Private Joint Stock Company in Iran
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Iran Company Law (part two): Private Joint Stock Company

Liability of shareholders

  • There are two types of joint stock companies in Iran Commercial Code: 1- Private Joint stock Company. 2- Public Joint stock Company.
  • These companies are Capital-based Company. See Difference between Capital based companies and Partner based companies in Iran Law.
  • There is no uniform structure for joint stock companies. For example in some countries, shareholders of a joint stock company have unlimited liability while in other countries, their liability is limited to the nominal value of shares. See Joint Stock Company.
  • Iran Commercial Code in Article number 1 defines the joint stock company as follow:
  • A joint stock company is a company whose capital is divided into shares and the liability of shareholders is limited to the par value of the shares respectively held by them.
  • As it is obvious from this article in both public and private joint stock company in Iran, liability of shareholders is limited.

Public and Private?

  • What is the difference between public joint stock company and private joint stock company?
  • In private joint stock company in Iran, founders secure company’s capital. In public joint stock company part of the capital can be secured by selling shares to public.
  • In private joint stock company in Iran, founders will secure the whole company’s capital. They should secure the capital because they don’t have to pay it all at first.

Structure

  • A private joint stock company in Iran should have at least 3 shareholders.
  • Private Joint Stock Company cannot advertise in order to sell shares.
  • Advertisement means all kind of publicity including papers and online.
  • Shares in private joint stock company are transferable. Statute of the company can put some limitations on this. For example transfer of shares can be subject to approval of Board of Directors.
  • General meeting of shareholders appoint Board of Directors. Members of this Board should be shareholder.
  • Board of Directors appoints CEO or Managing Director. CEO or Managing Director doesn’t need to be a shareholder.
  • The Managing Director is representative of the company.
  • There are also some rules about competition that we will discuss later.
  • See also Basic Type of Companies in Iran Law and Iran Company Law (part one)
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