IRAQ Law and Practice Contributed by: Ahmed Al-Janabi, MENA Associates in association with AMERELLER
6.2 Mandatory Offer Threshold Under Iraqi law, there is no mandatory offer threshold prescribed. Any terms and deadlines related to an offer are determined by the parties involved and outlined in the offer document. • No statutory requirement: the law does not mandate a specific threshold or timeframe for making an offer. • Contractual terms prevail: the offer’s condi - tions, including timing, are typically negoti - ated between the parties and detailed in the offer itself. This approach allows for flexibility in structuring offers while ensuring that the agreed terms are Almost all M&A in Iraq operate on a share trans - fer model. Under Iraqi law, each share carries a nominal value of 1 Iraqi IQD, so share transfers typically occur in exchange for cash payments based on this value. However, the actual eco - nomic value of the business is determined sepa - rately. In the shareholder agreement, the overall purchase price is clearly delineated, breaking it down into the nominal share value and the addi- tional business value. To bridge value gaps in industries with high valuation uncertainty, parties may utilise various mechanisms, such as: • earn-outs; • deferred payments; and • contingent adjustments based on future per - formance. clearly documented. 6.3 Consideration These tools allow the parties to address valua - tion differences while providing flexibility in the transaction structure.
direct offer and acceptance model and is typi - cally executed through two main documents: • Share Transfer Resolution: a formal document that authorises the transfer of shares; and • Share Transfer Agreement: a contract that outlines the terms and conditions of the share transfer. Both documents are strictly regulated by law and the Companies’ Registrar, and must adhere to a prescribed format that the parties cannot deviate from. Consequently, the process of ten - dering is not applicable under Iraqi law for M&A. However, the parties may enter into a share - holder agreement, which is not mandatory and is governed by the Iraqi Civil Code. 6. Structuring 6.1 Length of Process for Acquisition/ Sale Timeline for Acquiring or Selling a Business in Iraq Acquiring a business in Iraq is primarily conduct - ed through a share transfer process. The dura - tion of the process depends on several factors, including the following. • Regulatory compliance – the target company must be fully updated with tax authorities and social security requirements. • Due diligence – a comprehensive due diligence process is essential to assess all aspects of the target company. Assuming full compliance and a smooth due dili - gence process, the overall transaction typically takes between two and four months.
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