What is the Best Type of Company to Start Your Business in Iran ?
There are mainly seven types of corporations in Iran and dependent on every single field of business, a certain type is advisable. What is the Best Type of Company to Start Your Business in Iran? the Iranian legal framework is quite clear and detailed when it comes to corporate rules and regulations.
An Overview of Company Typology in Iranian laws
Company law in Iran is a well-developed branch which has been articulated in detail in the Code of Commercial Law (hereinafter, the Code). There are seven kinds of distinct forms of companies according to the article 20 of the Code and thereby are distinguished from the civil partnership which is more casual and less demanding in terms of formality and legalities. For some loopholes in the tax laws in Iran, businessmen sometimes prefer to go civil, instead of registering an entity, especially those of smaller turnover. But all serious businesses in Iran are inevitably destined to run on the commercial code rail.
before beginning our journey in this land, we have to mention that registering a company in Iran is different with registering a representative office or branch. When you incorporate a company in Iran, the company will be assumed as Iranian, regardless of the nationality of their shareholders or those who proceed to register it, etc. However, the dichotomy of principal and subsidiary company is totally recognized in the Iranian corporate literature.
Some people on the web advises that in order to get the ownership over immovable properties in Iran as a foreigner, you may register a company and buy the landed property in name of that company, rather than following the normal order of obtaining real estate for foreign nationals. But this trick is a lost cause and courts never hesitate to pierce the court veil if they feel they must. Never fall for non-starters like that.
If you institute a company inconsistent with the terms and conditions articulated mostly in the Code, the ill-founded corporation transactions are legal but you are liable for all risks towards the third parties and the company won’t be regarded as an entity independent of you.
“one person company” is not one of the company forms in the Code of Commercial Law and there is no other rule or regulation governing this kind of entity in Iran. So, remember that the forms of company numerated in the Code is almost exclusive and no other type would be recognized as a commercial company if doesn’t match with the list of forms discussed below.
Types of Companies in Iran Code of Commercial Law
1. Joint Stock (public held and private held)
In the scenario of company forms and types in Iran, the Joint Stock is the protagonist. The rules and regulations for this type of company is embedded in the Code with a span of 300 articles. As you already know, the shares of capital in this form of company are called “stocks”. There are two different types of joint stock company, namely the public joint stock and the private joint stock. The former is capable of selling stock to the public in the stock market and the latter is not and has a pretty closed circle of shareholders. The minimum monetary fund for incorporating both types are nominal and one can properly claim there is no capital requirement in practice. But there is a ratio requirement in this context that is absolutely noticeable: in public joint stock, the founders of the company have to guarantee 20% of whole capital and provide for 35% of the guaranteed amount. In private joint stock, the founders have to guarantee whole capital and provide for 35% of the whole amount. The minimum number of partners in the public held type is 5 persons, while the same requirement for the private held one is down to 3.
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What is the Best Type of Company to Start Your Business in Iran ?
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