According to Iranian regulations, non-Iranian natural and legal entities can establish companies in Iran and hold up to 100 percent of the shares of the Company.
The primary laws governing the companies in Iran are the Commercial Code of Iran 1932 (The code) and its amendment of 1969 (the amendment).
Foreign traders’ and investors’ most common corporate method to establish an Iranian entity is Private Joint Stock Companies (PJSC) and Limited Liability Companies (L.L.C.).
The above-mentioned commercial companies have legal personality and should be presented by a natural person while doing business in Iran. Foreign traders and investors can, of course, appoint a manager for the Company based in Iran.
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A PJSC can be formed by three persons (natural or legal) or more as shareholders, who are liable within the value of shares owned.
A PJSC is an appropriate company for commercial persons who wish to participate in a tender or obtain bank loans in the future. This type of Company is generally established for conducting more complex matters.
A private joint stock company may issue both bearers and registered shares. The main differences between the bearer and registered shares are the transfer of shares and tax-related matters. The Company may give its stakes in ordinary and preferred types. The preferred type of shares has some priorities, such as multiple voting powers, priority dividends, and distribution of assets in the event of liquidation.
Payment for shares should be either in cash or in kind. The amount of capital for this type of Company should not be less than IRR 1 million at the time of incorporation. Before the registration is completed, Shareholders should transfer %35 of the subscribed capital to the account of the selected local bank. Within five years, the Board of Directors (BoD) and shareholders will call for the payment of the remaining charter capital.
Suppose the whole capital or portion of the capital amount is in the form of non-monetary assets; in that case, the official appraiser of the Ministry of Justice or the Organization for Investment and Economic and Technical Assistance of Iran must appraise the property’s value. The right of possession for the whole property, including the title deeds, will be vested with the selected local bank, and the shareholders should submit a bank certificate alongside the other documents to the Company Registration Office (CRO)
Management of a joint stock company is the responsibility of the Board of Directors (BoD).
The first election of the BoD takes place by all the shareholders. The BoD selects the directors from amongst the shareholders (national or foreign nationals). A legal entity can also be a member of BoD. In that case, a representative of such a legal entity is responsible for its duties.
BoD has all the powers to run the Company and make decisions within the scope of the Company’s field of activity, except for matters which, per the provisions of the Commercial Code of Iran, fall under the jurisdiction of General Meetings of shareholders of the company.
Articles of Association: The shareholders should approve the Articles of Association and affix their signatures before the company formation may be registered.
As we mentioned above, the capital must be fully subscribed to, and shareholders should pay up at least % 35 of the capital at the time of incorporation. The shareholders should then submit a bank receipt to the CRO.
At the time of incorporation of the Company, shareholders should form a founder’s meeting. The founder meeting should:
Five Persian names should be chosen and submitted to the CRO. The names must be composed of at leat three words.The experts in CRO will then select a name for the company. The company’s name can not be the same as another registered company in Iran.
In addition, the name must be:
To establish a PJSC, the documentation that should be submitted to the Company Registration Office include:
The Founder’s Resolution including:
All documents shall be translated into Farsi and certified by the Iranian Consulate in Russia.
The shareholders must publish a notice of registration in both the Official Gazzette and the general circulated newspaper designated by the founding shareholders. This process can usually take up to 30 days to be completed, but the business can continue with a stamped copy of notification, received from the official gazette.
The directors and inspectors are required to accept the positions offered to them in writing. Acceptance of a position is ipso facto considered conclusive evidence that the directors and inspectors are fully aware of their rights and responsibilities. The company is considered duly established from the date of such an acceptance.
According to Article 177 of the Direct Taxation Act of Iran, any new company must notify the State Tax Affairs Organization of its commencement of business operations.
Companies now should proceed with V.A.T. registration with the Tax Organization. Retrieving the Sealed Books Accounts of the Company within 30 days from the formation of the Company
Within thirty days from the company’s incorporation, the application for obtaining the sealed accounting books should be submitted to the CRO. The CRO examines the matter and delivers the books to the company.
