Some Important Points about Company Law in Iran

Some Important Points about Company Law in Iran

Some Important Points about Company Law in Iran


How are the decisions taken by the management of a company?

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(which management body is vested different authorities)

The powers and the scope of authorities of the Board of Directors and the General Assembly have been implied in the previous question.
In “private joint-stock” companies, the Board of Directors’ meetings are held by attendance of more than half of the directors.
Their decisions are taken by the majority of participants, unless the company’s statute (articles of association) provides for a greater majority.
On the other hand, in the General Assembly “half plus one vote” majority takes all decision, except for selecting the Board of directors and inspectors, which the “relative” majority would be enough.
As mentioned earlier, in “limited liability” companies, all decisions are taken by those who possess half of the company’s charter capital.
If such majority is not reached, all the shareholders should be invited for the second time and decisions would be taken by those who are majority in number.
The company’s statute can set up another procedure for taking decisions.

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Companies and Corporations Law

What is the procedure for sale of shares of a local company to another person and perfection of title in shares in such company (i.e. registrations etc.)?

Based on Iran’s Commercial Act, “private joint-stock” companies can issue both named and anonymous shares.

If the company’s shares contain the name of a shareholder, the transaction has to be registered in the company’s “Share Registration Book” and signed by the parties.

In addition, a minute should be drafted between the two shareholders and sent to the “Companies Registration Office” after the “share trading tax” is paid.

Only after this procedure is followed to its end, the title of a named share would be transferred to someone else.

On the other hand, is the company’s shares are anonymous; there is no need for paying tax and registration in the “Companies Registration Office”.

Therefore, such shares are tradable by giving and taking and drafting a minute between the two parties.
However, as stated earlier, transferring of each partner’s share in “limited liability” companies are subject to consent of shareholders who possess three quarters of the company’s charter capital and also they have majority in numbers (number of shareholders).
Moreover, transferring of a partner’s share is possible only by drafting an “official deed”. Therefore, a minute has to be drafted and signed by the mentioned majority and also the two shareholders must refer to a “notary public office” to register their transaction in the form of an official deed.

sale of share

Company or Branch: Which one should you choose?

While registration procedures of a company and a branch in Iran are similar, their purposes are completely different.

According to laws of Iran, foreign branches can only be used for marketing purposes as well as conducting due diligence, research, data collection and also for liaising between parent companies and Iranian business entities. On the other hand, a company is suitable for all business activities in Iran including but not limited to trading, investing, import & export, and manufacturing.

Therefore, it is important to first establish the type of presence you wish to have in Iran before deciding between a company setup or establishing a branch.

Company Law in Iran

Corporate Due Diligence in Iran: How far you can go?

International companies and investors usually ask about the possibility of conducting due diligence about companies in Iran.

They are interested to know what information is publicly available and what information requires to have access to the company’s documents and therefore cooperation of company’s directors is needed.

The only available database in Iran which provides some information about registered companies is the database of “Companies Registration Office”. This online database shows the information such as type of company, registration number, registered address, and the latest changes in the company.

In order to access other information of a company in Iran including properties, debts, litigation and arbitration cases etc. the permission of company’s directors is required.

Our team is composed of highly skilled and versatile lawyers who combine practical experience and academic knowledge of their field. Most of our practitioners have worked in different professional environments, often outside their home jurisdiction.

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