{"id":41124,"date":"2026-01-14T11:41:39","date_gmt":"2026-01-14T11:41:39","guid":{"rendered":"https:\/\/alghanim-lawfirm.com\/en\/?p=41124"},"modified":"2026-01-14T11:59:34","modified_gmt":"2026-01-14T11:59:34","slug":"corporate-governance","status":"publish","type":"post","link":"https:\/\/alghanim-lawfirm.com\/en\/2026\/01\/14\/corporate-governance\/","title":{"rendered":"Corporate governance"},"content":{"rendered":"

Corporate Governance<\/strong><\/span><\/p>\n

Corporate governance constitutes one of the fundamental mechanisms for both domestic and international companies in the present era. The economic crises that have afflicted the global economy have elevated the concept of sound corporate management to a matter of priority.<\/strong><\/p>\n

The regulations and legislative frameworks governing corporate governance worldwide are directed towards curtailing the misuse of administrative authority in ways that do not serve the interests of shareholders.<\/strong><\/p>\n

They further seek to enhance the performance of boards of directors within such institutions, to strengthen internal controls, to ensure the monitoring of strategic plan implementation, and to delineate the duties and powers of shareholders, the governing body, executive management, and rights holders. In addition, emphasis is placed upon the necessity of clarity and transparency in disclosure.<\/strong><\/p>\n

The notion of institutional governance represents a reformist orientation and a modern operational mechanism, designed to entrench integrity in financial dealings through the establishment of controls that safeguard both the public interest and the individual rights of shareholders.<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Meaning of Corporate Governance<\/strong><\/span>
\nCorporate governance refers to a set of rules and principles by which a company is directed and managed. It entails the establishment of defined procedures to facilitate decision\u2011making and to confer clarity and credibility upon such processes, with the objective of safeguarding the rights of shareholders and stakeholders, and of ensuring fairness, competitiveness, and transparency within the market and the business environment.<\/strong><\/p>\n

The Importance and Benefits of Corporate Governance<\/strong><\/span><\/p>\n

The significance of corporate governance is manifested in several principal aspects, including:<\/strong><\/p>\n

1-<\/strong>\u00a0Economy <\/strong><\/p>\n

Corporate governance contributes to enhancing the efficiency of the economy through its role in supporting the stability of financial markets, increasing levels of clarity and transparency, attracting investment both domestically and internationally, and reducing the risks that may confront the economic system.<\/strong><\/p>\n

2- <\/strong>Companies <\/strong><\/p>\n

The application of governance principles assists companies in establishing a sound working environment that enables them to achieve improved performance under competent management, thereby increasing the economic value of the company. Proper governance further facilitates access to capital markets and the securing of necessary financing at lower cost, enabling the expansion of activities, the reduction of risks, and the building of trust with stakeholders.<\/strong><\/p>\n

3-<\/strong>\u00a0Investors and Shareholders
\nGovernance aims to protect investments from losses arising from the misuse of authority in ways contrary to the interests of investors. It also seeks to increase investment returns, shareholder rights, and investment value, while limiting conflicts of interest. A company\u2019s adherence to governance standards strengthens the role of shareholders in participating in fundamental decisions relating to the management of the company and in obtaining full disclosure regarding their investments.<\/strong><\/p>\n

4- <\/strong>Other Stakeholders
\nGovernance fosters a strong relationship between company management and its employees, suppliers, creditors, and other parties. Sound governance enhances the confidence of all parties dealing with the company, thereby contributing to improved performance and the achievement of strategic objectives.<\/strong><\/p>\n

Voting Rights<\/strong><\/span><\/p>\n

As stipulated in Articles 97 and 98 of the Iraqi Companies Law No. 21 of 1997 (as amended):<\/strong><\/p>\n

Article 97<\/strong><\/span><\/p>\n

1- In joint\u2011stock companies and limited liability companies, each shareholder shall have a number of votes equal to the number of shares held.<\/strong><\/p>\n

2- In partnership companies, votes shall be calculated on the basis of each partner\u2019s proportionate share of the capital.<\/strong><\/p>\n

Article 98<\/strong><\/span><\/p>\n

First \u2013 Voting shall be conducted openly, except in matters relating to the election or dismissal of the Board of Directors or any of its members in a joint-stock company, the discharge of the managing director in other companies, or where a number of members representing not less than ten per cent (10%) of the shares or quotas represented at the meeting request that voting be conducted secretly, regardless of the subject matter under consideration. In such cases, voting shall be by secret ballot.<\/strong><\/p>\n

