Basic notions of companies in Iran Law
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Introduction to different types of companies in Iran law

  • There are eight types of companies in Iran legal system; 1- Public Joint Stock Company 2- Private Joint Stock Company 3- Limited Liability Company 4- General Company 5- Joint Mixed Company 6- Non-joint Mixed Company 7- Relative Company 8- Cooperative Company.

  • For more details about Limited Liability Company, General Company, and Mixed Company See Iran Company Law (part one)
  • All companies have legal personality. Legal personalities have all right and duties of a natural person except those right and duties particularly belongs to natural persons based on the nature like paternity and etcetera. The domicile of a legal person is the place of its head office. Legal persons have the nationality of the country of their domicile.

  • A company consists of two elements: 1- partners 2- capital. Based on these elements, companies in Iran law have two general categories: 1- partner based companies and 2- capital based companies.

1- Partner based companies

General Company, Relative Company, and Non-joint Mixed Company are partner based companies.  A partner based company is a company in which personality of the partners plays a key role in the company.

1-1- General rules

A- The company has a memorandum and an agreement of partnership.

B- Partners can contribute in the company’s capital by non-cash contributions.

C- Partners can contribute in the company’s capital by non-cash contributions.

D- Partners have liability in company’s debt. This liability is as follow:

D-1- In general companies, partners have unlimited liability. In this company If company’s assets are not sufficient to meet its debts, each partner is liable for the payment of all the debts of the company.
D-2- In relative companies, If the assets of company are not sufficient to meet its liabilities, each of the partners is responsible in proportion to his or her contribution to company’s capital.
D-3- A Non-joint Mixed Company consists of two type of partners: 1- partners with unlimited liability like partners in general company 2- partners with limited liability like partners in limited liability company.

E- In partner based companies there is a relationship between bankruptcy of partners and bankruptcy of the company.

2- Capital based companies

All other types of companies Other than partner based companies are capital based companies.

2-1- General rules

A- These companies consist of shareholders not partners.

B- Shareholders are free to transfer their shares unless the statute of the company declares otherwise. There are two exceptions: 1- in limited liability company, shares cannot be transferred to third parties without the consent of a majority of partners, representing at least three quarters of the company’s capital and in this case, transfer has to be done only by deed. 2- In a public joint stock company, the transfer of shares cannot be subject to the approval of either the board of directors or general meeting of the company.

C- Contribution of shareholders in these companies is only in cash except for limited liability companies.

D- Liability of shareholders in company’s debts is limited to their shares.

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