Iranian Legal Newsletter

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Iran Eases Start of Business Activities
J. Nouraei & M. Mostafavi Law Offices -19 February 2021- In an unprecedented act, Iran is now allowing the start of business activities without prior procurement of statutory permits and licenses. The move seems to have been adopted for revitalization of a domestic economy in recession and burdened by high inflation, caused primarily by US sanctions and the COVID-19 pandemic.

Previously, obtaining permits for starting a new business in Iran, was always a lengthy and complicated process riddled by the red-type of bureaucracy and stagnated, in some cases, by corruption.

The State Administrative and Recruitment Organization, in its 5-article decree No.390825 dated 20/11/1399 (8 February 2021), signed by its chief, President Hassan Rouhani, declared that the applicants for launching a business do not need to first obtain the related permits, provided that the businesspersons undertake in writing that following commencement of their activity, they would comply with the relevant laws, regulations, rules and standards. Not observing these obligations during the course of their undertaking, may bring penalties for the wrongdoers as the case may be.

Important businesses in the area of security, medical treatment, and other specialized activities are excluded from the Decree.

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Decree of the Iran Council of Ministers on Reaching Conciliation with Survivors of the Victims of Ukrainian Plane Crash
J.Nouraei & M.Mostafavi Law Offices -19 January 2021- Iran has agreed to a compromise with the survivors of the victims of Ukrainian airliner Flight No. 752, shot down by missile fire on 18/10 /1398(8 January 2020). Notwithstanding, the decree keeps the door open for the survivors to file criminal cases.

Hereunder is our unofficial translation of the decree published in Farsi in the Official Gazette No. 22091, dated 14 January 2021.

Board of the Government
Approving Authority: Council of Ministers
Number of the Special Issue: 1360

Decree Regarding Conciliation with the Holders of Possible and Conceivable Rights of the Survivors of the Victims of the Ukrainian Plane Crash Incident (Flight No. 752 -8 January 2020)

No. 118136/T58341H
16/10/1399 (5 January 2021)

Ministry of Roads and Urban Development; Ministry of Foreign Affairs; Ministry of Economic Affairs and Finance; Ministry of Defense and Armed Forces Logistics; Ministry of Justice; National Plan and Budget Organization; Legal Deputy of the President; Central Bank of the Islamic Republic of Iran.

The Council of Ministers in its session of 10/10/1399 (30 December 2020), while paying tribute to the souls of the victims of the Ukrainian plane accident and expressing sympathy again with their survivors, on the recommendation of the Legal Deputy of the President and in accordance with Articles 138 and 139 of the Constitution of the Islamic Republic of Iran, empowered the Ministry of Roads and Urban Development to embark on reaching a mutual conciliation agreement with the holders of probable and conceivable rights of the survivors of the victims of the crash of the Ukrainian plane (Flight No. 752 -8 January 2020) and other holders of probable rights related to the accident, as follows:

1-The Ministry of Roads and Urban Development is permitted and commissioned with respect to all the disputes and claims related to the crash of the Ukrainian plane (Flight No. 752 -8 January 2020) to reach conciliation with all the parties to the said disputes and claims. Voluntary payment for damages to survivors of the deceased persons of the mentioned accident are to be paid through the credits approved by the Supreme Leader on 7/10/1399 (27 December 2020).

2. The subject of conciliation foreseen in Clause (1) of this decree and the damages payable to the survivors of the victims of the incident (with regard to the deceased Iranian nationals on the basis of the law of Iran and with regard to the deceased foreign nationals on the basis of the law applicable to them), by taking into consideration the international customs and practice and compensating any damages related to each of the deceased, shall be determined at the amount of $150,000 or its Euro equivalent (for the passenger and his/her baggage).
Note 1: Payment of damages exceeding the above amount is limited only to the value of the assets or items declared to the customs officials at the time of the flight.
Note 2: The assessment prescribed in this clause is only applicable to the accident subject of this decree and in no other cases can it be invoked or applied.

3. Arrangements, the executive method of conciliation and payment of damages, shall be in line with a method of action to be drafted according to the agreement of the Legal Deputy of the President and the ministries of Roads and Urban Development, Foreign Affairs and Economic Affairs and Finance and, if needed, with cooperation of the Judiciary Power (Judicial Organization of the Armed Forces) and implemented by the Ministry of Roads and Urban Development.

