Investment in Iran stock market
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Investment in stock market (part three)

  • Privileges and Assurances

    • Although there are some privileges and assurances for investment in Iran Stock Exchange market but in compare to other types of investment, these privileges are not protective and attractive enough. It seems that regulations in this field are not for promoting foreign investment but just for regulating it. In the next five years we should witness some changes and improved protections in this area (see: Iran Development Goals)

  • Article No. 10 of this regulation (see: Investment in stock market (part one)) is regarded to this topic. There is some restriction for foreigners to open bank account in Iranian banks, but legal or natural foreigners have permission for investment in Iran Stock Exchange market can open bank account in Iran. In an ordinary way, opening a bank account in Iran requires residence permission or work permission, and now, the third way is investment in Iran Stock Exchange market.

    • Bringing foreign money must be done through Iranian banks;

    • This money must be used for investment and other related banking operations.

  • An investor, who brings money for investment, can transfer this money and its profit to a bank account outside of Iran. Transferring the capital and its profit is providing upon other Iran Acts about foreign exchanges.

  • There are complicated rules for changing foreign money into Rial. In fact, this is a matter related to Iran macroeconomic system. In Iran macroeconomic there are two rules for determining exchange rate; free market exchange rate, and governmental exchange rate.

  • When a permitted investor want to transfer its capital or its profit, the exchange rate comes to matter. In general, exchange rate for transferring of money to outside of Iran is free market exchange rate. Free market exchange rate usually is higher than governmental exchange rate and it means that foreign investor must pay more Rial for each Dollar.

  • If an investor want to transfer money, must notify to the central bank because foreign exchange must be supplied by the Central Bank. In special circumstances, central bank can decide that this money (original capital or its profit) must be paid through installments. If central bank decides so, each of these installments must be in equal sum and must be liquidate in one year.

  • In hierarchy of legal materials and lawmaking process, a Regulation usually is the final and applicable part of the Act. In order to apply this regulation, “High Commission of Stock Exchange Market” adopted a guideline. Regarding to the transfer of money from Iran, this guideline has slated an equation;

    • Transferable money=
      • In this equation, “B” is the value of stocks owned by foreign investor at 365 days before date of request for transfer. The price of stock is the final price of the day of submitting the request. “Nip” is the number of stocks that foreign investor has bought in 365 days conduced to the date of request in purchase price. ” ” is the number of days during buying stocks and request for transfer. “N is” is the number of sold stocks during the 365 days conduce to the date of request in sale price. ” ” is the number of days between the date of selling the stocks and date of request for transfer. “Pi” is the final price of stocks in the date of request for transfer. “n” is the number of stocks had been bought by investor in 365 days leading to the date of request for transfer. “DIV” is the sum of profit that investor earned through its investment in stock exchange market in 365 days leading to date of request for transfer. “∑” means plus.

    • Although regulation did not mention this, but in guideline, confidentiality is one of important duties of any organization that is concern with foreign investment. Any information and documents taken from foreign investor is confidential. But there are some authorities and situations that confidentiality is not applied; related staffs, lawyers, inspectors, and auditors are excepted authorities and excepted situations are written consent, mass publishing (in the way that the single investor and its information could not be detected or tracked), and in case of inquiry of judicial power or other authorized organization.

    • Any information and documents that “Iran Stock Exchange Organization” receives has some limitations in use. These information and documents can be used in order to; first, for investigating complaints against activities of investor, second, inspecting potential transgress, and providing report for decision making or publish.

    • If an investor failed to submit related information or documents to the regarded authorities, the permission for investment shall be suspended or revoked. During this period, foreign investor cannot buy new stocks and just can sell owned stocks.

  • See Investment in stock market (part one)

  • See Investment in stock market (part two)

 

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