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Order 76: Consolidations of State-Owned Enterprises

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COALITION PROVISIONAL AUTHORITY ORDER NUMBER 76
CONSOLIDATIONS OF STATE-OWNED ENTERPRISES


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
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 by promoting economic reconstruction and the conditions for
sustainable development in a competitive global marketplace,

Determined to encourage more efficient Iraqi governance by consolidating government
functions carried out by certain state-owned enterprises into government agencies,

Further committed to improve the production and economic performance of some Iraqi
state-owned enterprises by merging them together,

I hereby promulgate the following:

Section 1
Purpose


This Order provides for the consolidation and reorganization of certain state-owned
enterprises into government ministries or agencies. This Order also clarifies the
operation of existing procedures with respect to the merger of state-owned enterprises.

Section 2
Consolidation


1) The state-owned enterprises listed in Column 1 of Annex A shall be consolidated into
the Iraqi ministries listed opposite those companies in Column 2 and may be
reorganized or reclassified as appropriate under the particular economic facts and
circumstances, so long as such reorganization remains consistent with this Order. The
Administrator may add to and remove state-owned enterprises from Annex A. A
minister may propose to the Administrator a state-owned enterprise for consolidation.
Following the transfer of governmental authority to the Interim Iraqi Government, a
minister shall make proposals for consolidation of state-owned enterprises to the
Council of Ministers or its successor. Generally, state-owned enterprises selected for
consolidation will be those that are not a complete business, but that provide a needed

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and valuable service, the operations and assets of which can be successfully
transferred to a ministry. State-owned enterprises that include any private ownership
shall not be consolidated pursuant to this Order.

2) Such consolidation shall be effected on approval of the Administrator and executed
under the direction of the minister of the ministry into which the state-owned
enterprise will be consolidated (the “gaining ministry”). Following the transfer of
authority to the Interim Iraqi Government, a consolidation shall be effected on
approval of the Council of Ministers or its successor. The minister shall have the
authority to reorganize the state-owned enterprise or components thereof in a manner
that effectively integrates the enterprise into the respective ministry.

3) The gaining minister may, with the written approval of the Minister of Planning (or
his delegee), and as provided by law, sell or otherwise dispose of any surplus assets,
except real property and cultural property (as defined in the Convention for the
Protection of Cultural Property in the Event of Armed Conflict of 1954), of the state-
owned enterprise or the ministry that are no longer necessary to the continued
functioning of such enterprise or ministry as a result of the consolidation; provided,
however, that such sale or disposition is accomplished through a transparent and
market-based transaction between two parties with independent interests, operating in
good faith and at arms-length, resulting in fair market value compensation to the
ministry. The proceeds of any sale or disposition under this Section shall be paid to
the Ministry of Finance, which may, in its discretion and with a view toward
encouraging the sale of unnecessary surplus assets, pay up to 50% of such proceeds to
the gaining ministry, so long as the proceeds are paid through the gaining ministry’s
existing accounts and reported in line with usual budget and accounting procedures.

4) Once the consolidation of a state-owned enterprise is complete, the gaining minister
shall submit a completion certificate to the Ministry of Finance, the Governing
Council and the Administrator. Following the transfer of governmental authority to
the Interim Iraqi Government, the gaining Ministry shall submit a completion
certificate to the Ministry of Finance and to the Council of Ministers or its successor.

5) The completion certificate shall contain, at a minimum, the following:

a) the name of the consolidated state-owned enterprise;

b) the name of the relevant ministry;

c) any assets disposed of as part of the consolidation and the amounts received as a
result of that disposal;

d) the date on which the consolidation was completed;

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e) the budget for the consolidated state-owned enterprise within the ministry,
including a sheet of spent, committed, and remaining budget allocations for the
current year; and

f) a list of employees consolidated into the relevant ministry.

6) After submission of the completion certificate and approval of budget allocations for
the current year by the Ministry of Finance, paragraph (3) above shall no longer be
applicable and Iraqi law shall prevail. The Ministry of Finance shall expedite
procedures for reviewing submitted completion certificates, and current year budget
allocations shall be deemed approved if not acted upon within two weeks of
submission.

7) In cases where the state-owned enterprise is consolidated into a ministry that did not
supervise the state-owned enterprise, the gaining ministry shall agree in writing with
the releasing ministry on the terms of the consolidation, including, with respect to the
payment and identification of any and all outstanding obligations, disposition of assets
and employee-related matters. Such an agreement is not required where the former
ministry of the state-owned enterprise has itself been dissolved prior to the
consolidation, including all ministries dissolved pursuant to CPA Order No. 2
(CPA/ORD/23 May 2003/2).

Section 3
Contracts, Property and Budgets


1) By operation of this Order, the ministry into which the state-owned enterprise is
consolidated shall be substituted for the state-owned enterprise as a party in each
contract to which the state-owned enterprise is a party. Upon consolidation, the
substituting ministry shall be entitled to exercise all of the rights and receive all of the
benefits of the enterprise.