4. In view of the foreign nationality of some parties to the conciliation, for concluding and execution of conciliation agreements with them, the required permits, as the case may be, shall be obtained from the competent legal authorities.

5. The conciliation stipulated in this decree shall govern the damage caused by the plane crash accident and does not negate the right to pursue the criminal aspect of the matter through the competent judicial authority under the law.

First Vice President
Eshaq Jahangiri

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Trial Execution of VAT Legislation Extended for Another Year
J.Nouraei & M.Mostafavi Law Offices -29 December 2020-Tehran-In line with Article 2 of the Civil Code of Iran, according to which the legislation of the Iranian Majlis is enacted after 15 days from the date of its publication in the Official Gazette, the Law of Extension of the Trial Execution of the Value-added Tax Act came into effect on 23 December 2020.

The Majlis in the said measure extended the trial execution period of the VAT Act, passed in spring 2008, up to 22 October 2021. The applicable amount of the Iranian VAT is currently 9% of transacted goods and services. Exclusions have been foreseen in the Act.

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Iran to Tackle FATF Problem for the Second Time
J.Nouraei & M.Mostafavi Law Offices -28 December 2020-Tehran- In light of the likely re-entry of the USA to the multi-party nuclear deal with Iran (JCPOA), committed to by US President-Elect Joe Biden, Iran is keen to wipe out hurdles of any kind and smooth global banking transactions to ease business deals with the eventual lifting of the present sanctions.

The sanctions were imposed on Iran by the outgoing President Donald Trump.  Accordingly, Iran is trying to be removed from the black list of the Financial Action Task Force (FATF), an intergovernmental anti-money laundering (AML) and counter-terrorist financing (CFT) body. To achieve this goal, bolstered with the agreement of the Grand Leader of the Islamic Republic of Iran, Ayatollah Ali Khamenei, the Expediency Council has been delegated the task of retackling the Iranian parliament legislation already ratified and in line with accepting the international standards of FATF.

The Expediency Council, as stipulated in the Iranian Constitution, is responsible for settling differences and disagreements arisen in relation to the Iranian parliament legislations. It was following the Expediency Council’s initial opposition to the aforesaid legislation, that FATF blacklisted Iran in February 2020.

According to Seyyed Mohamad Sadr, a member of the Expediency Council, “Considering the current conditions of the country and the effects of Iran being blacklisted, it can reasonably be foreseen that there would be fewer opposing voices in this round of debates in the Council’’

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Conversion of Companies allowed in Iran, not Yet Executable
J.Nouraei & M.Mostafavi Law Offices -8 December 2020- Tehran – After years of prohibiting the conversion of commercial companies into one another, Iran has decided to lift the ban. In our contact today with the Companies Registry we realized that the new regulations in this respect are being processed and will be executed in the near future. The conversion of private joint stock companies to public joint stock companies, foreseen in Articles 277 to 283 of the Amendment to the Commercial Code, remains possible as has previously been the case.

The seven companies referred to in Article 20 of the Commercial Code are: 1. Joint Stock Company (in two private and public forms) 2. Limited Liability Company 3. General Partnership 4. Limited Partnership 5. Joint Stock Partnership 6. Proportional Liability Partnership 7. Producers and Consumers Cooperatives.

A look at the background of the aforesaid development indicates that the Council of Ministers in its decree No. H57048T/88919 Dated 1398/07/15 (7 October 2019) added the following text as Article 36 to the Executive Procedure of the Companies Registration Law of the Iranian year 1311 (13 May 1932):

“Article 36- Conversion of all the companies listed under Article 20 of the Commercial Code of 1311 into one another is allowed. The manner of the conversion of these companies shall be based on the rules of implementation, to be prepared within three months by the Legal Deputy of the President assisted by cooperation with the Ministry of Economic Affairs and Finance and the National Organization for Registration of deeds and Properties”.

In a supportive development, the head of the Judiciary in circular letter No. 900/123032/1- Dated 99/7/30 (21 October 2020) has also declared that conversion of the commercial companies into one another is allowed and this stipulation should be added as Article 10 to the Procedural Regulations relating to Articles 196, 197 and 199 of the Commercial Code of Iran.

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