Seizure of shares for Mehrieh in Iran

Seizure of shares for Mehrieh in Iran [1]

Introduction

This paper starts by explaining the status of Mehrieh in Iran. Secondly, answers the question that whether a share in a company can be lawfully seized for Mehrieh? In order to answer the question, the paper studies three types of shares including private joint-stock, public joint-stock, and limited liability company. In the end, by conducting comparisons between these three types of companies, reaches a conclusion.

Mehrieh and company share

According to the Iranian legal system, Mehrieh is the property that is given to a woman on her marriage and is considered as one of the husband’s preferred debts.[2] In the situation in which the husband’s cash property is not enough, we face this issue that can a share in a company be possessed for a Mehrieh? In the following, we will answer this question with regard to the general procedure and three types of companies.

A share in a company has proprietary worth and is transferable; meaning that as the owner herself can buy, sell or trade it, the court’s enforcement of judgments can confiscate and sell it for sake of creditors who have been ordered by the court.[3] If a husband does not pay the Mehrieh and has some shares in a company, the court can pass a judgment to seize his shares in that company. In fact, his shares are seized by the court and will be sold with its order or transferred to whom the court decides if he does not pay the Mehrieh. Also, seizure of shares for Mehrieh and its sale can be done by the writ of execution issued by the registration office and it does not necessarily need the court’s verdict.

Before seizing the movable property,[4] the judge (executive officer) must prepare a form that includes a complete description of the property, such as type - number - weight - size, etc., and in the case of stocks and securities, its type, number and the nominal amount and each case, the specifications and features that fully represent the property must be written.

1) Public joint-stock companies: In public joint-stock companies, authorities will notify the Company Registration Department, the company’s CEO (chief executive officer), and Securities and Exchange Organization to prevent the transmission of shares. In this case, sales of shares are done by the Securities and Exchange Organization and the Mehrieh is paid thereafter.

2) Private joint-stock companies: In this type of company, every action needs to be informed to the CEO and Company Registration Office in order to stop share transmission and prevent the husband from the runaway of paying the Mehrieh.[5] In order to sell the seized shares, they should be expertized initially and then sold at an auction. In private joint-stock companies, shares are sold at an auction, and the wife’s portion will be paid after the expertise.

The seizure of the shares of individuals in a private joint-stock company does not in itself deprive the shareholder of the right to vote in the relevant company or the meetings of the assemblies and the board of directors.[6]

3) Limited liability companies: to the complicity of shares, the situation is a bit different. In this type of company, every shareholder is liable for the debts of the company only as the amount of her/his first capital. In another word, the juristic personality of the company is independent of its shareholder’s personality, and as a result, the creditors of the shareholder cannot claim their money from the corporate asset.[7] However, the creditor (or in this case wife) can take legal action against the debtor’s share in the company and claim its seizure from the court.

For instance, the court in an analogous judgment has stated: “The CEO of the company is sentenced to pay for his wife's Mehrieh. The issuance of the request for the execution of the legal rulings of the judiciary will be submitted in the sense that the CEO's share of the company will be confiscated.”[8]

 

 Conclusion

The answer to the question that a share in a company can be lawfully seized for the Mehrieh seems positive. However, the duration and success of the process depend on each particular type of company. The paper concludes that in limited liability company seizure of Mehrieh is more complicated and challenging in comparison to joint-stock companies.

Hence, due to the complication of the regulations about the seizure of shares for the Mehrieh and its long procedure, hiring an expert experienced lawyer would accelerate the process. Qualified lawyers of Karimi and associates law firm are ready for your legal services.

 

Footnotes 

[1] The original legal opinion of the publication has been provided by Ms.Aida Shahmardi, edited by Ms.Sarvenaz Mirzaei and Maryam Zaheri.

[2] Law of enforcement of civil judgments, Article 148(3).

[3] Bill amending certain parts of the Commercial Code, Article 24.

[4] Movable Property is called Personal Property in other legal systems, this is a property that can be moved from one location to another.

[5]Advisory Opinion of General Legal Department of Judiciary No. 7/93/57 – 9/4/2014

[6] Advisory Opinion of General Legal Department of Judiciary No. 2190/93/7 - 7/12/2014

[7] Commercial code, articles 129, 159, 189

[8] Advisory Opinion of General Legal Department of Judiciary No. 7/93/2764 – 28/1/2015

 

 

Reference List

  • Ministry of industry, mine, and trade, The Commercial Code of Iran,

available pdf at https://en.mimt.gov.ir/parameters/mimt/modules/cdk/upload/content/circularinformation/File/44/Law%20and%20Regulation/Commercial%20Code%20of%20Iran.pdf

  • Jahangir Mansour(edt.) (2005), Law of enforcement of civil judgments, enforced into 1977, Dowran publication.
  • Islamic Parliament Research Center of the Islamic Republic of Iran, Bill Amending Certain Parts of the Commercial Code, enforced into 1969, available at https://rc.majlis.ir/fa/law/print_version/96314
  • General Legal Department of Judiciary (2015), Advisory Opinion No. 7/93/57, available pdf at http://rrk.ir/Laws/ShowLaw.aspx?Code=2278
  • General Legal Department of Judiciary (2015), Advisory Opinion No. 2190/93/7, available pdf at http://rrk.ir/Laws/ShowLaw.aspx?Code=5028
  • General Legal Department of Judiciary (2015), Advisory Opinion No. 7/93/2764, available pdf at http://rrk.ir/Laws/ShowLaw.aspx?Code=5851

 

 


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