Overall Legislation System
„Iran has different well structured laws and regulations applicable to both domestic and foreign companies working in Iran such as commercial code company law, import and export regulations, labor law, social security regulations, taxations, industrial and intellectual property protection, foreign national entry. Resident and work permits, Banking and insurance etc.
Generally the government of Iran protects the legal rights of foreign companies active in Iran, licensed investors, registered branches or representative offices in exactly the same manner as it does with Iranian companies. If there is Bilateral investment Treaty agreement between Iran and your country even more favorable treatment is provided. Companies are encouraged to get acquainted with the above mentioned regulations. However to start your business, we recommend you to familiarize yourself with at least the following acts: „foreign investment Promotion and protection Act“ and „Act For Registration of Foreign Companies“.
You should differentiate the regulations which are applicable to Main Land and to Free Zones as Free Zones are independent form the Main Land. If you intend to carry out your business in free zones, then you should take into account commercial regulations developed for free zones only. Our recommendation to get through the operation and start a business is to choose your trust worthy and reliable business partner, or an expert consultant to help you to find the right things right times and right places.
Are you An Investor? If answer is yes, you are encouraged to enjoy benefits of licensing your investment under the „Foreign investment Promotion and Protection Act“ The benefits include coverage of non- commercial risks by the government of Iran almost restriction-fee investment, provision of foreign exchanges for capital transferring purposes, 100% export permission, long term and more relaxed entry and residence permits, protection of investor’s interest facilitated investment licensing as well as contraction OIETAL (Organization For Investment, Economic and Technical Assistance of Iran) as a one stop shop for all requests/permissions from other Iranian authorities Note that investment licensing is not mandatory In order to be qualities as an investor we quote the followings from the said act „Foreign investor is a non-Iranian natural and /or juridical persons or Iranians using capital of foreign source. The capital may be in the following forms and are all types of capital, being cash or non-cash, brought into the country by foreign investors and include the following:
- Cash funds in the form of convertible currency imported info the country through banking system or other methods of transfer, acceptable to the Central Bank of the Islamic Republic of Iran
- Machinery and Equipments.
- Tools and spares, CKD parts and ray, addable, and auxiliary materials.
- Patent rights, know-now, trade marks and names, and specialized Services.
- Transferable dividends of foreign Investors.
- Other permissible species approved by the council or Ministers
Paths to Start Business in Iran are you intending to form a new firm? Open a branch? Have a representative office? If you are intending to form a new firm in Iran ,you are entitled to join a local partner and your share will be maximum 49% There in possibility to go beyond this limitation if your activity is „Investment“ and you license your investment under „Foreign Investment Promotion and protection Act“ In case of branches and representative offices, you shall apply for either of them to the Organization for Company Registration Please see „Requirement for Registration of a branch or representative Office“ below. Requirement for Registration of a Branch or Representative Office There are certain requirements applicable to legal entities or natural persons to register Branches or Representative Office Consider the following general conditions.
- The company, who intends to open a branch or have a representative office, must have already been registered as a legal entity in its own country of origin.
- Bilateral treatment is required from your country that means that Iranian companies shall be able to enjoy the same treatment (as a minimum) in your country regarding registering branches or representative Offices.
- Representative agencies shall be managed / administered by persons permanently situated in Iran
In addition to the above mentioned general conditions, your field of activity shall fall within one of the following categories:
- You intend to give offer sales services to your Iranian customers if you are selling products or services to Iranian buyers; you can apply to register a branch or representative agency of your company to provide after sales Services.
- You have a contract with Iranian entities and, for the execution of project, you need to be located in Iran and be recognized as a legal entity.
- If you are considering investment for the purpose or investigating potential projects, partners etc, you can apply for the same.
- You have a joint contract with Iranian contractors to execute a project in a third country.
- Your activity promotes Iranian exports. If what you intend to do can be categorized as bringing technology, special equipments, knowledge, know-how. Etc which ends in promotion of Iranian entities‘ capabilities to produces more competent products and consequently promotion of Iranian exports, you can apply as well.
- Offering and transferring engineering, technical knowledge and know – how.
- You have a contract with government of Iran, or you have obtained a special permission from the relative Iranian authority to perform your special activities (which need special permission such as banking services, transportation, etc)
Procedure for Registration of a Branch or Representative Office
For the purpose of forming branches in Iran, you should submit the followings to the Organization for Company Registration for Company Registration, located in Tehran. Copies of the originals should be duty legalized by the nearest Iranian consulate:
- Filled out Application form.
- Justification Report“ explaining envisaged activities, justification and purposes, type and scope of authority, estimation of Iranian and non Iranian employees, methods for company financing.
- A certified copy of the „articles of association“ of the mother company.
- A certified copy of license of establishment with the latest alterations.
- Certified latest financial report of the mother company.
- A Letter of certification issued by the relevant ministry, department, or state run organization indicating that an agreement has been concluded with the foreign company and that they work together (If exist)
For the purpose of forming representative offices in Iran, the following Documents along with Persian translation are required, Copies of the Originals should be duty legalized by the nearest Iranian consulate:
- Representation contract the mother Company
- In case of natural person, identification documents of the applicant, in case of legal entities, articles of association license of establishment and the latest alterations
- Provision of supporting documents showing relative experience in the intended field of activity
- Articles of association, license of establishment and latest alterations of the mother Company
- A Justification Report
- The latest financial report of the mother company
- A letter of certification issued by the relevant ministry, department , or state-run organization indicating that an agreement has been concluded with the foreign company and that they work together (If exist)
The philosophy of establishment of Free Zones and Special Economic Zones is as it has been mentioned in respective laws, is to provide prosperity, economical development and growth, promotion of investment, active presence in local and international markets, production of indusial goods and services increase in national income and increase in employment. Such zones have facilitated the trade and industrial activities and they have promoted investment benefiting from great reduction in formalities like customs, banking and financial systems, insurance and labor laws, foreigner entrance etc. Especially Free Zones, in comparison to Special Economic Zones, have significant, advantages, most important of which is having independent organization rules and regulations for administration of the zones named: High Council of Free Trade-industrial zones. Since the investment promotion has been the main target of the zones, consequently all the existing systems, format and informal, have the intention to serve and indus trial activities.
If your commercial activities are going to be performed in Free Zones, Will be treated by the investment under the „Foreign Investment Promotion and Protection Act“ and you will enjoy the benefits below:
Registration of Companies
The act governing the registration of companies in tree zones is „Criteria on Registration of Companies, and industrial and intellectual Property Rights“ Registration of a company or institute in free zones will be made upon submission of the following document:
- Letter of declaration applying for registration.
- Company a articles of association.
- Minutes of the founders‘ general assembly.
- Minutes of the first session of the board of directors.
- Certificate issued from one of the banks located in the Zone, attesting that a minimum of 35% of cash capital has been paid
- License of the activity issued by the Organization.
In case of foreign legal persons, it is necessary to provide and submit the original letter of authorization indicating representation as well as the license of the establishment of those legal persons Issuance of such documents must be in accordance with those laws regulations of the legal persons sovereign state (and attested by representative of Islamic Republic of Iran in that country)
In order to register a branch or a representation office, the foreign legal persons, are to attach the Persian translation of the company’s registry declaration forms, and attested copy of the documents indicating the registration of company in their own sovereign country.“