In this article you will read:
Branch and Representative Offices (Part I)
- Governing Laws
- Procedure and Required Documents for Registration of a Branch Offices of Foreign Companies
- Responsibilities of a Foreign Company in Respect of its Branch Office
- Authorized Companies
- Permitted Activities
- Responsibilities of Branch Office and Agent(s) of Foreign Companies
- Tax Applicable to the Branches of Foreign Companies in Iran
1. Governing Laws
A foreign company may establish branches or representative offices in Iran. The Law Per- mitting Registration of Branches and Representative Offices of Foreign Companies in Iran was approved on 11 November 1997:
“The foreign companies considered as being legal in their own countries of origin may, on provision of reciprocal treatment by their governments in respect of Iranian companies, set up branches and representative offices in Iran to carry out the businesses authorized by the government of the Islamic Republic of Iran in due compliance with the Laws of Iran.”
According to Article 2 of the Executive By-Laws of the Law Permitting Registration of Branches and Representative Offices of Foreign Companies in Iran, a branch of a foreign company is a local (Iranian) wing of the original company that carries out the business and functions of the head office of the company in Iran directly through one or more principal representative(s).
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2. Procedure and Required Documents for Registration of a Representative or Branch Offices of Foreign Companies
Foreign companies intending to set up a representative or branch office of their companies in Iran must submit the following documents to the Companies Registration Office in Tehran:
4. A feasibility study containing the following information:
- Information concerning activities of the company
- A description of the reasons and the needs for registration of the company in Iran
- A description of the type and scope of authorities and the place of operation and business of the branch office of the company in Iran
- An estimate of the required local and expatriate work force
- The manner of procurement of the funds in Rials and in foreign currencies required for running the affairs of the branch office
5. A letter of introduction from a government entity in case the representative or branch has been set up for implementation of an agreement between the foreign company and that government entity
6. Statement of Registration (a form to be filled in and signed by the foreign company)
7. Certificate of Registration (a form to be filled in and signed by the foreign company)
8. Letter of Authorization given by the foreign company to its principal representative(s) in Iran
9. A Letter of Undertaking whereby the foreign company undertakes to wind up and close down its representative or branch office in Iran in case the activity permit given to the branch office by Iranian authorities shall be revoked and canceled. The branch office in such a case must be closed down by designating a liquidator who shall wind up and liquidate the branch office within a period to be specified by the Companies Registration Office.
All documents prepared by the foreign company for the above purpose must be certified by the authorities concerned (such as local registries), followed by confirmation by the Foreign Ministry of that country and then confirmed by the Iranian embassy of said country. The above said documents must thereafter be translated into Persian by official translators and certified by the Judiciary and the translations and original documents must then be submitted to the Companies Registration Office for registration of the representative or branch office of the company.
3. Responsibilities of a Foreign Company in Respect of its Representative or Branch Office
A representative or branch office are deemed to be carrying out business in Iran on behalf of the head office of the company. Therefore, the head office of the company shall be responsible for all activities performed by the representative or branch office.
4. Authorized Companies
The Council of Ministers approved the Executive By-Laws of the Law Permitting -Registration of Branches and Representative Offices of Foreign Companies under No.019776T/M/78-930 on 2 May 1999. According to Article 1 of these By-Laws, the companies that are considered as legal companies in their countries of origin, i.e. have been formed on the basis of the laws and regulations of those countries and are legal entities, may set up their branches or representative offices in Iran, on the basis of the applicable laws and regulations, in order to carry out the businesses mentioned hereafter.
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