
issue guidelines for the accounting system to be adopted by the
companies and everything that pertains to their final accounts.

Article 208: First. The minister of trade shall issue guidelines to
facilitating the implementation of this law.

Second. The Agency Registration Law No. 4 of 1999 shall be
inapplicable to the registration of a company, and a company is not
required to retain a commercial agent to register, though it may choose to
do so. Furthermore, no certification of tax compliance or of the absence
of tax delinquency shall be required for the registration of a company.
The Minister of Trade is hereby authorized to issue instructions to
coordinate the activities of the Registrar of Companies and the Chamber
of Commerce regarding the registration and approval of commercial trade
names, notwithstanding anything to the contrary in The Law on
Establishment of Chambers of Commerce No. 43 of 1989.

Article 209: The fees for the paperwork pertaining to this law shall be
charged in accordance with the chart attached to this law. The Ministry of
Trade may amend the chart in accordance with changes in costs and to
align the fees with processing costs .

Section Two: Temporary Rules

Article 210: Within 90 days from the enforcement of this law, the
economic projects stipulated in Article 10 of this law must take the form


of a company. The competent sectoral quarters shall supply the Registrar
with their lists of the registered economic projects that are subject to this
law in the period between the publication of the law and its enforcement.

Article 211: First: The branches and offices of foreign companies and
establishments shall be subject to the provisions of CPA Order No. 39
and regulations and administrative instructions issued thereunder.

Second: The penalties stipulated in Articles 216, 217, 218, and 219 shall
apply to these branches, offices, and their officials for any proven
offense.

Article 212: The provisions on bankruptcy due to insolvency wherever
they occur in this law shall apply until the promulgation of the law on
insolvency.

Section Three: Penal Rules

Article 213: First: Any economic project that does not take the form of a
company shall be punishable by a fine of 1,000 dinars for every day of
delay after the grace period stipulated in Article 210 of this law.
Second: The punishment stipulated in paragraph First of this Article shall
apply to every company branch or office that must be re-registered or
liquidated, for every day of delay after the periods stipulated in
regulations and administrative instructions issued under CPA Order No.
39Article 214: If three months of daily fines elapse without the parties
mentioned in Article 210 of this law taking the necessary steps to change
or rectify their conditions, the Registrar shall approach the competent
sectoral quarter in order to take the appropriate measures against the
defaulting party, while continuing to levy the daily fine on it.

Article 215: First: Anyone carrying out a business in the name of a joint-
stock company, limited liability company, joint liability company, or sole
owner enterprise without obtaining registration of its establishment shall
be subject to a fine of not more than 3,000,000 dinars, while taking into
consideration the severity of the violations and the provisions of
paragraph First of Article 210 of this law.

Second: Anyone carrying out a business in the name of a branch or an
office for a foreign company or economic establishment without
obtaining the registration required shall be subject to the penalties
provided in paragraph First of this Article unless otherwise provided in
applicable legislation.


Article 216: Any company that does not prepare the records stipulated
under this law shall be subject to a fine of not more than 10,000,000
dinars, depending on the severity of the violation.

Article 217: Any company failing to submit the required statements and
information to a competent official quarter at the times fixed under the
provisions of this law shall be subject to punishment of a fine of not
more than 300,000 dinars for every day of delay, depending on the
severity of the violation.

Article 218: Any company official who purposely gives inaccurate
statements or information to an official quarter on the company's
business, results of operations, financial condition, member shares and
quotas, and distribution of dividends shall be subject to punishment of
imprisonment for a period of not more than one year, or a fine of not
more than 12,000,000 dinars, or both, depending on the severity of the
violation.

Article 219: Any company official who bars a competent quarter from
seeing the company's records and documents shall be subject to
punishment of imprisonment for a period of not more than six months or
a fine of not more than 12,000,000 dinars, or both, depending on the
severity of the violation.

Section Four: Final Rules

Article 220: First: Company Law No. 36 of 1983 is hereby canceled. The
regulations and guidelines issued under that law that do not conflict with
the provisions of this law shall remain valid until they are replaced or
canceled.

Second: Any provision contrary to the provisions of this law is invalid.

Article 221: This law shall be enforced within 90 days from the date of its
publication in the Official Gazette.


Annex

Fee Chart

First: As provided in regulations to be issued by the Minister of Trade,
the Registrar of Companies shall charge a fee of 200,000 dinars for the
registration of a joint stock company, and a fee of 20,000 dinars shall be
payable for all other forms of company.

Second: As provided in regulations to be issued by the Minister of Trade,
the Registrar shall charge a fixed fee of 200,000 dinars for the
registration of branch for a foreign company or economic establishment.

Third: The Minister or Trade shall publish regulations or schedules of
such other fees as he or she may deem appropriate for other services
provided by the Registrar of Companies.

This work is in the public domain in the United States because it is a work of the United States federal government (see 17 U.S.C. 105).