2) Notwithstanding paragraph (1) above, the substitution of the relevant ministry for the
state-owned enterprise in a contract shall not constitute an explicit or implicit waiver
of any immunity, including sovereign immunity, to which the relevant ministry is
entitled. Nor shall the relevant ministry retain benefits and entitlements concerning
revenue generation, such as raising funds by issuing debt, making loans from a bank
other than the Central Bank of Iraq, or holding a bank account outside the Central
Bank of Iraq.

3) Except as set forth in Section 2(3), title to all property owned by the state-owned
enterprise being consolidated – whether movable or real, tangible or intangible – shall
be transferred to the gaining ministry. The gaining ministry shall accomplish such
transfer of property through the means or procedures prescribed by Iraqi law.

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4) After a completion certificate is delivered to the Governing Council and the
Administrator, (or the Council of Ministers or its successor, as appropriate) the
Ministry of Finance shall transfer to the gaining ministry the allocation of the national
budget associated with the state-owned enterprise being consolidated.

Section 4
Legal Identity


1) Upon the date that the completion certificate is submitted to the Governing Council
and the Administrator, (or the Council of Ministers or its successor, as appropriate)
the state-owned enterprise shall no longer have a separate legal identity and shall
cease to exist.

2) Notwithstanding paragraph (1), the authorities granted by law, regulation or rule to
the state-owned enterprise being consolidated shall be transferred to the gaining
ministry and may be exercised by the gaining ministry as part of its own authorities.

Section 5
Modifications to the State Companies Law


To effectuate the terms of this Order, the State Companies Law shall be modified as

follows:

1) Article 31, Paragraph First of the State Companies Law, No. 22 of 1997 (the “State
Companies Law”) shall be amended to read in full: “It is permissible to merge two or
more wholly state-owned enterprises into a single state-owned enterprise, provided
they engage in a similar or integrated activity. If all of the state-owned enterprises
involved are overseen by a single ministry, the relevant minister may propose the
merger. If each of the state-owned enterprises involved is overseen by a different
ministry, ministers of all involved ministries must agree in writing to the merger,
including with respect to which ministry will ultimately oversee the state-owned
enterprise resulting from the merger (for the purposes of Article 31, 32, 33 and 34, the
‘new enterprise’).”

2) Article 31, Paragraph Second of the State Companies law shall be amended to read in
full: “The involved minister or ministries shall prepare a proposal describing the
merger and submit it for final approval to the Administrator in consultation with the
Governing Council. Following the transfer of governmental authority to the Interim
Iraqi Government, the proposal shall be submitted to the Council of Ministers or its
successor for approval.”

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3) Article 32 of the State Companies Law shall be amended to read in full: “Once the
Administrator in consultation with the Governing Council (or the Council of
Ministers or its successor, as appropriate) has approved the merger pursuant to Article
31, Paragraph Second, the ministry that will ultimately supervise the new enterprise
shall amend the original contract or draw up a new contract. The board of directors
shall amend the basic law or draft a new basic law.”

4) Article 33 of the State Companies Law shall be amended to read in full: “The
ministry that will ultimately oversee the new enterprise shall inform the Registrar of
the amended contract or provide the Registrar with the new contract. The merger
shall be considered valid as of the date of the Administrator’s (or Council of
Ministers’ or its successors’, as appropriate) approval, unless otherwise specified by
the Administrator in consultation with the Governing Council (or the Council of
Ministers or its successor, as appropriate). On the date the merger becomes valid, the
corporate status of the enterprise or enterprises being merged into the new enterprise
shall expire. The Registrar shall issue a new certification of establishment.”

5) Article 34, Paragraph First of the State Companies Law shall be amended to read in
full: “The Governing Council, and subsequent to the transfer of authority to the
Interim Iraqi Administration, the Council of Ministers or its successor, shall publish
notice of its merger decision in the Official Gazette of Iraq and, if available, the
bulletin issued by the Registrar.”

6) Article 34, Paragraph Second of the State Companies Law shall be amended to read in
full: “The rights and obligations of the enterprise or enterprises being merged shall
revert to the new enterprise.”

7) Following the transfer of full governmental authority to the Iraqi Interim Government,
the duties of the Administrator and the Governing Council under this Order shall be
assumed by the body vested with national executive authority.

Section 6
Administrative Instructions


The Administrator may delegate authority to issue Administrative Instructions to

clarify and implement this Order.

Section 7
Inconsistent Legislation


Any provision of Iraqi law that is inconsistent with this Order or Annex A is hereby
suspended to the extent of such inconsistency.

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ANNEX A


SOEs to be Merged:

1. The Industrial Bank into Rafidain Bank, with Rafidain Bank surviving
2. The Real Estate Bank into Rafidain Bank, with Rafidain Bank surviving
3. The Agricultural Bank into Rasheed Bank, with Rasheed Bank surviving
4. The Socialist Bank into Rasheed Bank, with Rasheed Bank surviving
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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).