IRAQ Law and Practice Contributed by: Ahmed Al-Janabi and Sarmad Akrawi, MENA Associates in association with AMERELLER
board member must own at least 1,000 shares in the company. The board members may be freely determined by the shareholders, as long as they are legally qualified under the applicable laws. 4.4 Appointment and Removal of Directors/Officers LLC The managing director and deputy managing director of an LLC are appointed by the general assembly and may only be removed by the gen - eral assembly. The LLC must also have one auditor and one legal adviser, who must be Iraqi nationals. These officers are also appointed and dismissed by the general assembly. JSC The general assembly may elect or dismiss a chairman or board member through a secret bal - lot held during its meeting. The chairman or dep - uty may also be considered as having resigned if they fail to attend three consecutive meetings or successive meetings for over six months and without a legitimate reason. The board of directors appoints a managing director and has the power to remove him/her through a decision. The decision must cite the reasons for removing the managing director and should be signed by the chairman. The same steps apply for the appointment and removal of a deputy managing director. There are no restrictions on who may be appoint - ed as managing director of a company. 4.5 Rules/Requirements Concerning Independence of Directors The Companies Law states that the chairman or board members cannot have any direct or
indirect interest in any business or transaction undertaken by the company, except where the general assembly grants approval after being made aware of the nature and extent of the interests. The chairman or board member will be directly liable for any damage that may arise in violation of that rule. Voting on a matter in which the chairman or board member has direct or indirect interests is also prohibited unless a majority of the members grant permission after the nature and extent of the interests are disclosed. 4.6 Legal Duties of Directors/Officers The Companies Law provides that the chairman and members of the board of directors shall do their best to serve the company’s interests and run the company in a sound and legal manner. They are liable to the general assembly in carry - ing out these duties. They must also disclose any direct or indirect interests they have with regard to any transac - tions and dealings with the company. 4.7 Responsibility/Accountability of Directors Directors are responsible before the general assembly in carrying out their duties. They are required to serve the interests of the company as they would their own personal interests. 4.8 Consequences and Enforcement of Breach of Directors’ Duties An inspection may be requested by a sharehold - er of more than 10% of share capital, the manag - ing director of a company, or a member of the board of directors in the case of a JSC, if there are reasonable grounds to believe that there is a violation of law, shareholders’ resolution or the company’s articles of association.
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