Stock Market
Based on the strategic goals of Iran’s capital market, the internationalization of the country’s securities markets has always proved to be an inevitable necessity. Foreign portfolio investment, in addition to contributing to be trade boom, can eventually achieve the aim of activating foreign investors (both real and legal persons), including institutional investors in Iran’s capital market, assist in transnational activities of the Iranian firms and, indirectly, contribute to financing Iranian companies’ needs. However, the country’s policies prescribe a gradual approach so that the capital market undergoes such a transnational trial slowly and in manageable stages. Foreign investment in Iran’s stock market complies with three types of laws and regulations as follows:
I ) Islamic Republic of Iran (I.R.I) Securities Market law, which refers to foreign investment in Articles (4) and (7).
II ) Article (15) of the Fourth Development Plan Law which requires the Ministry of Economics and Finance and the Central Bank to prepare the required executive bylaws for internationalizing the Stock Exchange.
III ) The Executive Bylaws of Section (c) of Article (15) in the Fourth Development Plan which specifies all the procedures, manners and limitation of foreign investment in the Exchange. Iran Exports & imports Magazine offers the rules and regulations concerning foreign portfolio investment in Iran’s Stock Exchange to the readers.
The Securities Market Law
The second Chapter of the I.R.I securities Market Law (ratified in
1384, corresponding to 2006) has established the Securities and
Exchange council and elaborates on its responsibilities in Article
(4), to support the investors’ rights and to aim at the
betterment, safeguarding and development of a transparent market, as
well as monitoring the proper implementation of the Law. The
following functions and responsibilities are specified for this
Council in international interaction n Sections (13), (14) and (15), as
follows.
Article (4), Section (13):
Granting authorization to the purpose of listing securities of Iranian companies
at foreign exchanges.
Article (4), Section (14):
Granting permission for listing foreign stocks in the Exchange.
Article (4), Section (15):
Extending permission to the Exchange, authorizing foreign investors to
engage in investment in the Exchange.In addition, Article (7) of this Law
specifies the responsibilities and the authority of the Board of Directors of
the Securities and Exchange Organization dealing with foreign investment in
Section (14), s follows:
Article (7), Section (14):
Monitoring the foreign real and legal persons’ investment in the Exchange.
The Fourth Plan Law, Article (15)
Sections (a) and (c) of the Fourth Economic, Social and Cultural Development
Plan, passed in 1383 (corresponding to 2004),emphasizes the internationalization
of the stock market a follows:
Article (15), Section (4), (a):
Establishing relations with the regional and world markets, to exchange
information and mutually list securities. (b): [Excluded, as it does not deal
with foreign investment.]
Article (15), Section (4), (c):
The Central Bank of I.R.I and the Ministry of Economics and
Finance are required to make foreign investment in the country’s
capital market as well as the internationalization of the stock
exchange possible, by designing and formulating the required executive
mechanism and monitoring framework. Prepared by the Central Bank and
the Ministry of Economics and Finance, the executive regulation of
this Article was ratified by the cabinet.
Foreign Investment Manner in the Stock Market
The Cabinet has ratified the Executive Bylaws of Article (15),
Section (c), of the I.R.I. Fourth Economic, Social and Cultural
Development Plan (legislated in 1383, corresponding to 2004), as
jointly proposed by the Ministry of Economics and Finance and the
Central Bank, dated 11.3.1384 (corresponding to June 1,2005) as
follows:
Article (1):
The following in – detail definitions are used:
1) Organization: Tehran Stock Brokers’ Organization
2) Organization’s Board of Directors: Board of Directors of Tehran Stock
Brokers’ organization.
3) The Investment Organization: Iran’s Organization for Investment. Economic and
Technical Assistance
4) The Law of Promotion: the Promotion and Protection of Foreign
Investment Act
5) Foreign Investor: real or legal person who trades (purchases and sells) the
stocks listed in the Stock Exchange, under thePromotion and Protection of
Foreign investment Act, observing the principles of these by laws.
