From among the available companies recognized by the Iranian regulations that local or foreign applicants may proceed to establish in Iran, limited liability company (LLC) and private joint-stock company (PJSC) are the ones that have been established most in Iran.
Within the LLC and PJSC there are several decision-making bodies that enjoy different authorities for making a decision regarding the company activities. Moreover, it should be noted that based on the relevant decision-making body or the measure subject to decision, a specific quorum may be required in order that such decision considered to be valid.
For example, there are three assemblies of shareholders in PJSC:
- The general assembly of founders (not obligatory to be formed in PJSC);
- Ordinary General Assembly of Shareholders;
- Extraordinary General Assembly of Shareholders.
The authority to change the statute, change in the share capital and liquidation is exclusively vested in the extraordinary general assembly of shareholders. While matters not within the exclusive authority of the extraordinary general assembly are to be decided by the ordinary general assembly.
In LLC, the general assembly of partners can agree on issues relating to the company, change of statute, and liquidation.
The following tables indicate the differences and similarities between the Iranian LLC and PJSC in respect to the authority of their decision making bodies and the required quorum for making such decision according to the relevant regulations.
A) Authority and Duty of the Company Deciding Bodies:
| Type of Company | Board of Directors/ director | Ordinary General Assembly/ Shareholders | Extraordinary General Assembly |
| Private Joint Stock Company | At least every six months submit a summary of company assets and debts to the inspectors.
The general director has the right to represent the company sign on behalf of the company. Board of directors can appoint General director. Board of directors appoints people who can sign documents. The statute can specify the authorities required for management such as : Establishment of branches and rep. office, opening bank accounts, passing executive directives, register company trademarks, take out loans and etc. |
Matters not within the exclusive authority of the extraordinary general assembly are to be decided by the ordinary general assembly and requires a simple majority.
E.g.: choice of directors, passing the company balance. |
Exclusive: to change the statute, change in the share capital and liquidation. Requires a two-thirds majority. |
| Limited Liability company | Manage and represent the company.
Board of directors appoints people who can sign documents, General director and chair of the board. |
Shareholders can agree on issues relating to the company and liquidation. |
Change of Statute, Transference of Shares. Requires a ¾ majority. |
B) Majority Requirements based on Deciding Authority:
- General Majority Requirements:
|
Decisions of …
|
LLC | PJS |
|
Board of Directors
|
Numeric majority | Numeric majority |
|
Ordinary general assembly
|
Numeric majority+ share majority | A simple majority vote( shares) |
|
Extra-ordinary general assembly
|
Three-quarters majority | Two-thirds majority |
- Majority Requirements for Certain Measures:
| Measure | Majority Requirement LLC | Majority Requirement PJC |
| Change of the Articles | Numeric majority + three-quarters of shares (combined).
Statute of the company can agree otherwise. |
Two-thirds of votes in the extraordinary general assembly. |
| Increase of share capital
|
Increase in shares requires consensus between all shareholders | Two-thirds of votes in the extraordinary general assembly. |
| decrease of share capital | decrease of shares requires numeric+ share majority.
The statute can agree otherwise |
Two-thirds of votes in the extraordinary general assembly. |
| Liquidation of Company | The decision of shareholders who hold more than 50 percent of shares.
|
A two-thirds majority in the extraordinary general assembly. |
| Sale of shares | Numeric majority+ Three-quarters of shares; parties cannot agree otherwise.
|
No limitations in principal. However, the statute can make it conditional upon approval of the board or the assembly. |
| Distribution of profit | The statute decides on the distribution of profit; absent an agreement, it is done according to the proportion of shares held by each shareholder.
|
Profit must be distributed based on shares. The decision is made in the Ordinary General Assembly and according to a simple majority vote. |
Bayan Emrooz Law Firm renders services to foreign and Iranian natural and legal persons in the field of corporate law, including consulting and registration of a company, branch and representative office. Having an experienced and specialized legal staff, Bayan Emrooz is ready to provide the needed legal services in respect to investment and formation of company in Iran.
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