Company Formation in Iran
Updated on Sunday 18th February 2024
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Opening a company in Iran can have many benefits. Investors have several options when referring to the types of companies to be set up here, and our team can provide in-depth information on these legal entities, as well as on the investment opportunities available here.
Iran is the second largest country in the Middle East, has a rather large economy and it is situated second in the world when it comes to natural gas reserves. Thus, many foreign investors think about setting up a company in Iran.
If you plan to invest in this country, our consultants can offer information on the main economic sectors that can be of interest for foreign investors and our team can also present the conditions foreigners need to comply with in order to initiate the process of company formation in Iran.
Types of business entities in Iran
As a foreign entrepreneur who wants to invest in Iran, you can choose from a few types of business entities such as the limited liability company, the public joint stock company, the representative office or the branch office.
The type of business entity that is usually preferred by investors is the private joint stock company. In order to successfully register this type of company, you need to have a minimum of two directors and three shareholders. It does not matter if they are Iranian citizens or not. The minimum share capital that must be paid is approximately $24 (IRR 1 million).
For the registration of this company, the following must taken into consideration:
- the company can be established with 100% foreign ownership, with the exception of certain business activities where restrictions can apply;
- the main rule of law regulating the incorporation and the governing of this company type is the Commercial Code of Iran 1932 (amended in 1969);
- the company will be liable for the payment of various taxes and it must address the State Tax Affairs Organization for tax registration, in accordance with the Article 177 of the Direct Taxation Act of Iran;
- the company must also conduct value added tax registration formalities and must obtain its accounting documents, including the company seal, in a period of maximum 30 days since the incorporation.
Documents necessary for the incorporation of the Iranian joint stock company
The process of company formation in Iran for a joint stock company implies that the investors have to prepare a set of documents. Some of them have to be submitted to the Company Registration Office, the institution that will issue the certificate of registration.
After having this document, the company can continue the incorporation process with other competent institutions, such as those who handle taxation matters. For the Company Registration Office, investors have to prepare their identity documents, when the investors are natural persons, or the corporate documents, when the investors are legal entity.
An important document to submit is the company’s statutory documents – the articles of association. This document must be prepared with the assistance of specialists in company formation in Iran.
Another type of business entity found to be convenient is the private limited liability company, that requires at least two directors and three shareholders. Again, their nationality has no importance. One of the advantages is that the required paid up share capital is minimum $1 and that the registration process will take approximately three weeks.
Opening a company in Iran
There are a few simple steps to be followed if a foreign investor wants to incorporate a company in Iran (in case of the private joint stock company). First of all, you have to get a certificate from the authorities in Iran proving that you do not have a criminal record.
Secondly, you will have to choose a suitable name for the company, one that has not already been used, and then register it at the Companies Registration Office and pay a fee for that process.
You also need to submit some specific documents in order to register a company in Iran, such as a bank record stating that you have paid minimum 35% of the capital share and a written document where the directors state that they accept their position within the firm.
Then you have to place an announcement of the registration of the company in a well-known newspaper. This process can usually take up to 30 days to be completed, but meanwhile the business can continue with a stamped copy you receive from the official gazette.
Furthermore, you will have to pay the stamp duty in the course of not more than 60 days after the company has been registered. Lastly, you have to go to the Labor Department of Iran and enroll your workers in the social security program and thus obtain a workplace number.
As Iran offers so many advantages, many foreign entrepreneurs choose the country for the fact that the taxes for workforce are low, the company's shares can be 100% foreign-owned and the registering process can be quick and cheap, as well as the rental or the running of the business itself.
Do foreign companies need an Iranian business address?
Yes, regardless if you open a company in Iran as a local citizen or if your company is set up with 100% foreign ownership, it is mandatory to have a registered address located in Iran, as this is a part of the incorporation process.
What are the requirements for the company’s trading name?
Just like in other countries, a newly founded company must have a suitable trading name, that is selected following the legislation of the country. With regards to Iran, there are several matters to take into account when deciding on a company name, as follows:
- the company name must be in Farsi (Latin forms of the name are not accepted);
- the name can’t be contradicting with the country’s culture;
- it must mean something in the Farsi language;
- it must be unique, therefore a new company can’t use the name of a company that has already been registered.
What other company types are available in Iran?
There are more options for those who want to open a company in Iran. They can also set up partnerships (general partnerships and mixed partnerships) and a cooperative company. Our team can present the characteristics of these company types and when it is best to select them for business purposes.
We also invite you to request in-depth details from our team on the taxation system applicable to these company types as well as of the others presented in this article. You can also rely on us for assistance on the accounting obligations imposed to each business form.
Please contact us for more information. Our specialists can offer you support with the procedures. We also invite you to contact our team if you need information on how to open an offshore bank account. If you want to start an offshore business, we also provide offshore company formation services, therefore you can address us for specialized assistance.