6) Foreign Investment in the Stock Basket [Portfolio]: the process of the
transaction of listed stocks in the Exchange which is done by foreign investor
solely for profit without the goal of managing the company. Foreign investment
in these by laws exclusively means theinvestment of this type [portfolio].
7) Foreign Direct Investment: purchasing the listed stocks in the Exchange by
the foreign investor for profit acquisition and company management.
8) Trustee Auditor: a member of the Iranian Association of Certified
Public Accountants who is chosen pertaining to principles legislated
3.3.1378 [corresponding to May 24, 1999] by the Stock Exchange
Council of auditing organizations and of the legal trustee inspectors in
Tehran Stock Exchange.
9) Transnational Certificate of Deposit: the transferable certificate
which is issued by a foreign bank in two or more foreign countries,
and signifies the ownership of a listed – in – the Exchange Iranian
company’s definite number of deposited shares at the issuing bank.
This certificate is issued based on the prior agreement between the
Iranian company issuing the stock and the foreign bank [issuing the
certificate], with the endorsement of the Stock Exchange.
Article (2):
Foreign investor’s activities in the market are authorized by the
permit obtained from the Investment Organization, observing the
general conditions of supply and demand in the country’s capital
market.
Article (3):
Foreign investors are obliged to transfer the entire committed fund
into the country and to invest in the Exchange, entirely or gradually,
within at most one year after obtaining the permit. If either the
entire fund is not transferred into the country or the investment is not
undertaken within this time limit, the investment of remainder would
depend on obtaining a new permit.
Article (4):
Foreign investor can solely invest in the following financial assets:
a) The shares of listed companies in the Exchange.
b) Other securities listed in the Exchange.
c) Any participation securities listed in the Exchange.
Article (5):
After the permit is issued by the Investment Organization, it
will request the applicant or foreign investor to submit the following
documents before trading and allocating the share holder’s code to
the permit holder.
a) Foreign investor’s articles of association.
b) The profile of those holding above 5% of the foreign investor’s shares.
c) The profile of senior managers of foreign investor.
d) The identification of the bank accounts (the subject of Article
(7) in these Bylaws) assigned to the foreign investor’s trades in the Exchange.
Note (1): If foreign investor’s fund is managed by an independent
legal person, Sections (a), (b) and (c) in this Article shall apply
to the legal person as well.
Note (2): Real investors are only obliged to observe Section (d)
and Note (1) of this Article, as the case may apply.
Article (6): According to the Organization’s current principles on disclosure of information. The foreign investor is obliged to present he following information to the Organization:
a) Annual and quarterly financial performance reports
and statements concerning the activities in the Exchange.
b) The current list and value of the invested stock basket [portfolio] in the
Exchange.
c) Monthly forwarded copy of the comprehensive statement of bank accounts, the
subject of the Article (7) in these Bylaws, showing the circulation
and detail of the account.
d) Reports on disclosing substantial change in the investor’s management
structure or corporate governance (concerning the legal persons only).
Article (7): Foreign investor should choose one
of the banks inside the country for banking transactions.
Note (1): Foreign investor is obliged to present the bank’s
verification, subject of the present Article, on depositing or
selling the foreign currency funds to the bank to the investment
Organization and the Organization, observing the Central Bank
principles.
Note (2): All the foreign investor’s
receipts and payments will be exclusively carried out through
accounts opened in the bank, subject of the present Article; and the
amounts obtained from the securities traded according to the principles in
these Bylaws and the dividends of the above – mentioned securities are
deposited in to these accounts.
Note (3): Foreign investor is not allowed to use the financial
resources of these accounts except for the purposes and limits projected
in the present regulations.
Article (8): Inflow, maintenance and its profit, taken into the country by foreign investor according to the principles of the present regulation, follow the promotion and protection of Foreign Investment Act, its Executive Bylaws and foreign currency regulations.
Article (9): The maximum amount of stocks to be purchased by all
foreign investors in any listed company in the Exchange who invest
in the aforementioned companies in one of the following ways, should
not exceed 10 present of each company’s total shares:
1) Purchasing the company’s shares by obtaining the permit discussed in these
Bylaws.
