Commercial Companies in Iran

Today, creating and managing a successful business without legal registration of commercial companies seems impossible in Iran. Registering commercial companies in Iran guarantees your business’s legal status and credibility. On the other hand, it also provides the ground for receiving exceptional government support. Commercial companies in Iran can be classified according to various criteria. However, according to the commercial code, the classification of commercial companies in Iran includes General Partnership, Proportional Liability Partnership, Limited Liability Company, Joint-Stock Company, Limited Partnership, and Consumers’ Cooperative. Join us to examine the classification of commercial companies in Iran and their characteristics in the following section.

General Partnership

The word partnership in the name of this type of company somewhat shows their nature. A general partnership is a company that comprises at least two partners. So that each of the partners is fully considered the guarantor of the company and is responsible for paying all the company’s debts to creditors, and his responsibility is not limited to the contributions he brought to the company. According to Articles 116 and 177 of the Country Commercial Code, the naming of a general partnership company has its own rules, and the company name must contain the word partnership and the name of all partners or at least one partner along with the words “and partners.”

Proportional Liability Partnership

Unlike general partnerships, in a proportional liability partnership, the liability of each partner is proportional to the capital invested in the company. For example, if four people are partners in a proportional liability partnership company and each owns an equal share of the company’s capital, each partner must pay one-third of the company’s creditors’ claims if needed.

According to Articles 183 to 187 of the Commercial Code, a Proportional liability partnership company is the closest commercial company to a civil company. Because with a bit of carelessness, we can say that the only difference between them is the assumption of legal personality for this type of company.

Limited Liability Company

In a limited liability company, there is no concept of shares, and each of the partners owns a part of the company’s capital according to their initial investment. Also, the partners will not be able to transfer their share of the company without the consent of the other partners. In this type of company, the partners’ liability to the company’s creditors is limited to what they bring to the company, and the creditors will not have a right to the partners’ personal assets.

Joint-Stock Company

In a joint-stock company, its capital is divided into shares, and the shareholders are responsible for the company according to the number of shares they hold.

Joint-stock companies are divided into two categories: public companies and privately held companies.

Public Company

In public companies, the founders share part of the company’s capital for sale to the public.

The share of public participation in the ownership of the company’s shares must be at least 51%. The shares of these companies are often transferred to the public through the stock exchange.

Privately Held Company

The difference between this type of company and public companies is that the founders fully commit all the capital of privately held companies at the time of establishment. In registering joint-stock companies, pay attention to the fact that “public company” and “privately held company” should be placed next to the company name. Also, according to Article 29 of the bill amendment of part of the Commercial Code, in public companies, the nominal amount of each share should not exceed ten thousand Rials.

Limited Partnership

The combination of laws and conditions governing general partnerships and joint-stock companies creates another type of classification of commercial companies in Iran called a limited partnership. A limited partnership is also divided into two categories:

Limited partnership without Share

This type of company combines a general partnership company and a limited liability company. In this company, some partners are liable to third parties, and some have limited liability according to their initial investments, like limited liability companies.

In the job description of these companies, those in the latter group have neither the right to manage the company nor the company’s affairs.

Limited Partnership by Share

What distinguishes this type of company from a limited partnership without share is that, besides the guarantor partners, the other part is considered a shareholder, and their capital in the company has become shares, and this group of partners does not have the right to manage the company.

Also, in the name of both types of joint ventures, the company’s name must include the words “joint venture” and at least the name of one of the guarantor partners.

Consumers’ cooperative

The last category of classification of commercial companies in Iran is called cooperative companies, which are subject to the law of the cooperative sector and their settlement is subject to commercial code.

Individuals from these companies meet the needs and achieve common goals such as improving partners’ economic situation and welfare with mutual help.

Such as agricultural cooperatives formed for the items needed by farmers who are not well-off or housing cooperatives developed to help buy housing for the low-income segment of society.

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