Business entities in Iran
Foreign entrepreneurs incorporating in Iran commonly prefer the Private Joint Stock Company. However, there will be other business entities available to our Clients namely, the LLC, the Public Joint Stock Company, the Branch office and the Representative office. Healy Consultants will assist our Clients with choosing the optimum Iran business setup to suit their needs.
Private joint stock company (Sherkat Sahami Khass)
- This business entity is most commonly used by foreign entrepreneurs intending to set up business in Iran. For successful registration, at least 2 directors and 3 shareholders must be appointed, who can be of any nationality. Also, the minimum paid up share capital required will be only €40;
- While our Clients will be required to submit financial statements to the Government annually, they will be exempted from getting an audit if i) their annual revenue is lower than €1m or ii) total assets are lower than €2m.
Limited liability company (Sherkat ba Masouliyat Mahdoud)
- An Iran LLC can be setup with 2 shareholders and 1 director of any nationality. Furthermore, the minimum paid up share capital required will be only €1. This business entity is mostly incorporated for the purpose of opening trading companies.
Public joint stock company (Sherkat Sahami Am)
- This Iran business setup will be recommended if our Client wishes to raise public capital. For successful registration, at least 2 directors and 5 shareholders of any nationality will be required. Furthermore, minimum initial capital required will be €200;
- Every public company will issue at least 20% of its shares to the general public. Also, it will be mandatory to list the company on the national stock exchange. A public company must submit audited financial statements to the Government annually.
In accordance with the Iranian law, the branch office can be established without the need for Iranian participation. The branch is simply an Iranian-registered extension of the company setting up the branch, and thus the shareholders and directors are the same and do not require re-appointment. However, a resident legal representative must be appointed in Iran to accept service of legal proceedings and other official communications.
Although a branch office can only pursue business activities within the scope defined by the parent company, it will still be allowed to invoice local customers, sign local sales contracts and receive income from customers.
Table of comparison between different Iran entities
|Summary at a Glance||Private Joint Stock Company||LLC||Public Joint Stock Company||Branch|
|Also known as:||Sherkat Sahami Khass||Sherkat ba Masouliyat Mahdoud||Sherkat Sahami Am||N/A|
|How long to set the company up?||15 weeks||8 weeks||20 weeks||18 weeks|
|How long to open company bank account?||4 weeks||5 weeks||4 weeks||4 weeks|
|Issued share capital required||€40||€1||€200||€0|
|Is doing business in Iran permitted?||Yes||Yes||Yes||Yes|
|Allowed to sign sales contracts with Iranian Clients?||Yes||Yes||Yes||Yes|
|Allowed to invoice Iranian Clients?||Yes||Yes||Yes||Yes|
|Corporate tax payable in Iran||25%||25%||25%||25%|
|Corporate bank account||Bank Melli Iran||Bank Sepah||Bank Saderat Iran||Bank Sepah|
|Can rent office in Iran?||Yes||Yes||Yes||Yes|
|Tenancy agreement required before incorporation?||No||No||No||No|
|Allowed to import raw materials?||Yes||Yes||Yes||Yes|
|Allowed to export goods?||Yes||Yes||Yes||Yes|
|Can the entity hire expatriate staff in Iran?||Yes||Yes||Yes||Yes|
|Do you visit Iran for company incorporation?||No||No||No||No|
|Resident director required?||No||No||No||No|
|Resident shareholder required?||No||No||No||No|
|Minimum number of directors||2||1||2||0|
|Minimum number of shareholders||3||2||5||0|
|Iran resident company representative required?||No||No||No||Yes|
|Individual shareholders allowed?||Yes||Yes||Yes||No|
|Corporate shareholders allowed?||Yes||Yes||Yes||Yes|
|Corporate director(s) allowed?||No||No||No||No|
|Public register of shareholders and directors||Yes||Yes||Yes||Yes|
|Statutory audit required?||Yes||Yes||Yes||Yes|
|Annual tax return to be submitted?||Yes||Yes||Yes||Yes|
|Total business setup costs in Year 1||€26,020||€24,060||€21,740||€25,110|
|Subsequent annual costs (incl. accounting & tax)||€8,230||€7,990||€4,250||€5,940|