2) Purchasing the transnational certificate of deposit of the company’s stocks.
3) Trading in the stocks of companies listed in Tehran Stock Exchange that is
offered in one of the foreign markets.
Article (10): The maximum foreign investment is
the participation securities (the subject of Article 4, Section (c)
of these Bylaws should not exceed 10 present of foreign investor>s
total funds transferred into the country. Foreign investment in
other securities (the subject of Article 4, Section (b) of the
present regulation) follows the same limitations pertaining to stock
investment (subject of Article 9)
Article (11): If foreign investor exceeds portions [or the ceilings] assigned in the present regulation regarding the transaction volume, he / she is required to sell the surplus within a workweek. The Organization will announce the foreign investment percentage of every company’s shares to the market at the end of each week.
Article (12): Foreign investor is allowed to
withdraw the capital principal and its earnings from his / her own
activities after three years, observing the Law of Promotion
and the country’s foreign currency regulations. Dividends on stocks
can be withdrawn annually.
Article (13): If foreign investor cannot reinvest the capital
and the earnings, he / she will be allowed to withdraw the non –
investment portion, observing the following points:
1) The demand for funds transfer from the country,
subject of the present Article, will be accepted only if two thirds
of the total funds of the investor has been already allocated to
investment in the country.
2) The funds outflow, the subject of the present Article, after is
announced by the Board of Directors must be verified by the
Investment Organization.
Article (14): Auditing the foreign investor’s
activity performance in the Exchange is carried out by the
Organization’s trustee auditor.
Article (15): If foreign investor breaches the principles of the present Bylaws, his / her transaction code is annulled, and it will be announced to the investment Organization.
Article (16): The limitations mentioned in these Bylaws do not extend to foreign direct investment through purchasing the company’s shares listed in the market. This regulation, numbered 15619/ T/33070/H and dated 16.3.84 (corresponding to June 6/2005), has been reported to the Ministry of Economics and Finance and the Central Bank of I.R.IRAN
Iran Toseeh Co.
An Interview with Seyed Ahamd Mousavi managing director of Iran Tose-eh Company The “Recreational City” complex is an ongoing project of Iran Tose-eh Company, located at Savojbolagh district, 50 Km to the west of Tehran. Considering the importance of this project regarding the tourism point of view, discussing it would be useful for the ones interested in tourism related subjects. Hence, we decided to elaborate on some of the important characteristics and features of this project. Following this goal and by visiting Iran Tose-eh’s main office, we managed to know the opinions Investment IRAN TOSEEH Co. of the managing director of this project, Seyed Ahmad Mousavi. He had a cheerful face, with a dim beard and smiling expression. He warmly greeted us and explained about the Recreational City project: “our company has been engaging in the horse breeding activities for many years. Having a high potential in various branches of horse-related activities and respecting diverse capabilities of our country, led us to consider the Recreational City project in our future plans” considering the importance of this issue he followed that “ by implementation of this project Iran would be able to raise the tourist level up to 6 million people. This kind of project, with consideration of Iran’s 20-year development plan prepared by the Expediency Council, noting the 20 million tourist prospect, is being seen as a unique national project”.
