Iran - Company Incorporation

Starting a Business in Iran - Iranian Market

Iran is a difficult market for new companies to penetrate, although if done successfully it can be very rewarding. Iran is an important market for goods and services, it has the potential for significant growth driven by the expanding population, wealth of natural resources and the need to modernise and update.

Given that most business is done on a personal basis, face to face, Iranians like to deal with someone with whom they can build up mutual respect. Good interpersonal skills are therefore essential, as well as the technical ability to inspire confidence in the product or service as well as the capacity to make decisions locally.

Local representation

The use of agents is well established in Iran. Business is often conducted on a personal basis and a good agent can be essential in order to make the right contacts and establish an effective presence in the market. Following the Revolution, agents were frowned upon and public sector procurement offices were reluctant to deal with them. However the continued operation of Iranian entrepreneurs as agents has gradually led to a change to the present day position where they are generally accepted.

Setting up in business

The law on establishing a branch office in Iran is unclear. In November 1997, the Iranian Parliament passed a law designed to facilitate the opening of branch offices in Iran. However, to date, the executive orders which outlines what steps are necessary to open a branch office have yet to be published. Until such time as the executive orders are published the old law applies.

The old law on establishing a branch office is something of a Catch 22 situation. It states that a branch office cannot be established unless the foreign company has a contract establishing a business relationship with an Iranian governmental organisation. However, a separate law states that a service contract can only be awarded to a company, which already has an office in Iran. Companies seeking to find their way through this legal jungle have found it time consuming and expensive. The key to success is to have the backing of one of the government ministries, e.g. the Ministry of Industry.

Search and reserve a unique company name

Deposit at least 35% of the subscribed shares in a bank account and obtain a certificate from the bank

Register the company with the Companies Registration Office

Pay the registration tax

Publish a notice of the company formation in the official Gazette and the selected newspaper of general circulation

Take out the officially sealed books of account within 30 days after the date of registration

Pay the share certificate stamp duty within 30 days after the date of registration of the company

Enrol workers in the social security program by open files for all employees before the Iranian Labour Department and obtain a workplace number