When conducting investigations in Iran, knowing the distinctions between Iranian corporate structures is a crucial tool. This is especially true for due diligence and other researchers looking to figure out who owns Iranian businesses.
Iranian firms fall into one of eight legal entity kinds, according to the Iranian Commercial Code. This article looks at some of the most prevalent structures and explains how they can be used to find the ultimate beneficial owners.
Joint Stock Companies
Both governmental and private joint-stock corporations (JSCs) in Iran are required to have at least three shareholders. A minimum of five directors, including a chairman and vice-chairman, are required for public JSCs. Only a chairman and vice-chairman are necessary for private JSCs.
Board members must be disclosed in the Iranian Official Gazette, although stockholders are not. Databases maintained by the Tehran Stock Exchange and the Iranian Securities and Exchange Organization (e.g. CODAL) can offer complete ownership reports for public JSCs with publicly traded shares. For private JSCs, this information is kept private.
Regardless, you can learn about a JSC’s ownership structure by looking at board membership information from the Iranian Official Gazette and other sources. JSC board members must be elected by the shareholders, hence unless otherwise stated, everybody listed as a board member must be a shareholder. You won’t be able to figure out their specific shareholding percentages, and there may be other shareholders who aren’t listed.
Limited Liability Companies
At least two partners and one director are required for a limited liability company (LLC).
LLCs, like JSCs, are required to publish their board members in the Iranian Official Gazette. Unlike JSCs, LLC board members are not required to be chosen by the shareholders. As a result, LLC board members cannot be assumed to be stockholders.
Although LLCs are not obligated to reveal their shareholders, they do so on occasion in their gazette filings. This is extremely useful information, but it is not always available.
Private Joint Stock Companies
is no difference between an LLC and a Private Joint Stock Company in terms of operations. When it comes to incorporation, they are slightly different. The following are the main differences:
A private joint-stock company is required to hire an auditor, and the corporation must be aware that it will be required to report all of its financial statements to the government on an annual basis.
It requires at least three shareholders, who can be from any country.
IRR 1,000,000 M is the minimum capital requirement for a private joint-stock company.
The CEO of such a corporation will be chosen for a two-year term. Reappointment, on the other hand, is not restricted.
The complete amount of the registered capital in a Private Joint Stock Company must be placed in the company’s bank account.
Public Joint Stock Companies
Those looking to raise public capital should consider forming a public joint-stock corporation. In such instances, the firm must have two directors and at least five shareholders of any nationality to be registered in Iran. The general public will be allotted 20% of the company’s shares. A corporation must also be listed on a national stock exchange. This sort of corporation, like the Private Joint Stock, is required to report all of its financial statements to the government on an annual basis.
Branch Office
A foreign corporation can register a branch office in Iran without any Iranian participation, according to Iranian law. Because this branch is a subsidiary of the parent firm, the directors and shareholders will be the same as the original. Although to handle the processes performed by this branch, a resident representative must be selected.
The parent firm will establish the scope of activities, and the branch will only be authorized to execute those duties, albeit it will still be able to charge local consumers, sign domestic sales contracts, and accept money from them.
