IRAQ Law and Practice Contributed by: Ahmed Al-Janabi and Sarmad Akrawi, MENA Associates in association with AMERELLER
The inspectors will be determined by the Regis - trar of Companies ( “Registrar” ), who would then inform the relevant authorities so that action may be taken if there is a breach of duties by a direc - tor or manager. The Registrar would also guide the company based on the findings of the report. 4.9 Other Bases for Claims/Enforcement Against Directors/Officers Directors or officers shall be held liable if the duties mentioned in 4.6 Legal Duties of Direc- tors/Officers are proven to be violated. The liability of LLC shareholders towards third parties is limited to the nominal value of their shareholding. However, Iraqi courts have yet to develop a consistent doctrine concerning the lia - bility of shareholders and/or managers towards third parties. 4.10 Approvals and Restrictions Concerning Payments to Directors/ Officers All payments to current or previous board mem - bers or managing directors must be included in a detailed report on the final accounts to be sub - mitted to the shareholders. The shareholders determine the remuneration of the managing director of an LLC. In a JSC, the general assembly of shareholders fixes the remuneration of the chairman, deputy chairman and other members of the board of directors, which must be in proportion to the latter’s scope of work and fulfilment of the com - pany’s plans and profits. The board of directors determines the remuneration of the managing director. Although the consequence is not specified in the law for non-compliance with the approval
requirements, inspections may be carried out by the Registrar, who must inform the responsible authorities of any questionable findings in their report in order for the appropriate action to be taken. This could lead to suspension of the com - pany’s file at the Registrar and possible fines. 4.11 Disclosure of Payments to Directors/Officers No public disclosures with regard to remunera - tion, fees or benefits to directors or officers are required to be made. As mentioned previously, the final accounts report disclosed to the shareholders must include the payments received by board mem - bers or the managing director in cash or in kind. 5. Shareholders 5.1 Relationship Between Companies and Shareholders The Companies Law governs the relationship between the company and its shareholders. Shareholders may not use their powers and vot - ing rights for their own personal gain and make decisions which harm or put the company at a disadvantage. Furthermore, they may not with - draw capital or transfer assets if prohibited or if insolvency is imminent. Shareholders of over 10% of the shares of a company may propose items to be included in the agenda of the general assembly meeting, which must then be passed by the majority of shareholders present there. The general assembly of shareholders has the following powers in the company:
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