Iran provides several business forms for investors, of which the main forms include:

Company (Limited Liability)
Joint Stock Company (Private or Public)
Partnership (General or Limited or Joint Stock or Proportional Liability)
Foreign Business (Subsidiary or Branch or Representative Office)

Company

A Limited Liability Company ('LLC') is generally formed as trading companies. LLCs provide more stringent voting requirements and better protection for minority shareholder’s interests than JSCs. Joint Stock Company ('JSC') is the most common type of business form used by foreign enterprises for setting up business in Iran. JSC can be formed as private JSC or public JSC.

The key aspects of Limited Liability Company (Sherkat ba Masouliyat Mahdoud) include:

Shareholders' liability is limited to their contribution in the company
Minimum capital requirement is EUR 1
Minimum 2 shareholders (individual or a company) and 1 director (individual), of any nationality, are required
It is mandatory to include 'Limited Liability' in the company name otherwise, the company is considered as a general partnership

The key aspects of Private Joint Stock Company (Sherkat Sahami Khass) include:

Shareholders' liability is limited to their contribution in the company
Minimum capital requirement is IRR 1million
Minimum 3 shareholders (individual or a company) and 2 directors (individual), of any nationality, are required
Audit is mandatory, if annual revenue is higher than EUR 1 million or if the value of the total asset is higher than EUR 2 million

The key aspects of Public Joint Stock Company (Sherkat Sahami Am) include:

Shareholders' liability is limited to their contribution in the company
Minimum capital requirement is IRR 5 million
Minimum 3 shareholders (individual or a company) and 2 directors (individual), of any nationality, are required
Minimum 35% of the company’s shares are required to be issued to the public
Mandatory to list the company on the national stock exchange
Mandatory to audit financial statements annually and submit to the government

Partnership

Partnerships can be formed as a general partnership, limited partnership, joint stock partnership or a proportional liability partnership.

The key aspects of a General Partnership (Sherkat Tazamoni) include:

Formed by two or more individuals
All partners are jointly and several liable for firm’s liabilities
It is mandatory to include ‘general partnership’ in the firm name

The key aspects of Limited Partnership (Sherkat Mokhtalet Gheyr Sahami) include:

A limited partnership is formed for the purpose of trading which consists of one or more general partners and one or more limited partners
Formed under a common title and not required to issue shares
General partners are liable for all the debts and obligations of the firm, whereas, the limited partners are liable to the extent of their capital contribution in the firm
Only general partners manage the partnership firm
Mandatory to include ‘limited partnership’ and name of at least one of the general partners in the firm name

The key aspects of Joint Stock Partnership (Sherkat Mokhtalet Sahami) include:

A joint stock partnership consists of certain shareholding partners and one or more general partners
The shareholding partners’ capital is represented by shares or bonds of equal nominal value and their responsibility is limited to the extent of their capital contribution in the partnership firm
General partners’ capital is not represented by shares and has unlimited liability towards the firm
The management of the firm is in the hands of the general partners

The key aspects of Proportional Liability Partnership (Sherkat Nesbi) include:

A proportional liability partnership is formed for trading purposes with the liability of each partner being in proportion to the amount of capital subscribed by them
Partners joining a proportional liability partnership after its formation is liable for their proportion of all outstanding debts and liabilities, regardless of when they joined

Foreign Business (Subsidiary, Branch, Representative Office)

Foreign companies can conduct their operations in Iran through the constitution of a Subsidiary or a Branch Office or a Representative Office. A Subsidiary can be formed as an LLC or JSC with foreign holding, subject to certain restrictions.

A Branch of a foreign entity is not considered as a separate legal entity in Iran. Its operations are pre-defined and controlled by the foreign parent entity. However, it is permitted to conduct business activities in the country such as executing the works under a contract entered into by and between the foreign parent entity outside Iran and a client in Iran. Branch Office is required to appoint at least 1 resident legal representative on behalf of the foreign parent entity in Iran.

Representative Offices, generally, are permitted to engage in activities such as representing their foreign parent entity before the clients, selling their products in Iran or carrying out after-sales services and negotiation of the terms of agreements to be concluded by and between the foreign parent entity and their clients in Iran.

Further information on the general investment, tax and regulatory regime about the country is available at the following external references:

“Doing Business” report from World Bank - click here
Reports and publications from OECD - click here
Reports and publications from IMF - click here
Report and news from Tax Justice Network - click here
Taxation overview in Iran - click here
Invest in Iran - click here
Free trade zone in Iran - click here

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