Second \u2013 No resolution shall be adopted to amend the Articles of Association of a joint-stock company, to increase or reduce its share capital, to dispose of more than half of its assets in a transaction outside the scope of its ordinary business, to approve a transaction pursuant to paragraph (4) of Article 56,<\/span> to merge the company with another, to convert it, or to liquidate it, except on the basis of a majority of votes of the shareholders whose subscribed shares have been fully paid up, unless the Articles of Association require a higher percentage.<\/strong><\/p>\n

No such resolutions in respect of a limited liability company shall be adopted except on the basis of a majority of votes of the shares paid up as at the date of the notice convening the general assembly meeting, unless the Articles of Association require a higher percentage.<\/strong><\/p>\n

No such resolutions in respect of a partnership shall be adopted except by unanimous vote of the partners\u2019 quotas. In the event of a tie in a limited liability company, or the impossibility of unanimity in a partnership, recourse to the competent court for settlement of the matter shall be permissible.<\/strong><\/p>\n

Resolutions concerning other matters shall be adopted on the basis of a majority of votes of the shares or quotas represented at the meeting, unless the Articles of Association require a higher percentage.<\/strong><\/p>\n

Disclosure and Transparency in Corporate Governance<\/strong><\/span><\/p>\n

Disclosure and clarity are regarded as among the most prominent principles of corporate governance, as they aim to enable shareholders to obtain the necessary information fairly and transparently. Companies are required to accompany their financial statements with a report issued by the Board of Directors, setting out the company\u2019s activities during the preceding financial year and the factors affecting its performance, thereby assisting investors in assessing the company\u2019s assets, liabilities, and financial position.<\/strong><\/p>\n

Furthermore, the Board of Directors\u2019 report must include details of the provisions of the Corporate Governance Regulations issued by the Capital Market Authority that have been implemented, as well as those that have not been implemented, together with an explanation of the reasons for non\u2011implementation.<\/strong><\/p>\n

Board of Directors<\/strong><\/span><\/p>\n

Pursuant to Articles (106\u2013112) of the Companies Law<\/strong><\/p>\n

Article 106<\/strong><\/span><\/p>\n

First \u2013 A member of the Board of Directors must:<\/strong><\/p>\n

1-<\/strong>\u00a0Possess full legal capacity<\/strong><\/p>\n

2-<\/strong>\u00a0Not be prohibited from managing companies under any law or by a decision issued by a legally competent authority;<\/strong><\/p>\n

3-<\/strong>\u00a0Own not fewer than two thousand (2,000) shares if representing the private sector. Should his shareholding fall below this threshold, he must complete the shortfall within thirty (30) days from the date of acquiring membership of the Board of Directors; otherwise, he shall be deemed to have forfeited his membership upon expiry of the said period.<\/strong><\/p>\n

Second \u2013 If a member of the Board of Directors loses any of the conditions stipulated in paragraph (First) of this Article, his membership shall lapse as of the date of losing such condition. Any resolution adopted in his presence shall be deemed void if his vote has influenced its adoption.<\/strong><\/p>\n

Third \u2013 The term of membership of the Board of Directors shall be three (3) years, renewable.<\/strong><\/p>\n

Article 107<\/strong><\/span><\/p>\n

First<\/strong> \u2013 Where an elected shareholder declines to accept membership of the Board of Directors, he must notify the Board thereof within seven (7) days from the date of his election if he was present at the election meeting, or from the date of being notified thereof if he was absent.<\/strong><\/p>\n

Second<\/strong> \u2013 Where a member of the Board of Directors resigns, such resignation must be in writing and shall not take effect except from the date of its acceptance by the Board.<\/strong><\/p>\n

Article 108<\/strong><\/span><\/p>\n

First<\/strong> \u2013 Where the seat of a member of the Board of Directors representing the State sector becomes vacant, the Board shall invite one of its alternate members to occupy such seat and to attend meetings of the Board of Directors as a member thereof. In issuing such invitation, the Board shall observe the order of names of alternate members as set out in the list of alternates for each sector.<\/strong><\/p>\n

