Can Foreign Companies Own Shares in Iranian Companies? Legal Routes Explained

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Can Foreign Companies Own Shares in Iranian Companies with the gradual re-opening of Iran’s economy and renewed interest from global investors, many holding companies, venture capital funds, and family offices are asking: Can foreign companies buy shares in Iranian companies?

The answer is yes, but it depends on how and where you invest. Iranian law distinguishes sharply between:

  • Foreign Direct Investment (FDI) — such as buying a stake in a private Iranian company or establishing a joint venture, and

  • Foreign Portfolio Investment (FPI) — such as purchasing shares on the Tehran Stock Exchange (TSE) or Iran Fara Bourse (IFB).

This article explains both tracks — from FIPPA-covered direct investment to regulated stock market access — and outlines legal, financial, and strategic considerations to help you buy shares in Iran safely and legally..in mjklawfirm

1. Foreign Direct Investment (FDI) in Private Companies – Under FIPPA

What is FDI?

FDI involves active equity participation in an Iranian company, such as incorporating or acquiring shares in a private joint stock company (PJSC) or limited liability company (LLC). This type of investment qualifies for protection under Iran’s Foreign Investment Promotion and Protection Act (FIPPA).

Legal Benefits under FIPPA:

  • Ownership up to 100% in most non-restricted sectors
  • Repatriation rights for capital, dividends, and profits
  • Access to international arbitration
  • Equal treatment with domestic investors
  • Ability to use foreign currency capital, machinery, IP, and services

Requirements:

  • FIPPA license via the Organization for Investment, Economic and Technical Assistance of Iran (OIETAI)

  • Capital registration with the Central Bank of Iran (CBI)

  • Sector-specific approvals (e.g., for telecom, transportation, or health)

  • Evidence of technology transfer or value addition to the Iranian economy

✅ Best suited for: M&A deals, joint ventures, greenfield investment, or strategic partnerships

2. Foreign Portfolio Investment (FPI) in Public Companies – Outside FIPPA

Recognition of Foreign Judgments

What is FPI?

FPI refers to passive ownership of shares in publicly listed companies on Iran’s capital markets, such as the Tehran Stock Exchange (TSE) or Iran Fara Bourse (IFB). It does not involve control, voting power, or management participation, and is therefore not protected under FIPPA.

Legal Basis:

  • Regulated by the Capital Market Law of the Islamic Republic of Iran

  • Administered by the Securities and Exchange Organization

  • Governed by foreign investor guidelines, disclosure rules, and reporting thresholds

Key Requirements:

  • Obtain a Foreign Investment Trading Code from the SEO

  • Open a custody and trading account via an authorized broker

  • Observe ownership limits per sector (often 10% to 49%)

  • Comply with anti-money laundering (AML) and KYC obligations

Currency and Repatriation:

  • No guaranteed repatriation rights

  • Dividends and sale proceeds can be remitted only via CBI-licensed banking channels

  • Subject to forex allocation rules, sanctions, and government policy changes

⚠️ FPI is more flexible but less protected, especially in times of political or financial instability.

✅ Best suited for: Funds seeking exposure to Iranian equities, sector ETFs, index strategies

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Risks and Challenges in Both Routes

  • Common Risks to Address:
    Issue
    FDI (Private)
    FPI (Stock Market)
    Legal Ownership Risk
    Low (if under FIPPA)
    Moderate (ownership caps, no arbitration)
    Repatriation
    Protected under FIPPA
    Uncertain; subject to forex availability
    Sanctions Exposure
    Sector- and transaction-specific
    Varies by listed entity and intermediaries
    Local Disputes
    Mitigated by arbitration clauses
    Dispute resolution route via SEO
    Bureaucratic Delays
    OIETAI processes take time
    Broker licensing can be slow
    💡 Tip: Always check the sanctioned status of target companies and sectors before investing

How to Structure Your Investment in Iran

For FDI:

  • Choose the right entity (LLC or JSC)
  • Conduct due diligence on the Iranian partner or company
  • Apply for FIPPA through OIETAI
  • Draft enforceable shareholder agreements under Iranian and international law
  • Register all foreign capital properly for repatriation eligibility

For FPI:

  • Appoint a local authorized capital market broker
  • Register with SEO for a foreign investor trading code
  • Work with a local bank familiar with capital market repatriation
  • Monitor sectoral caps and reporting obligations

Diversify to reduce exposure to currency and compliance shocks






    MJK Law Firm’s Approach

    At MJK Law Firm, we help international clients navigate the full spectrum of investment routes in Iran:

    • Structuring FDI under FIPPA with full legal protection

    • Preparing and negotiating joint venture and shareholder agreements

    • Conducting corporate due diligence on target companies

    • Advising on public share acquisition under SEO rules

    • Risk management for sanctions, repatriation, and dispute resolution

    We combine on-the-ground experience with cross-border legal understanding to give foreign investors the clarity and security they need in Iran’s complex regulatory environment

    Frequently Asked Questions (FAQs)

    Can a foreign company own 100% of an Iranian company?

    Yes, under FIPPA, foreign entities can own all shares of a private Iranian company, except in sensitive sectors.

    ❓ Can foreigners buy shares on the Tehran Stock Exchange?

    Yes. Foreign investors can purchase listed stocks but must register with the SEO and follow capital market rules.

    ❓ What’s the difference between FIPPA and SEO protection?

    FIPPA offers legal and repatriation protections for direct investment. SEO regulates market-based portfolio investment, which has fewer protections.

    ❓ Can I repatriate profits from Iran?

    If your investment is made under FIPPA and registered with CBI, yes. Stock market profits may be remitted, but they’re not guaranteed.

    ❓ Are nominee structures legal in Iran?

    They’re common but risky. Nominee arrangements lack formal protection and may not be enforceable in court.

    📞 Speak to a Trade Lawyer in Iran

    Whether you’re planning to buy shares in a private Iranian company or invest through the Tehran Stock Exchange, our lawyers ensure your investment is structured properly and legally protected.

    Contact MJK Law Firm today to speak with a trade and investment lawyer in Iran — and take the first step toward secure, strategic entry into Iran’s evolving market.

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