Legal and Juridical Relations for the Investment Protection

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Implementing Regulations of Foreign Investment Promotion and Protection Act.

Admission of Foreign Investment is carried out within the framework of the following methods:

a) Direct Foreign Investment
b) Foreign Investment within the framework of contractual arrangements including various schemes of "build, operate and transfer," "buy-back," and "civil partnership."
The investment methods these Regulations in respect of the manner of investment and protection coverage under the Act and Regulations share the following common and/or distinctive characteristics and facilities:

Common Characteristics and Facilities:

  1. Foreign Investors shall be subject to the same treatment as domestic investors.
  2. The import of foreign cash and in kind capital shall only be based on an Investment License and no other permits required.
  3. The amount of Foreign Investment in each case is not subject to any limitation whatsoever.
  4. The transfer of the principal of capital, profits of capital and benefits derived from the exploitation of capital is possible in the form of foreign currency or, as the case may be, in the form of commodities as provided for in the Investment License.
  5. Foreign Capital shall be guaranteed against nationalization or expropriation, and the Foreign Investor in such cases shall be entitled to receive compensation
  6. The freedom of exportation of commodities produced by the Investment Project Firm is guaranteed and in case of export prohibition, the produced commodities shall be sold in the country and the revenue can be transferred abroad in the form of the foreign currency and through the Official Monetary Network of the Country.

Distinctive Characteristics and Facilities

1-1. Investment is authorized in all fields where private sector activity is permitted.
1-2. there is no limitation as to the percentage of Foreign Investment participation.

Foreign Investors who have already invested in Iran without the benefits of the coverage of FIPPA may, upon completion of the admission procedure, benefit from FIPPA’s coverage for the principal of the investment already made. Subsequent to the issuance of the Investment License, the investor shall be entitled to benefit from all privileges of FIPPA including interalia, the right to transfer profit. This type of investments shall be generally considered as existing investment to which the general criteria for admission of Foreign Capital is applicable.

Foreign Investment in existing firms by way of purchasing shares and/or increase of capital and/or a capital increase and/or a combination of the two, subject to completion of the admission procedure, shall benefit from the privileges of FIPPA provided that such investment creates added value. The added value so created may result from an increase in investment in the exiting firm and/or achievement of certain objectives such as enhancement of management, increase in exports, and/or in the technology level of the existing firm.

With respect to those investment projects where a government agency is the exclusive purchaser of purchased goods and services as well as cases where the goods and services produced by the investment project is supplied at subsidized prices, the government agency may within the established legal framework, guarantee the purchase of the goods and services produced at the price and quantity determined in the relevant contract,

The Organization For Investment Economic and Technical Assistance of Iran while carrying out its duties relating to admission and protection of Foreign Investment within the framework of the FIPPA, is in charge of performing and conducting foreign investment promotion activities inside and outside of the country as well as introducing legal grounds and investment opportunities, carrying out studies and applied researches, organizing conferences and seminars, cooperation with relevant international institutions and organizations, and establishing relation and coordination with other agencies, compiling and providing information related to Foreign Investments.

The procedure relating to the importation, valuation and registration of Foreign Capital, being cash or non-cash (in kind), is set forth as follows:

  • Cash funds in foreign exchange referred to in Para (a) of Article 11 of FIPPA imported into the country in one or several stages with the intention to be converted into Rials, shall, on the date of conversion into Rials and in accordance with the certificate of the bank, be registered by the organization in the name of the Foreign Investor and shall be covered by FIPPA. The Rial equivalent of the foreign currency imported shall be deposited in the account of the Investee Firm or in the account of investment project.
  • The foreign exchange earnings from export of Foreign Investment, within the limits prescribed by the Board, is exempt from any regulations restricting exports and from foreign exchange regulations such ad commitments for reintroducing the export earnings to the country pursuant to the current and future government regulations.
  • The Foreign Investor, if so wishes, may use, with the permission of the Board, all or part of the transferable amounts pursuant to Article (13), (14) and (15) of FIPPA for capital increase in the same firm and/or after completion of legal formalities for obtaining the Investment License, may utilize it in a new investment.
  • In cases where the Foreign Investment results in the establishment of an Iranian company, the ownership of land in the name of the company is permitted at a sixe appropriate to the investment project, at the discretion of the Organization.
  • The relevant executive agencies, including but not limited to, the Ministry of Foreign Affairs, Ministry of Interior, the Ministry of Labor and Social and Social Affairs and the Law Disciplinary Forces of Islamic Republic of Iran (the police) are required, to proceed with the issuance of visas, residence permits for foreign investor, directors, experts and their immediate family members in relation to the investments covered by FIPPA.