Second<\/strong> \u2013 Where a vacancy arises in the membership of the Board of Directors representing the private sector, the Chairman of the Board shall invite the alternate member who obtained the highest number of votes. If two or more alternate members have obtained an equal number of votes, the Chairman shall select one of them.<\/strong><\/p>\n

Third<\/strong> \u2013 Where more than one vacancy arises in the membership of the Board of Directors representing the private sector and the number of alternate members is insufficient to fill such vacancies, the Chairman of the Board shall convene the General Assembly to elect principal members to complete the shortfall in the membership of the Board after the alternates have been admitted, and to elect new alternates in their stead, within sixty (60) days from the occurrence of the vacancy.<\/strong><\/p>\n

Fourth<\/strong> \u2013 Where the Board of Directors of a private joint\u2011stock company loses half of its members at the same time, it shall be deemed dissolved, and must convene the General Assembly within thirty (30) days from the date of such loss to elect a new Board.<\/strong><\/p>\n

Article 109<\/strong><\/span><\/p>\n

Where a member of the Board of Directors is absent from attending a meeting, the procedures set out in paragraphs (First) and (Second) of Article 108 of this Law shall be followed, as applicable, and the alternate member shall replace the principal member for the duration of his absence.<\/strong><\/p>\n

Article 110<\/strong><\/span><\/p>\n

First<\/strong> \u2013 No person may serve as a member of the Boards of Directors of more than six (6) companies at the same time. However, he may, at the same time, hold the office of Chairman of the Board of Directors of one or two companies.<\/strong><\/p>\n

Second<\/strong> \u2013 Neither the Chairman nor any member of the Board of Directors may serve as Chairman or member of the Board of Directors of another company engaged in a similar activity, unless duly authorised to do so by the General Assembly of the company in which he holds the office of Chairman or Board membership.<\/strong><\/p>\n

Article 111<\/strong><\/span><\/p>\n

The Board of Directors shall convene within seven (7) days from the date of its formation, and shall elect by secret ballot from among its members a Chairman and a Deputy Chairman, who shall act in his stead during his absence, for a term of one (1) year, renewable.<\/strong><\/p>\n

Article 112<\/strong><\/span><\/p>\n

First<\/strong> \u2013 The Board of Directors shall meet at least once every two (2) months upon the invitation of its Chairman, or at the request of any of its other members.<\/strong><\/p>\n

Second<\/strong> \u2013 Meetings of the Board shall be held at the company\u2019s head office, or at any other place within Iraq chosen by the Chairman if it is not possible to hold the meeting at the head office.<\/strong><\/p>\n

Duties of the Board of Directors in a Joint\u2011Stock Company or the Managing Director in Other Companies<\/strong><\/span><\/p>\n

As regulated by Article 126 of the Companies Law:<\/span><\/strong><\/p>\n

The Board of Directors in a joint\u2011stock company and the managing director in other companies shall, within the first month of each year, prepare a list containing the following particulars:<\/strong><\/p>\n

First \u2013 The name of the company and the address of its head office and branches, if any.<\/strong><\/p>\n

Second \u2013 The amount of share capital and a statement of the shares or quotas of which it is composed.<\/strong><\/p>\n

Third \u2013 The instalments paid on the value of the shares in the joint\u2011stock company, the amounts paid during the year, and those which remain unpaid despite falling due.<\/strong><\/p>\n

Fourth \u2013 The total number of shares which their holders are no longer entitled to retain.<\/strong><\/p>\n

Fifth \u2013 The names, nationalities, professions, addresses, and the number of shares or quotas held by each of the following:<\/strong><\/p>\n

1- <\/strong>The members of the company, and those who have acquired or ceased membership since the date of the last annual list or, in the case of the first annual list, since the date of the company\u2019s registration;<\/strong><\/p>\n

2-<\/strong>\u00a0The Chairman and members of the Board of Directors and the managing director in the joint\u2011stock company, and the managing director in other companies.<\/strong><\/p>\n

Article 117<\/span> \u2013 Powers of the Board of Directors<\/span><\/strong><\/p>\n

The Board of Directors shall undertake the administrative, financial, planning, organisational, and technical functions necessary for the conduct of the company\u2019s activities, save for those matters falling within the competence of the General Assembly. In particular, the Board shall have the following powers:<\/strong><\/p>\n

