IRAQ Law and Practice Contributed by: Ahmed Al-Janabi, MENA Associates in association with AMERELLER
3. Recent Legal Developments 3.1 Significant Court Decisions or Legal Developments M&A in Iraq have generally been straightforward. Until last year, demand for these transactions was relatively low, and there have not been any significant court decisions or legal developments specifically related to M&A activity. 3.2 Significant Changes to Takeover Law No significant changes have been made to take - over law in the past 12 months. The existing con - dition, which limits foreign investors to a maxi - mum of 49% ownership, remains in place. This restriction has encouraged investors to partner with local stakeholders or invest in existing com - panies rather than establishing new entities. 4. Stakebuilding 4.1 Principal Stakebuilding Strategies Stakebuilding Strategies in Iraq It is not customary in Iraq for a bidder to build a stake in the target company prior to launching an offer. Instead, M&A are based on the target company’s existing status. Due Diligence Focus • Business operations: bidders concentrate on evaluating the company’s operations and business model. • Liabilities and financial health: a thorough review of outstanding liabilities and financial stability is undertaken. • Employees and shareholders: a detailed analysis of the workforce and existing share - holder structure is carried out.
In summary, the primary strategy in Iraq is to conduct comprehensive due diligence rather than engaging in pre-offer stakebuilding. 4.2 Material Shareholding Disclosure Threshold Material Shareholding Disclosure In Iraq, material disclosures cover all the signifi - cant records of a company. These include the following. • Financial statements – detailed reports of the company’s financial performance. • Shareholders’ resolutions – documentation of decisions made by the shareholders. • Financial liabilities and transactions – infor - mation on debts, loans, and significant finan - cial dealings. • Partnerships and business deals – details of any joint ventures or strategic alliances. • Employee records – lists of employees along with their salaries. • Loans and debts – comprehensive records of outstanding financial obligations. Filing Obligations The filing obligations apply to the company rath - er than to individual shareholders. Companies are required to: • file annual financial statements; • submit monthly payroll taxes and social secu - rity contributions; and • provide an annual Ultimate Beneficiary Owner Declaration. These requirements ensure transparency and accountability, providing regulators and stake - holders with a clear view of the company’s oper - ational and financial status.
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