According to Article 48 of Iran Direct Taxation Law, Stamp duty is 0.05 % of the par value of the subscribed share capitals and should be paid within 60 days after the Company’s formation to Bank Melli.
The Commercial Code or Commercial Number is required for all the companies conducting Trading activities in Iran. The Tax Organization will issue the Commercial Code for companies, and companies can apply for the commercial code online via the Tax Organization website.
At last founding shareholders should enrol the employees in the social security program and obtain a social security number.
Every legal entity incorporated in Iran should have an actual ( not nominal) registered office address in Iran.
The following charges will be incurred in connection with the registration of the PJSC company:
L.L.C. is the simplest type of Company in the Iranian legal and registration system. If foreign export companies are interested in import, export, and commercial activities but not complex projects or obtaining financial loans in Iran, L.L.C. would be suitable for conducting commercial activities.
L.L.C is a company formed between two or more people for business purposes. Foreign nationals can own 100% shares of the L.L.C company. Shareholders can be natural or legal persons and are responsible only within the limit of the amount of their capital in the Company.
The minimum capital requirement is 1 million Rials. There is no requirement to deposit the capital in a bank account before the Company’s formation. The shareholder’s contribution to the Company’s capital can be in cash or kind. In the case of a contribution in non-cash form, One or two experts should assess the value of the same. Experts can be official or non-official, and the shareholders will be jointly and severally responsible for evaluating such a contribution.
However, an L.L.C. is not duly incorporated under Iranian law unless all capital in cash has been fully contributed and non-cash contributions have been assessed and contributed by partners.
Shareholders in an L.L.C. company should appoint a managing director for the Company. The managing director or C.E.O. of the Company is not required to be a shareholder, can be of Iranian or foreign nationality, and can be appointed indefinitely.
If the number of shareholders in an L.L.C. is more than twelve, Iranian law requires the formation of the Board of Supervisors (BoS). The BoS may call a shareholder’s general meeting at least once a year.
The BoS should start an investigation immediately after the Company’s incorporation if the capital in cash has been fully paid up and the non-cash contributions have been valued and delivered and if the Memorandum of Associations of the Company has expressly mentioned the value of the non-cash contributions.
Transferring each partner’s shares in an L.L.C. is subject to the consent of shareholders who own three-quarters of the Company’s capital and also have a majority in shareholders.
Furthermore, transferring shares is possible only by drafting an official deed.
Each shareholder has the number of voting right in proportion to the amount their contribution to the capital .
Five names composed of at least three words should be chosen for the Company before the incorporation, and the CRO will then pick one name from the same. The names composed of one or two words are extremely difficult to be sslected by the CRO .
The chosen names should mention the term L.L.C. Otherwise, the Company will be a general partnership form concerning the third parties, creating unlimited liability for the shareholders.
Moreover, if any of the shareholders has been mentioned anywhere in the Company’s name, that particular shareholder shall be considered a general partner and, therefore, will have unlimited liability towards third parties.
In addition, the name must be:
After registration with the tax authorities, a commercial code must be obtained for the Company within 60 days from the Company’s date of incorporation.
The following charges will be incurred in connection with the registration of the L.L.C. company:
According to Article 2 of Export- the Import Law of Iran (1993), all companies conducting export-import activities should obtain a commercial card from the Iran Chamber of Commerce. The commercial card is valid for a period of one year.
Foreign natural or legal entities can apply for the commercial card if the same service is available for Iranians in their country. In some cases, the Ministry of Industry, Mining and Trade can authorize issuing a commercial card, even if such a service is unavailable for Iranian nationals in the foreign person’s home country.
We are looking forward to answering your questions on how to register a company in Iran and selecting a legal form most appropriate for your case . Please contact us via email ( email@example.com ) or by phone ( +98 22 65 43 62 ) .