First \u2013 To appoint the managing director, determine his remuneration, allowances, functions, and powers, supervise his work, direct him, and dismiss him.<\/strong><\/p>\n

Second \u2013 To implement the resolutions of the General Assembly and to monitor their execution.<\/strong><\/p>\n

Third \u2013 To prepare the final accounts for the preceding year within the first six (6) months of each year, together with a comprehensive report thereon and on the results of implementing the annual plan, and to submit them to the General Assembly for discussion and approval. Such accounts shall include:<\/strong><\/p>\n

1- The general balance sheet<\/strong><\/p>\n

2- The profit and loss account<\/strong><\/p>\n

3- Any other data required by the competent authorities<\/strong><\/p>\n

Fourth \u2013 To discuss and approve an annual plan for the company\u2019s activities for the following year, which the managing director must prepare during the last six (6) months of the year in light of the company\u2019s objectives. The plan shall include a full report on the company\u2019s activities and a draft budget showing:<\/strong><\/p>\n

1- Cash flow<\/strong><\/p>\n

2- Sales<\/strong><\/p>\n

3- Purchases<\/strong><\/p>\n

4- Workforce;<\/strong><\/p>\n

5- Capital expenditure<\/strong><\/p>\n

6- Production<\/strong><\/p>\n

Fifth \u2013 To monitor the implementation of the plan and to submit periodic reports to the auditor and an annual report to the General Assembly on the results of its implementation.<\/strong><\/p>\n

Sixth \u2013 To prepare studies and statistics with the aim of developing the company\u2019s activities.<\/strong><\/p>\n

Seventh \u2013 To adopt resolutions relating to borrowing, mortgaging, and guarantees.<\/strong><\/p>\n

Eighth \u2013 The Board of Directors shall establish two committees from among its members to provide recommendations concerning:
\n(a) The selection of independent financial auditors not employed by the company \u2013 the Audit and Financial Oversight Committee;
\n(b) The determination of the nature and amount of remuneration payable to members of the Board of Directors and to the managing director \u2013 the Remuneration Committee.<\/strong><\/p>\n

No member of either committee shall be an official employee of the company or a shareholder holding more than ten per cent (10%) of its shares, nor shall he be related to any of them by direct kinship, marriage, or personal or economic interest to a degree that may affect the impartiality of his decisions.<\/strong><\/p>\n

Any act or measure taken contrary to the recommendations of either committee, together with the reasons therefor, shall be announced at the meeting of the General Assembly and recorded in the minutes thereof.<\/strong><\/p>\n

The Audit and Financial Oversight Committee shall bear responsibility for ensuring the accuracy and reliability of financial auditing operations and shall hold closed meetings with the independent financial auditors to achieve this.<\/strong><\/p>\n

It shall also ensure that, throughout the year, a record is maintained of all relevant financial transactions in accordance with internationally recognised accounting standards, for the purpose of discussion with the independent financial auditors.<\/strong><\/p>\n

Article 118<\/span> \u2013 <\/strong>Implementation of Resolutions of the Board of Directors<\/strong><\/p>\n

First<\/strong> \u2013 Every resolution issued by the Board of Directors shall be signed by its Chairman and sealed with the company\u2019s seal.<\/strong><\/p>\n

Second<\/strong> \u2013 Resolutions of the Board of Directors shall be implemented upon their issuance in accordance with the provisions of the law.<\/strong><\/p>\n

Third<\/strong> \u2013 A majority of the members of the Board of Directors of a mixed joint\u2011stock company may lodge an objection with the Council of Ministers against any measures or directives that are inconsistent with the provisions of the law.<\/strong><\/p>\n

Fourth<\/strong> \u2013 The Chairman of the Board of Directors shall be responsible for monitoring the implementation of the Board\u2019s resolutions.<\/strong><\/p>\n

Articles 119 and 120 <\/strong>\u2013 Liability of the Chairman and Members of the Board of Directors<\/span><\/strong><\/p>\n

Article 119<\/strong><\/span><\/p>\n

First<\/strong> \u2013 The Chairman of the Board of Directors of the company, or any member thereof, shall not be permitted to derive benefit from any interest, whether direct or indirect, in transactions or contracts concluded with the company, save upon obtaining authorisation from the General Assembly, which shall be contingent upon disclosure of the nature and extent of such interests. The Chairman or any member of the Board shall be liable to the company for any damage sustained by it as a result of contravention of this Article. Compliance with the provisions of this Article shall not exempt from the liability stipulated in paragraph (Third) of Article 4.<\/strong><\/p>\n