Explaining about the high amount of capacity and amenities of this project he stated “In this project we will be able to accommodate up to 20 thousand tourists a day and deliver various types of services to them. This capacity is being provided in a time that Tehran’s current facilities fall behind in providing accommodation to tourist up to this level. With executing this project we have provided a bundle of entertainment and recreational amenities and services for attracting domestic and international tourists such as horse-related and horse race complexes”. Dr. Musavi also noting the importance of this project in prospect of Iran tourism industry and its position in international world followed: “right now our company has close ties with European horse breeding and tourism units, with having a stronger correlation with French resources, in a way that following our plans, Iran Toseeh will be able to deliver tour services such as directing foreign tours into the country and especially into the Recreational City complex in near future”. He regarding the sport activities and future plans of the Iran Toseeh Company concerning the horse-riding activities added that “currently we have proper correlation with many investors and supporters of this field and are ready to hold different competitions in varied horse riding activities” As regards the other tourist attraction services offered in Recreational City project Dr Musavi described that “given the anticipated amenities and developing them in accordance with the company development plan, delivering recreational services to tourist will be in a way that people of Tehran or the ones travelling to Tehran would be able to spend a whole day along with their families in this complex. Respecting the application of the free zone term for this complex he stated that “one of the other services offered to domestic and international tourists in our complex is an appropriate, modern and diverse shopping center. The establishment of this shopping center would be in a way that provides tourists with the highest quality goods and services” Considering the methods and conditions of investments he continued that “previous researches and studying show that for finishing this project the sum of investment required would be 1.9 billion Dollars with a 45 percent annual return on investment. In addition, the method of investment would be in a form of general stock, available for everyone. Moreover, foreign investors can also have investment in different sections of this project on the basis of their interests and specialized activities or take up the managerial job of the constructions being built by us. The tourism-based region which will be established shortly is being considered an international district with all the international tourism rules and regulations”.
On the topic of the means of transportation to this complex he said that “this region is directly connected to Tehran through subway lines, in addition Payaam Airport is also connected to it by the means of a roadway. This airport is nearby this complex with capabilities of having private flights and charters in correlation with international airline companies”. He pointed out the current competitive environment in the Middle East concerning the absorption of investments and tourists and emphasized that “our goal in the first place would be the neighbor countries. However we do not ignore the other international tourists. We have gathered up fascinating services on the international standards which would surely be appealing to a lot of tourists. We will not remain passive until they decide to choose us, we are sure that our under-construction projects and schemes will pull the international tourists towards us” He also elaborated on the other services being delivered in this complex and explained that “tourist coming to this complex can gain advantages from the medical, therapeutic and surgical services (medial tourism).
The most advanced and modern medial equipments and facilities have been brought together in this complex. By just a single call giving the preliminary information about their condition and positions, tourist can travel with preplanned schedules and programs. They can also become members of this complex and receive medical and treatment services in specific periods. Given our negotiations with Iranian and German doctors we are determined to bring up a group of the most specialist doctors and surgeons at our visitors service. A bundle of highest available services in the fields of disease prevention, welfare, checkups, treatments and surgeries of tourist coming to our complex is being provided so that in near future the possibility of performing the most advanced surgeries and treatments of the most special diseases would be available for our medical tourism sector in this complex. He in the end regarding his previous achievement concluded that “given our adherence to managerial and environmental rules and principles and observance of international standards, we could acquire the exceptional quality rewards for various years and we are determined to continue our efforts leading to receiving more international certificates and standards.
Each year, Business Initiative Directions selects companies from
the top areas of industrial production and services, in order to
publicize the implementation of successful
quality-enhancement strategies and these companies’ commitment to
quality, leadership, technology and innovation. The award is
granted in three different categories, Gold, Platinum and
Diamond, and for 14 activities. The winners are chosen by means
of a preliminary voting of more than 900 business leaders from
93 countries, according to their merit and the information obtained.
The jury of the International Quality Summit Award is formed by 42
experienced business professionals, specialized in the areas of
quality, excellence and client service. The International
Quality Summit Award is a symbol of distinction, the pinnacle
achievement of quality and business excellence, bestowing
a model of leadership on those awarded and opening new businesses
opportunities for them. Over the years, the implementation of
the QC100 Total Quality Management Model has put companies from
173 countries throughout the world at the cutting edge of
innovative organizational system. Now, Iran Toseeh will join
those leagues of management teams to benefit from the QC100.
Iran Toseeh was awarded in New York for the strong commitment of
its staff to work with effective models of quality. The B.I.D.
award honors the work of Iran Toseeh, providing deserved
recognition for many years of work towards quality and innovation.
2007 is a year achievements, with the International Quality Summit
Award bringing deserved recognition.