Branches and Rep Offices in the Law of Iran
Since 1931 when Article 4 of the Corporate Registry Act of Iran recognized two distinct legal forms for activities of foreign companies in Iran, namely establishing a branch office or appointing a representative, all of the Iranian laws and regulations have remained loyal to this dichotomy as if no other option exists. Even the new Commercial Code of Iran (2014) could not succeed in creating a modern business law for regulating the activities of foreign companies in Iran.
If a foreign company intends to establish a legal presence for itself in Iran, it needs to consider the following issues:
1. Which legal structure is the most appropriate form of representation in Iran: establishing a branch office or appointing a representative?
2. What are the legal consequences of establishing a branch office in comparison with entering into a representation contract with an Iranian natural or legal person?
3. What controlling measures will be adopted and applied by the Iranian authorities on the activities of a branch office or a representative?
4. How can a foreign company put an end on the activities of its branch office or representative?
5. Under what conditions the Iranian authorities terminate the activities of a branch office or a representative of a foreign company?
This News & Analysis has a brief and rapid look at the available responses to these five crucial questions.