Legal and Juridical Relations for the Investment Protection

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Foreign Investment Rule

Foreign Investment Rule, Foreign Investment Promotion and Protection Act

In order to provide appropriate legal grounds for attracting foreign investment and technology towards economic development of the country, in 1381 (2001) the foreign investment promotion and protecting law was replaced the previous law enacted in 1334(1956).

Comparing with the previous laws in this regard, the new law enjoys many advantages and practical points of strength including:

  • offering vast protection covering all the investment methods
  • presenting comprehensive definition of foreign investment and official recognition of different types of foreign investment implementations including direct foreign investment, different methods of financing, construction, exploitation and ownership transfer, countertrade , and etc.
  • offering more facilities in the process of admission and ratification of foreign investment plans
  • organizing a station under the title of "The Center for Foreign Investment Services" to facilitate and expedite the affairs related to foreign investment
  • Providing security for the foreign investors through direct government undertaking to officially recognize the basic foreign investors’ rights

In the Foreign Investment Promotion and Protection Act "The Foreign Investor" is defined as: Any natural or legal non Iranian or Iranian person utilizing capital of foreign origin having obtained the Investment License.

Foreign Capital: All types of capital, including cash or non cash that has been imported into the country by the Foreign Investor and includes, sums in cash, machinery and equipments, spare parts and tools, raw material, manufacturing parts, additives and auxiliary, material patent rights, technical know-how, trade names, trademarks, specialized services, transferable dividends and etc.

Foreign investments admitted in compliance with the provisions of this Act shall enjoy and facilities and protections of this Act. These investments may be admitted by the following means

a.Direct foreign investment in those fields that private sector activity is authorized.

b.Foreign investments in all sectors within the frameworks of “civil partnership,” “buy back,” and “build, operate and transfer (BOT)” where the return of principal and profit arises solely through the economic activity of the same investment project and does not rely on any guarantee by the government or banks or government companies.

In order to review and decide upon the requests a board referred to as the "Foreign Investment Board” shall be set up to be presided over by the Deputy Minister of Economic Affairs and Finance as the head of the Organization and consists of the deputies of other ministries and organizations.

The Organization for Investment, Economic and Technical Assistance of Iran

Within a maximum of 15 days from the date of application, The Organization for Investment, Economic and Technical Assistance of Iran shall complete preliminary examination and recommend its decision to the Board. The Board must within one month of receiving the application, examine and announce in writing its final decision in regards to the application.

Foreign investments subject to this Act shall enjoy the same rights, protections and facilities available to domestic investments in a non-discriminatory manner. Some of the advantages of this advantages of this Act are:

  • Foreign Investment shall not be expropriated or nationalized
  • Foreign Capital may enter the country and be covered under this Act through one or a combination of the following:
    1. Cash sums converted to Rials.
    2. Cash sums not converted to Rials to be used directly for purchases and orders related to the Foreign Investment.
    3. Non-cash items upon completion of the evaluation process by the competent authorities

The principal and interest of Foreign Capital or any portion of the capital remaining in the country may be transferred abroad with a three-month notice to the Board upon fulfillment of all outstanding obligations, payment of legal deductions and the approval of the Board and confirmation of Minister of Economic Affairs and Finance.

The profits of Foreign Investment may be transferred abroad upon deduction of taxes, duties and legal reserves with the approval of the Board and confirmation of the Minister of Economy and Finance.

Payments for the principal part of financial facilities and related expenses of Foreign Investors, contracts related to patent-right, know-how, technical and engineering, trade name and trademark, management and other similar contracts within the framework of Foreign Investment may be transferred abroad pursuant approval of the Board and confirmation of the Minister of Economic Affairs and Finance.

The repatriation of the part of Foreign Capital which is imported into the country within the framework of the Investment License but remains unused, shall not be subject to any foreign exchange or imports-exports’ laws and regulations.

The relevant executive bodies are required to accommodate the requests of the Organization in matters concerning issuance of visas, residence permits, issuance of work and employment permits on a case by case basis which shall be required for foreign investors, managers and/or experts working of the private sector and connected to foreign investments subject to this Act and for their next of kin.