Second<\/strong> \u2013 The Chairman of the Board of Directors or any member thereof shall not be permitted to cast his vote or participate in any matter in which he has a direct or indirect interest without disclosing and declaring the nature and extent of such interest to the other non\u2011benefiting members and obtaining the approval of the majority of them. In either case, the details of the matter shall be recorded in the minutes of the meetings of the Board of Directors and made available to the General Assembly, as well as to the auditors and independent financial examiners responsible for reviewing and auditing the company\u2019s accounts.<\/strong><\/p>\n

Article 120<\/strong><\/span><\/p>\n

The Chairman and members of the Board of Directors shall exercise in the management of the company\u2019s affairs the same degree of care as they exercise in the management of their own affairs, and shall administer them in a sound and lawful manner, not falling below the standard of care expected of a reasonable person of their kind. They shall be liable before the General Assembly for any act performed by them in such capacity.<\/strong><\/p>\n

Articles 123 and 124<\/span> \u2013 <\/strong>Duties of the Managing Director<\/strong><\/span><\/p>\n

Article 123<\/strong><\/span><\/p>\n

First<\/strong> \u2013 The managing director shall undertake all acts necessary for the management of the company and the conduct of its activities, within the competences and powers defined for him by the authority which appointed him and in accordance with its directions.<\/strong><\/p>\n

Second<\/strong> \u2013 Subject to the provisions of paragraph (First) of this Article, the managing director in a limited liability company, a partnership, or a sole proprietorship shall have the same competences as those of the Board of Directors in a joint\u2011stock company, as set out in paragraphs (Second), (Third), (Fourth), (Fifth), and (Sixth) of Article 117 of this Law.<\/strong><\/p>\n

Article 124<\/strong><\/span><\/p>\n

In the exercise of his competences and powers, the managing director shall be subject to the provisions of Articles 119 and 120 of this Law. In addition, the company shall disclose in writing the five highest salaries and wages paid to its employees, and such information shall be made available to the members of the General Assembly for their review.<\/strong><\/p>\n

Conclusion:<\/strong><\/span><\/p>\n

The culture of corporate governance seeks to achieve the most rational and optimal investment of the capacities and resources of companies by fostering a working environment based on responsibility, oversight, and discipline, while adhering to the principles of transparency and clarity in defining the company\u2019s objectives and strategic business plans. It further aims to clarify the rights and obligations of each party, and to regulate the company\u2019s relationships with suppliers, financiers, clients, regulatory authorities, and the activities it undertakes.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Corporate Governance Corporate governance constitutes one of the fundamental mechanisms for both domestic and international companies in the present era. The economic crises that have afflicted the global economy have elevated the concept of sound corporate management to a matter of priority. The regulations and legislative frameworks governing corporate governance worldwide are directed towards curtailing…<\/p>\n","protected":false},"author":1,"featured_media":39587,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[56],"tags":[],"class_list":["post-41124","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-articles"],"acf":[],"_links":{"self":[{"href":"https:\/\/alghanim-lawfirm.com\/en\/wp-json\/wp\/v2\/posts\/41124","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/alghanim-lawfirm.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/alghanim-lawfirm.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/alghanim-lawfirm.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/alghanim-lawfirm.com\/en\/wp-json\/wp\/v2\/comments?post=41124"}],"version-history":[{"count":4,"href":"https:\/\/alghanim-lawfirm.com\/en\/wp-json\/wp\/v2\/posts\/41124\/revisions"}],"predecessor-version":[{"id":41128,"href":"https:\/\/alghanim-lawfirm.com\/en\/wp-json\/wp\/v2\/posts\/41124\/revisions\/41128"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/alghanim-lawfirm.com\/en\/wp-json\/wp\/v2\/media\/39587"}],"wp:attachment":[{"href":"https:\/\/alghanim-lawfirm.com\/en\/wp-json\/wp\/v2\/media?parent=41124"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/alghanim-lawfirm.com\/en\/wp-json\/wp\/v2\/categories?post=41124"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/alghanim-lawfirm.com\/en\/wp-json\/wp\/v2\/tags?post=41124"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}