Published by Iran Chamber of Commerce, Industries and Mines Centre of Economic Research and Analysis, 1994 Word Count: 4854
The Ministry of Economic Affairs and Finance, had announced the complete Regulations for Foreign investments in the Islamic Republic of Iran.
The following are some of the topics explained in this collection:
1- The law for Attraction and protection of Foreign investments of 1955 (The Law);
2- The by - laws of the law;
3- Investment procedure;
4- The special questionnaire to be filled by the investor(s).
Organization for Investment, Economic and Technical
Assistance of Iran (OIETAI) has arranged the procedure in such a way that all the applications, before any commitment of either side, must go through the supervisory board for attraction and protection of foreign investments, and in case of approval of the Board they may proceed further for obtaining the decree by the Council of Ministers and for implementation of project(s).
Iran Chamber of Commerce, Industries and Mines has decided to publish the text in English for interested parties, with the hope that it shall serve the purpose. Iran Chamber of Commerce, Industries and Mines
Foreign Investment in the Islamic Republic of Iran
Foreign direct investment in Iran is allowed only through participation of foreign persons in the equity capital of existing and new Iranian companies. Maximum foreign participation in the joint companies is 49% however, this proportion will be determined on merits of each project. The Law for the Attraction and protection of Foreign investments of 1995 (The Law) provides the legal framework for the approval of all foreign investments in Iran.
In accordance with Article I of the Law, foreign natural or legal persons importing capital, either in cash or in the form of machinery, etc. into Iran with the permission of the Government of Iran for the purpose of development and productive activities in industry, mining, agriculture and transportation shall enjoy the facilities provided in the Law. Such facilities shall be granted to those investors who obtain the required approval. In general, the facilities referred to among other things, are the annual transfer of net profits in the currency of the original investment, repatriation of the original capital and the accrued profits derived there from and proceeds of the sale of capital or shares and the remaining portion of capital in the event of liquidation Government guarantee of fair compensation in the event of expropriation pursuant to law, all at the exchange rate of the Central Bank’s selling rate on the day of actual transfer, and the legal facilities accorded to the domestic investors.
The Procedure to be followed by prospective foreign investor to get his investment approved involves different stages:
1-Finding a Suitable Iranian partner
The foreign investor may approach in the following manners:
By referring to or direct correspondence with the relevant Ministries. The relevant Ministry, with regard to its sanctioned projects, is in a position to introduce holders of "Agreement in principle" issued by the Ministry/ and or introduce potential Iranian investors interested to establish industrial firms, to the foreign side:
By referring to or direct correspondence with different banks, financial institutions and or Iran Chamber of Commerce, Industries and Mines:
By referring to or direct correspondence with Organization for investment, Economic and Technical Assistance of Iran (O.I.E.T.A.I) Foreign investment Dept. Ministry of Economic Affairs and Finance:
By direct correspondence with governmental organizations and companies and or through the press.
2- obtaining the "Agreement in principle" As the second step in initiating the investment process, the local partner (together with the foreign investor) should apply to the concerned Ministry for sanctioning the industrial project. The application should be supported by the following:
a) The special prescribed questionnaire for Setting up an industry, and
b) Copy of project feasibility study.
Should the concerned Ministry, after necessary investigation and examination, be in agreement in principle with the proposed industry, it will issue and "Agreement in principle." Based on the above agreement the investor(s) is (are) permitted to start practical measures for construction of plant, import of machinery and arrangement for infrastructural utilities.
3- Application for participation
Simultaneous with 2 above or afterwards, the foreign investor may apply to O.I.E.T.A.I for participation in the realization of the sanctioned project.
His application should be submitted along with the following documents:
a) Duly filled in "Application for import of Capital(1)".
b) Copy of project feasibility study.
c) Copies of draft Joint Venture Agreement, and Articles of Association of the Joint Company.
d) Copies of other draft Agreements, if any, in case the foreign investor is the supplier of services and know-how etc.
e) Power of Attorney given to person (s) for signing the application and other contractual texts confirmed by the Islamic Republic Consulate in the county of investor.
f) Copies of Articles of Association and financial reports of the foreign investor including balance sheet and profit and loss account of at least last three years.
g) Other information which is deemed to be helpful.
