startups in Iran legal system
share this

Startups in Iran Legal system

introduction

  • There are so many different definitions on startups. Considering the title, a startup is a company that is in the first stage of its operations. see Startup in Investopedia

  • In this notion any company in early stages of operation is a startup.

  • Still, founders protest that a startup is a culture not delineated by metrics, and that a startup can remain so at all ages and sizes. see What Is A Startup?

  • There is no legal definition of startup in Iran legal system. Case study between startups shows that there is some similarities between startups which can be describe as their elements: 1- Startups, usually do not participate in production. The scope of activities in startups normally is limited to intermediate activities. 2- Startups usually are depended on cyberspace instruments. 3- Startups usually change the course of consuming which directly or indirectly effects on prices.

  • In this notion, Startup is not a company in nature but it is an idea to change the course of: 1- access to products, 2- access to services. They usually operate on cyberspace instruments so it is safe to say that startups are an outcome of digital era.

  • Regarded to above mentioned definition, there are three important legal issues about startups: 1- Structure 2- Operation tools and 3- Protections.

Structure

  • A startup does not need to be in shape of a company. In fact, it is the method of business that determines the structure of a startup. A startup can operate through a solo individual and then take shape of a company. Even if the startup (in notion of an idea) requires participating of more than one person, still it can operate through one or more contract rather than a company. In both of these forms, there might be some legal ambiguities like type and title of contract, distribution of responsibilities, type and title of company, and managing the outcomes and new challenges.

  • In Iran Legal System, there is no special contract for this type of participation so a participation contract with mutual obligation is sufficient for fulfilling the legal problems.

  • If the startup needs to be shaped as a company, parties should choose a form that is suitable for their purposes. See Basic Type of Companies in Iran Law and Iran Company Law (part one)

Operation Tools

  • Startups usually operate through cyberspace instruments but it is not a necessary element of a startup. If a startup operates through physical instruments, the general rules about fair trade are applicable on its activity.

  • If a startup depends on a cyberspace instrument like an application or a website, rules regarded to cyber advertisement and softwares are applicable. In case of computer software see Protection of Computer Software

Protections

  • Protection regarded to startups can be described in three categories:

    • Protection of company rights: in this area, general rules about company law are applicable which give a variety of protection to the patents and company’s property.
    • Protection of business modules or Idea: unfortunately, there is not any clear regulation about protection of the business modules in Iran Laws. In most cases, the business modules or the ideas of a startup are a part of trade secrets and are protectable under this topic.
    • Protection of software: Computer software has its own legal protections see (link) in some cases it also can be protected as a patent.

Concluding Remarks

  • Launching a startup business module mainly depends on market factors but lack of clear legal instruments results in discretion in application and operation of the startup.

  • Because of lack of special legal instrument in Iran legal system about startups, general rules about business activities govern to this type of business.

  • Main legal issues that need due diligence are: 1- individual operation or company operation. See Methods of Business 2- type and condition of contracts in each case 3- condition for protection of the idea as a trade secret 4- registration of software either as a software or an invention.

share this

Leave a reply