The Joint Stock company is defined by the law as a company whose capital is divided into shares and the liability of whose shareholders is limited to the par value of their shares. As mentioned in the Foreword, the Joint Stock Company may be either a public company (Sherkat Sahami Am) or a private company (Sherkat Sahami Khass).
The main difference between the two is that the public company may offer its shares and debt securities to the public while the private company may not. See Annex A for additional differences between the public and private
1.2. Other Forms of Business Association
In addition to the Joint stock company, the Iranian Commercial Code provides for the following types of business
(a) Limited liability company (Sherkat ba Masouliyat Mahdoud)
(b) General partnership (Sherkat Tazamoni)
(c) Limited partnership (Sherkat Mokhtalet Gheyr Sahami)
(d) Mixed joint stock partnership (Sherkat Mokhtalet Sahami)
(e) Proportional liability partnership (Sherkat Nesbi)
(f) Production and consumption cooperative (Sherkat Ta'avoni Towlid va Masraf)
Of the mentioned listed companies, the limited liability company and the joint stock partnership provide for a limitation of shareholders' liability to the value of their shares. In the case of the mixed joint stock partnership, the law provides for both shareholders and unlimited liability partners. The principal difference between the joint stock and the limited liability company is that with the latter, the capital may not be divided into shares and the participants may not transfer their interests therein without the approval of a majority of the participants representing three-fourth (3/4) of the company capital.
1.3. General Features
The shareholders of a joint stock company participate in the ownership, profit and losses, and distribution of assets in liquidation, in proportion to the shares held. As indicated above, the liability of each shareholder is limited to the par value of his shares and in the absence of fraud or other deceptive practices, there should be no
recourse to shareholders for the liabilities of the company. The company has a separate juridical personality by the law and can sue or be sued in its own name. The shareholders possess the usual shareholder rights including, in general, the right to attend shareholders meetings, receive financial reports, elect and replace the board of directors, and vote on major decisions of the company.
1.4. Number of Shareholders
The law specifies that a joint stock company must have a minimum of three shareholders.
1.5. Nationality of Shareholders
There are no legal restrictions with respect to the nationality of persons who may form joint stock companies. As a matter of policy, however, the Iranian Government generally requires Iranian shareholder participation in fields of activity deemed important to the nation's development programs.
A Joint Stock company may issue both ordinary and preferred. shares in either bearer or registered form. While the law does not specifically state what privileges may be accorded to preferred shares, it is understood that priorities as to dividends and distribution of assets in liquidation, and multiple voting powers will be honored under
the law. The principal differences between registered and bearer shares relate to the manner of transfer and tax implications.
Management of a joint stock company is made the responsibility of board of directors which must be elected by
cumulative voting of the shareholders at least once every two years. See Pan IV below for additional information concerning the board of directors.
1.8. Dissolution and Liquidation
General provisions governing the dissolution and liquidation of a joint stock company are provided in the law and companies are authorized to specify in their Articles of Association any particular provisions they may desire so long as they are not inconsistent with the law. Since the provisions of the law on this subject are general in nature, it is advisable, when drafting Articles of Association, to include procedures for dissolution and liquidation.
Investment Licensing Procedure
Documents Required by the OIETAl for the Issuance of Foreign Investment Licensing Procedure:
1. Application Form
2. Establishment License / Primary agreement / Preliminary agreement of the pertinent Iranian organization
3. Official letter of the foreign investor to submit to the OIETAl
4. The foreign investors background including a brief history of the company ,the year of establishment area of
activities in case of foreign investor is a natural person , a photocopy of passport and resume will be provided.
5. A list of machinery, equipments and CKD part which may be imported into the country as a part of the foreign
investors capital (if available).
6. In case that part of the foreign investor’s share is in the form of technical know –how, a draft of the contract outlining
the conditions of the transfer of technology.
7. Any further useful information.