4- Review of Application by Supervisory Board for Attraction and Protection of Foreign Investments (The Board)
Foreign Investment Dept. (formerly CAPFI) , after necessary coordination with the relevant Ministries and examination of the Application and supporting documents, prepares a comprehensive report and submits it to the Board for a decision. Should the Application meet country’s overall interests, the Board will present its positive decision through Minister of Economic Affairs and Finance for approval and issue of a Decree.
5- Issuance of Decree of Council of Ministers
The Decree so issued is the permission that officially authorizes the foreign investor to begin operations by importing the required capital into the country. Once officially registered, the imported capital shall be covered by The Law.
6- Formation of the Joint Company
Upon announcement of the Board’s positive decision or after issuance of the Decree, the local and foreign investors may form joint company for commencement of operations.
The above procedure must exactly be followed in all new investments. The process of foreign participation in existing Iranian companies of development plans supply of technology and or increasing productivity is limited to stages 3,4 and 5 above.
Application for the Import of Capital
A- SPECIFICATIONS OF THE APPLICANT
1. Full name of the applicant (person, firm, etc.):
2. legal domicile of the applicant (full address):
3. Countries of similar activities of the applicant:
4. References (foreign and local banks. industrial or business personalities):
B- SPECIFICATIONS OF THE FIRM IN IRAN
5- Particulars of the company which is to use the imported capital:
a- Name of the proposed company:
2- To be established
b- Address: Tel:
c- Legal status:
d- Capital: Registered: Rls.
Paid up : Rls.
e- registration No. Date:
6. Names and addresses of Iranian (persons, or firms):
7. Type of proposed or exiting activities in Iran:
C. SUBJECT OF THE PROJECT
8. State whether the project is:
9. Exact location of the plant and its distance from the centre of Ostan:
10. Manufactured items with their quantity: Items Unit Maximum capacity of the factory for each item
11. Proposed working schedule of the factory:
a- Number of shifts:
b- Number of days/Year:
12. Number of foreign technicians, proposed to be employed and the schedule of their utilization with details for the training of Iranian personnel.
13. Proposed total number of local employees.
a- Total investment Rls.
b- Local investment Rls.
c- Foreign investment Rls.
d- Country of investment
16. Type of foreign investment in the form of:
a- Plant and machinery: Rls.
b- Transfer of cash: Rls.
c- Know - How, technical assistance Rls.
d- Loan Rls.
Rate of interest Period
Terms of payment and sources:
e- Capital and loan ratio:
(a) Total Project cost:
Machinery and equipment Rls.
Tools and Spares Rls.
(b) Fixed assets: Rls.
(c) Working capital Rls.
18. Annual repuirements of raw materials:
Imported Indigenous Items
Quantity Value Quantity
Value (1,000 Rls) (1,000 Rls.)
Unit Volume Unit Volume
19- Estimated annual wages and salaries (excluding those of foreign technicians). Rls.
20- annual consumption of power and fuel: Rls.
21-Technical, if any: and the period: Rls.
22- Know-how, if any: and the period Rls.
23- Will the Company be managed by a joint board of directors? Yes No
24- On what basis? Please give full details
G- FOREIGN EXCHANGE SAVING
25- Savings, if the industry is established: Rls.
(a) Annual recurring foreign exchange Rls. requirements.
I- Import of raw materials Rls.
II- Spare parts: Rls.
III- Payments: technical, know-how, interest, salaries etc; Rls.
IV- Approximate remittance of profits: Rls.
(b) Non-recurring foreign exchange expenditure: Rls.
I- Import of machinery: Rls.
II- Technical and consultancy services: Rls.
III- Erection losses: Rls.
IV- Others: Rls.
(c) Total C and F value of annual production, if the products are imported.
(d) Estimated ex-factory price of finished product:
26- Foreign exchange return through export:
(a) Estimated FOB value of exports per annum Rls.
(b) Export prospects (indicate likely countries):
27- Salient Features of Schemes:
Please enclose complete project report as well as a complete list of machinery and equipment showing their capacities.
Having studied the Law and Regulations for the Attraction and protection of Foreign Investments, I have filled and completed the abroad application and hereby apply for approval.