26/11/2023
Company Registration for Foreigners in Iran
Introduction
Registering a company in Iran by foreign nationals has a mutual advantage for both side of foreigners and Iran. As a result, Iran has continuously supported this and cleared the path for it to occur. Applicants can begin their legitimate economic and commercial activity in Iran by forming a company. Naturally, with the assistance of experts and consultants, this path will be made easier and faster.
Preface
Article 1 of the Company Registration Act states that any company established in Iran with its primary headquarters in Iran is regarded as an Iranian entity. As a result, foreign persons, both natural and legal, who become shareholders of the entity by registering it in Iran will be considered an Iranian legal entity. The foreign investor can own all of the company’s shares, which implies 100 % of the company’s shares, and there are no restrictions on the investment of foreign owners and shareholders, according to the law.
Legal Basis
The first legal basis for this topic is Principle 81 of the Constitutional Law, which must be carefully interpreted for better clarification. According to this principle: “It is forbidden to give foreigners the right to establish companies or institutions in commercial, industrial, and agricultural fields, as well as in mines and the service sector.”
This might seem strange since the principle explicitly denies foreigners the right to company establishment. But principle 81 does not prohibit the right but rather privilege. In other words, foreigners may establish a company in Iran if it does not constitute a privilege. The second one is the Foreign Investment Promotion and Protection Act. In short, the goals of FIPPA are to provide an adequate legal foundation for capital enlistment, foreign technology, and country economic development. When we talk about the FIPPA, the license comes next, and clarification is required to help better understand.
FIPPA License
When it comes to company registration in Iran, the FIPPA License is the next concern. Is it obligatory to apply for a FIPPA License as a foreigner to register a company in Iran? The straight answer is No. However, it is undeniable that the FIPPA license provides many advantages that lead to more pleasant trading.
Company Registration Advantages
As a foreigner, it is your right to know about the advantages of company registration in Iran. You can ask for the reasons and look for the options that could be granted to you by company registration. Let’s have a look to some of the most prominent advantages:
Iran Residency
When a foreigner lawfully forms a company in Iran, they bring a large amount of capital into the country. As a result, the relevant organizations have attempted to recognize and support foreign investors in Iran so that they can stay in Iran. Of course, it is worth noting that the conditions of residence in Iran may vary as the country’s administrators and heads change. As a result, before relying on this benefit, examine the state of the laws in Iran. The opportunity to benefit from scenic features, natural resources, and facilities in Iran is an excellent incentive to establish a reputable business there.
Unconditional Company Registration
Many countries around the world prohibit foreigners from legally registering companies. Or, if approval is granted, they may not transfer 100% ownership of the company to foreigners. Fortunately, there is no such barrier in Iran. As a result, foreigners can simply establish a company in Iran.
Types of Companies
Now that you know about the advantages, it is time to decide on the type of the company. According to the Commercial Law3 of Iran, there are eight types of commercial companies, listed below:
1- Public Joint Stock Company
2- Private Joint Stock Company
3- Limited Liability Company (LLC)
4- Proportional Liability Company
5- General Partnership
6- Mixed Partnership
7- Mixed Joint Stock
8- Cooperative Company
According to the “Company Registration Act” foreign natural persons or legal entities can establish and register any of these companies in Iran. However, we suggest to you to consider two types of these companies more than the others:
* Private Joint Stock Company: A private joint stock company is set up with at least 3 partners and also there must be 2 inspectors.
* Limited Liability Company: A limited liability company consists of at least 2 shareholders. If you want to get a loan, participate in tenders, and cooperate with important organizations, a private joint stock company is the best choice.
Required Documents and Licenses
There are different documents and licenses that are required during the company registration process, and the most important ones are as follows:
1. The first is the “FIDA Code,” which identifies legal entities and natural persons. Simply put, all foreigners (natural or legal) must get the “FIDA Code” to be involved in any commercial practice in Iran.
2. The next is the “Commercial Card”. All individuals, whether natural or legal, must possess the Iranian import authorization known as the Commercial Card to engage in overseas commerce of commodities in Iran. After the Ministry of Industries, Mine, and Trade has given permission, the Iranian Chamber of Commerce issues import licenses. The general manager will receive the License, which has a one-year expiration date and is renewable yearly.
3. The last but not least important is the License obtained from the applicable ministries. (Each company must obtain a license from the relevant organization based on its activity.)
Necessary Provisions in the Registration Statement
The company’s registration statement is one of the legal documents that a foreign citizen and other documents must provide to the Company Registration Organization. The information that must be included in the declaration includes:
Company Name,
Type of the Company,
Type of Activity,
Nationality,
Address,
Minimum Capital,
Branch of Company (if any),
Company Representative,
Persian Statement,
Certificate of documents.
The samples of official documents (Article of Association, Memorandum, …) are accessible in Company Registration Office of Iran’s website.
Conclusion and Practical Tips
1. Foreigners are permitted to set up companies in Iran. This company is classified as Iranian.
2. There is no barrier to foreigners to set up a company in Iran with 100% of the ownership.
3. The nationality of the shareholders has no impact on the company’s nationality.
3. Foreigners can set up companies according to the Constitutional Law and Foreign Investment Promotion and Protection Act.
4. The registration process varies case to case.
5. Foreigners are prohibited from using their Iranian-origin property as the company’s capital while forming a company in Iran.
6. To establish a company in Iran, two types of companies are recommended: Private Joint Stock Company and, Limited Liability Company.
Karimi & Associates Law Firm
