A new law recently
issued in Iraq now regulates commercial agencies /company representations,
an important area of business particularly to foreign companies.
Agency Law No. (51) of 2000, which replaces previous agency laws,
defines commercial agencies as "any business activity performed
in Iraq by a person in his capacity as an agent for an individual
or a corporate entity from abroad whether it is a trade, commission
or other commercial agency provided for in special trade, companies
and transport laws".
The justification
for issuing the new Agency Law was stated as "to regulate the business
of commercial agencies, realise development objectives, limit aspects
of exploitation and prohibit illegal mediation." Several new requirements
and restrictions were imposed to achieve these objectives. A Commercial
agents must be exclusively an Iraqi nationals or companies wholly
owned by such nationals. Agents who were previously authorised to
act as such prior to the application of the new law were given one
year to conform to it's new detailed provisions and obtain the requisite
licence. Government employees or public servants are prohibited
from acting as commercial agents.
A new important
aspect reintroduced in this Law is specifically aimed at avoiding
corrupt practices. Provisions of the Law prohibit the government
and socialist sector departments, i.e. official governmental office
or public/state organisations and companies, to conclude transactions
with foreign principals through commercial agents. These official
Departments should deal directly with Arab or foreign producers
or manufactures except when they can obtain a specific approval
to deal with or through an authorised agents. The above prohibition
is coupled with the imposition of severe penalties for violations
of the provisions of new Agency Law. Violators can be sentenced
to pay fines or serve prison sentence for periods which can be for
life.
For further
information and assistance in a specific matter, contact GLS.
Other Updates:
Iraq
Update: October 2003
Iraq
Update: Agency Law
Iraq
Update: July 2003
Iraq
Update on Agency Law: March 2001
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