How to Form an LLC in Iran – Step-by-Step Guide 2025

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In today’s global economy, many entrepreneurs and foreign investors – including in-house counsel advising their parent organisations – are considering whether to establish a company in the Iranian market. Setting up a Limited Liability Company (LLC) in Iran offers access to a sizeable domestic economy, favourable foreign-investment laws, and strategic regional positioning.
This article provides a step-by-step guide to forming an LLC in Iran in 2025. It covers legal definitions, required documents, registry filing steps, typical timelines, and common pitfalls. If you are an entrepreneur, foreign investor, or in-house legal advisor seeking clarity on “how to register a company in Iran” or “how to form an LLC in Iran as a foreigner”, you’ve come to the right place.

Legal Definitions & Corporate Structures in Iran

What is an LLC under Iranian law?

Under the Commercial Code of Iran (and related registration acts), one of the commonly used company types is a Limited Liability Company (LLC).
In an LLC, shareholders’ liability is limited to their capital contributions.
An LLC is often the preferred form for smaller to medium commercial ventures, including for foreign investors importing, exporting, or engaging in general commerce.

Foreign Investor Ownership & Legal Entity Status

Foreign natural or legal persons may form a company in Iran; their nationality does not automatically prohibit registration under the Company Registration Act.
According to the law, “any company established in Iran … is regarded as an Iranian entity” even if shareholders are foreign.
Therefore, foreign investors establishing an LLC in Iran will hold a legal entity recognized under Iranian law and may access applicable benefits/incentives available to Iranian companies.

Key statutory references and company types

The Commercial Code defines a number of company types: joint-stock companies (public/private), limited liability companies, general partnerships, limited partnerships, proportional liability companies, and cooperatives.
For many foreign investors, the LLC (and perhaps Private Joint Stock Company) forms are most relevant.

Key Requirements & Practical Steps for Formation

Preliminary considerations

Before embarking on registration, advise the client (entrepreneur/foreign investor/in-house counsel) to review:

The business activity and whether specific licensing is required (some sectors are restricted or subject to special approval).
Whether the investor will operate via a wholly-owned foreign entity or a joint venture, Iran allows 100 % foreign ownership in many cases.
The need to appoint an Iranian-resident representative (or local agent) to execute administrative approvals.
Capital structuring (cash vs non-cash contributions), minimum capital thresholds, and handling of non-monetary assets (appraisal required).

Step-by-step checklist

Here’s a practical checklist:

Choose company name (suggest five alternatives, must be in Farsi, at least three words, include “LLC” equivalent term).
Draft and approve:
- Articles of Association (AoA)
- Memorandum of Understanding (if applicable)
- Registration Statement (application)
Appoint shareholders (minimum two for LLC) and managers (may be foreign or Iranian).
Deposit capital / assess non-cash contributions (if any) and obtain bank/valuation certificate.
Submit registration documents to the Companies Registration Office of Iran (or equivalent regional registration chamber), including translation of foreign documents, power of attorney for a representative.
Publish the formation notice in the Official Gazette and a widely-circulated newspaper.
Register with the Iranian Tax Organization: obtain the Commercial Code, notify tax affairs, and apply for VAT registration (if turnover threshold met).
Open a company bank account in Iran (in local currency or as required for capital).
Register with labour/social-security authorities (if hiring staff), and obtain stamped accounting books (within 30 days of formation).
Commence operations once all legal formalities are complete and licenses (if required) have been obtained.

Timeline

While every case differs, a typical formation timeline might be:

Week 1–2: Name reservation, drafting of AoA & registration documents
Week 2–4: Capital deposit or contribution, obtaining appraisals (if needed)
Week 4–6: Submission to the registration office, review, issuance of registration certificate
Week 5–8: Publication in the official gazette/newspaper, tax registration, and bank account opened

Month 2–3: Final license (if needed) and commencement of operations
You should advise clients that matters such as licensing, non-cash contributions, translation, and foreign shareholder clearance may lengthen the process.

Legal & Practical Requirements in Detail

Minimum Capital & Non-Cash Contributions

For LLCs, the minimum capital is relatively modest, though non-cash contributions must be appraised and fully paid before registration is complete.
Non-cash contributions (such as real estate, machinery) must be valued by one or two experts and properly documented.

