Incorporation Law in Iran
In a general view, Incorporation Law in Iran is stipulated in accordance with the Iranian Commercial Code which has been ratified before the Islamic Revolution and subjected to amendments after the Islamic Revolution. This paper aims to present a glance at the relevant regulations base on which you will be able to establish and run your company.
What is a company?
A company based on the Iranian Commercial Code is a union of the capital of specific numbers of persons (depends on the type of the company) due to conduct permitted activities. Same as the other countries, the formation of a company needs to register. In this regard, you shall register your company in the framework of the presented company’s type in accordance with the Commercial Code and by submitting the requested documents before the relevant authorities.
Which type of companies are allowed?
There are seven types of companies under Article 20 of the mentioned law as below:
- The Joint Stock Company
- The Limited Liability Company
- The General Partnership
- The Limited Partnership
- The Joint Stock Partnership
- The Proportional Liability Partnership
- The Consumers and Producers Cooperatives.
Bear in mind that the most registered companies in Iran are Private Joint Stock Company and Limited Liability Company since some difficulties regarding registration and activities under other forms of the companies.
Furthermore, since 2002 it is not necessary for foreigners who have an investment contract with the Organization for Investment Economic and Technical Assistance of Iran to count with an Iranian partner to set up a company in the country in addition to that the nationality of the shareholders does not have any effects on the nationality of the company, but in certain activities deemed important to the nation’s development programs the Government can impose the presence of Iranian shareholders.
Is Merge and Acquisition in Iran permitted or not?
As was mentioned previously, all the regulations regarding the Incorporation stipulated by the Iranian Commercial Code, but in the field of merge and acquisition, we are facing the lake of regulation based on the latter.
In general, the merge and acquisition of the companies are permitted but not under the Iranian Commercial Code. Therefore, for the sake of presenting more information, we should refer to the provisions of the Amendment Code of Some Regulations of the Fourth Economic, Social and Cultural Development Program named the “Code of General Politics of Enforcing the Principle 44 of Constitutional Law of Iran”.
Based on Article 1 of the above-mentioned law, the merge defined as an action by which several companies, whilst eliminating either legal personality, form a new and unique legal personality or become absorbed in another. Moreover, there are some restrictions in the law regarding the merge of the governmental companies which specifies the permitted fields in this regard.
Therefore, despite the lack of regulations in the Iranian Commercial Code, by virtue of the above clarifications, the merge of the company shall be authorized in general.
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