Types of Companies in Iran

As a foreign entrepreneur, you can choose to open a company in Iran and you should know there are different alternatives, depending on the intended activities. As in other countries, there is a Commercial Code which recognizes seven types of companies: 

1.    Joint Stock Company or Corporation (Sherkat Sahami),
2.    Limited Liability Company (Sherkat ba Masouliyat Mahdoud),
3.    General Partnership (Sherkat Tazamoni),
4.    Limited Partnership (Sherkat Mokhtalet Gheyr Sahami),
5.    Joint Stock Partnership (Sherkat Mokhtalet Sahami),
6.    Proportional Liability Partnership (Sherkat Nesbi),
7.    Production and Consumption Cooperative Society (Sherkat Ta’avoni Towlid va Masraf).

The main types of companies which are established in Iran by most entrepreneurs are: limited liability company, joint stock partnership and public joint stock company. 

The limited liability company can be incorporated in Iran with one director, who can be of any nationality, and two shareholders. Beside this, the Commercial Code sets no statutory minimum share capital, but the cash capital must be fully paid in at registration. Mostly, this type of business entity is created when entrepreneurs want to open trading companies.

The private joint stock partnership, is a type of business which restricts for its members the right to transfer their shares. There are needed at least three directors and three shareholders appointed. They can be of any nationality and the minimum share capital required by law is IRR 1,000,000 (a nominal amount), of which at least 35% must be paid in at incorporation. Beside this, the entrepreneurs need to know that they will have to submit, to the Government, all the financial statements, annually, and, if it (statement) will be lower than one million EUR or if the value of the total assets is beneath two million EUR, they will be excluded from getting an audit.

Conditions for setting up a public joint stock company

The public joint stock company is recommended if the client wants to raise public capital. In this case, there are required at least five directors and at least five shareholders (of any nationality) for a successful registration. The founders must subscribe at least 20% of the shares (paying in at least 35% of that amount) and offer the rest to the public. More so, its public offering must be registered with the Securities and Exchange Organization (listing on the Tehran Stock Exchange is not automatic) and, annually, it will have to submit the financial statements to the Government.

Creating a branch office

According to the Iranian law, a branch office can be created without Iranian participation. Basically, it is an Iranian-registered extension of the company and the directors and shareholders are the same as for the parent company. No re-appointment is required. However, in order to accept service of any legal proceedings and official communications, a legal representative needs to be appointed in Iran.

More than this, the entrepreneur must know that the branch office will be permitted to invoice any local customers, receive income from them and sign sales contracts (locally), even considering the fact that this type of company is only able to pursue business activities inside the defined scope of the parent company. 

In conclusion, setting up a company in Iran is legally possible. However, UN sanctions were reimposed on 28 September 2025 and US, EU and UK sanctions prohibit or severely restrict most foreign investment, trade and banking with Iran, so a sanctions check is required first. The entrepreneur needs to pick the type of company best suited for him/or her and our experts will take care of the paper work. So, if you are in need of any legal advice, do not hesitate to contact us.