Shareholders & Directors

There must be at least two shareholders for an LLC.
A managing director (or general manager) must be appointed; that person need not be a shareholder and may be foreign or Iranian.
If the number of shareholders exceeds 12, a Supervisory Board may be required.

Name Reservation and Language Requirements

Company names must be in the Persian (Farsi) language, cannot be Latin-only, must be at least three words, include the relevant company type identifier (e.g., LLC), and cannot suggest unlimited liability or partnership if intending to limit liability.

Licensing & Restricted Activities

Some activities in Iran require specific governmental licences, and some sectors remain restricted for foreign participation.
Foreign-owned entities should check the scope of their authorised activity and confirm any licensing/policy requirements before or soon after incorporation.

Taxation & Compliance

Business entities in Iran are subject to corporate income tax (recently stated at a flat ~25 %) and must comply with VAT, social security, bookkeeping, and other corporate governance obligations.
It is critical for in-house counsel and foreign investor clients to factor ongoing compliance, translations, filings, and local representation into the operational costs and timeline.

Common Mistakes, Local Pitfalls & How to Mitigate

Mistake: Ignoring Local Language & Address Requirements

Using a Latin-only company name or failing to select a valid Iranian registered address (not residential) may cause registration delays or rejection.

Pitfall: Non-cash Contributions Improperly Valued

If non-cash contributions are not appraised or fully contributed, the company may not be properly incorporated under the law.

Licensing Overlooks

Starting operations without ensuring the correct sector licence (especially for regulated fields) can lead to sanctions, fines, or voiding of contracts.

Expecting Instant Timeline

Underestimating translation issues, local approvals, publication deadlines, or tax registration may push the registration beyond initial estimates.

Neglecting Post-Incorporation Compliance

Failing to notify tax authorities, register for VAT, obtain sealed accounting books, or adhere to social security registration can create legal and financial risk.

How MJK Law Firm Supports Clients

At MJK Law Firm, we guide foreign investors and entrepreneurs through every step of forming an LLC in Iran. Our services include:

Advising on optimal corporate structure (LLC vs Private Joint Stock vs branch) and foreign-ownership rules
Drafting and reviewing the Articles of Association, Memorandum of Understanding, and registration documentation
Coordinating with Iranian-resident legal representatives and managing powers of attorney
Liaising with the Companies Registration Office, resolving queries, ensuring correct publication and tax-registration steps
Post-incorporation compliance support: tax registration, VAT filings, social security, and ongoing corporate governance
With our expertise in international transactions and Iranian corporate law, we help reduce the timeline, mitigate risk, and facilitate a smooth market entry.

FAQ

Q1: Can a foreign investor own 100% of an LLC in Iran?
Yes. Iranian law allows foreign natural or legal persons to hold up to 100 % of shares in a company registered in Iran, and the company will still be treated as an Iranian legal entity.

Q2: Is there a minimum bank-capital deposit before registration?
For an LLC, while the minimum nominal capital may be modest, if non-cash contributions are involved, they must be valued and paid in. Some sources indicate no requirement for a full cash deposit before filing, but a full contribution is required for proper incorporation.

Q3: How long does the registration process typically take?
While timelines vary, formation of an LLC may be completed in about 4-8 weeks under ideal circumstances (name reservation, document preparation, registration, publications, tax registration). Delays may occur due to licensing, translation, or valuation.

Q4: Does forming an LLC in Iran automatically grant residency for the foreign investor?
Not automatically. While company formation may support a foreign investor’s presence in Iran, obtaining work permits and residence visas involves additional immigration/labour steps beyond company registration.

Q5: What ongoing compliance responsibilities are there after formation?
Key obligations include: annual shareholder meetings, maintenance of accounting books, tax filings (corporate tax, VAT if applicable), social security registration (if hiring staff), and ensuring the registered office remains valid.

Conclusion

If you are planning to form an LLC in Iran, or you represent an in-house legal team advising such a project, the creation process deserves careful planning, expert legal support, and attention to detail. Contact MJK Law Firm to discuss your specific business model, timeline, and regulatory environment. We are ready to assist you from name reservation through full registration, and to support your ongoing Iranian entity operations.