Decree of the Council of Ministers

Ministry of Economic Affairs and Finance/ State Management and
Planning Organization

The Council of Ministers upon joint proposal of the Ministry of Economic Affairs and Finance and the State Management and Planning Organization, subject of letter of the Ministry of Economic Affairs and Finance, No.28505 Dated 25 October 2000, and by virtue of Article (15) of the Law of the Third Economic, Social and Cultural Development Plan of the Islamic Republic of Iran -ratified in 2000- , approved the Articles of Association of the Privatization Organization as follow:

“Articles Association of the Privatization Organization”

Chapter One- General
Article 1- By virtue of this Articles of Association, the Organization for Promotion of Ownership of Production Units is renamed to Privatization Organization.

Article 2- The Privatization Organization, called “Organization” in this Article, is affiliated to the Ministry of Economic Affairs and Finance, possesses a legal entity and is financially independent. It has a corporation status and administered according to this Articles of Association. In unpredictable circumstances it is subject to the Commercial Law.

Article 3- Headquarters of the Organization is in Tehran. If necessary, it may set up branch or representative offices in the provincial centers upon approval of the general assembly.
Article 4- The Organization’s capital is the same as of the Organization for Promotion of Ownership of Production Units at the end of the 20 March, 2000, one hundred percent of which belongs to the government.
All assets, both movable and immovable, financial rights, claims and both movable and immovable, financial rights, claims and debt and obligations of the Organization for Promotion of Ownership of Production Units are exactly transferred to the Organization and recorded in its first balance sheet. Also, resources and employees of the Organization for Promotion of Ownership of Production Units are transferred to the Organization.

Article 5- Duties and authorities of the Organization are as follows:

a- Formulating proper guidelines in order to expedite and facilitate promotion of public participation toward realization of enhanced efficiency and increased productivity of material and human resources and development of potentials of the private and cooperative sectors, and presentation of the said guidelines to the High Commission of Divestiture subject of Article (12) of the Law of the Third Economic, Social and cultural Development plan -ratified in 2000-, as well as to other authorities.
b- To make out plans for enhancing capabilities of the private sector, and to provide incentives to specialized groups and organizations, and to educate the entrepreneurs.
c- To act as proxy in matters of divesting shares of the companies designated for divestment on the basis of the related regulations.
d- To offer and divest shares of the salable companies according to an approved time- table.
e- To implement policies approved by the High Commission of Divestiture subject of Article (12) of the Law of the Third Development Plan.
f- To render any other action, operation and services towards execution of the program of divesting shares and management of governmental corporations and privatization within the framework of the laws and regulations.
g- Supervising over prompt execution of the provisions of the contracts related to divestment, management, rent, and performance of other matters entrusted to the Organization according to the contracts.
h- Performing other duties related to divestment of shares and privatization that are entrusted to the Organization within the framework of the five-year development plans.

Chapter Two- Organs of the Organization
Article 6- The Organization possesses the following organs:

a- General Assembly
b- Executive Board
c- Managing Director
d- Audit

Article 7- The Organization’s general assembly is composed of the following seven members:

1- Minister of Economic Affairs and Finance
2- Head of the State Management and Planning Organization
3- Minister of Justice
4- Minister of Industries and Mines
5- Minister of Labor and Social Affairs
6- Minister of Commerce
7- Minister of Cooperative

Note- The general assembly is presided over by the Minister of Economic Affairs and Finance.

Article 8- Meetings of the general assembly constitute a quorum by presence of majority of its members. Decisions of the assembly are valid by votes of the majority.

Article 9- Meetings of the general assembly are called on discretion of the president of the general assembly or on request of the executive board and the managing director or the auditor (legal inspector) by written invitation of the chairman of the executive board and the managing director.
Note- Invitations shall be sent out at least ten days prior to the meetings and shall accompany a specific agenda and supporting documents.

Article 10- Duties of the general assembly are:

1- To appoint or discharge of duties the chairman and members of the executive board as per regulations of this Articles of Association.
2- To determine salaries and fringe benefits of the managing director and members of the executive board with due consideration of the relevant regulations.
3- To approve budget and financial statements, and to make decision on the reports of the chairman of the executive board and managing director.
4- To appoint auditor (legal inspector) and to determine the related compensation.
5- To approve by-laws needed by the Organization including employment, financial, administrative, business transaction and welfare by-laws with due consideration of the relevant laws and regulations.
6- To adopt general strategy and to approve the structure of the Organization upon consent of the State Management and Planning Organization.
7- To approve proxy fees and charges in connection with the sale of stock.
8- To make decision concerning arbitration, to appoint arbitrator, and to settle to claims in due observation of the laws and regulations.
9- To propose to the Council of Ministers change or amendment of the Articles of Association.
10- To take decision concerning all other matters that according to the commercial law fall into domain and competence of the General Assembly but not indicated in this Articles of Association.

Article 11- The executive board of the Organization consists of a chairman (undersecretary of the Minister of Economic Affairs and Finance) who will also hold position of the managing director, and four members who will be charged with their duties.

Article 12- Managing director will be proposed by the president or the general assembly to be approved by the general assembly. Other members of the executive board are to be proposed by the managing director, approved by the president of the general assembly. Appointments will be made by the Minister of Economic Affairs and Finance.
Note: Members of the executive board in the capacity of assistant managing director will be charged with certain activities of the Organization.

Article 13- Members of the executive board are elected for the initial term of three years, their reelection is permissible. They shall continue to fulfill their duties and responsibilities at the end of their tenure until the new board is appointed.

Article 14- In the event of resignation, retirement, demise and/or any other reason for which any member of the executive board would be unable to perform his duties, his substitute shall be elected and appointed within a maximum of one month and in observation of the arrangements provided in Article 12.

Article 15- Meetings of the executive board shall reach a quorum by presence of majority of the members. Meetings are chaired by the managing director. Decisions are valid with a minimum of three votes.

Article 16- Decisions made by the executive board are to be recorded in a book and signed by the attending members. The responsibility to communicate and follow up the decisions of the executive board is with the managing director.

Article 17- Duties of the executive board are:

1- Annual budgeting and preparation of the annual financial statement and annual performance reports to the general assembly for approval.
2- Review and presentation of the Organization chart to the general assembly for approval.
3- Proposing changes in the Articles of Association to the general assembly.
4- Proposing settlement of claims and reconciliation to the general assembly with due consideration of the relevant laws and regulations.
5- Proposing to the executive board the needed by-laws, legal fees as well as charges and commissions for sale of the stock.
6- Preparing and formulating necessary plans and programs in order to achieve objectives of the Organizations.
7- Performing any other necessary and in the framework of this Articles of Association and the Commercial Law.

Article 18- The managing director is the highest executive officer of the Organization and is in charge of administration of the Organization affairs within the limits set forth by relevant laws and regulations as well as the provisions of this Articles of Association. He has the following duties and authorities:

1- Implementation of the decision of the High Commission of Divestiture subject of Article (12) of the Law of the Third Development Plan as well as those of the general assembly and the executive board.
2- Annual budgeting and proposing the budget to the general assembly upon approval of the executive board.
3- Preparation of the financial statement to be reviewed by the auditor and the legal inspector upon ratification of the executive board, submission of the same to the general assembly for review and approval.
4- Preparation of the annual performance report which is to be ratified by the executive board before it is reviewed and audited by the auditor and the legal inspector and submission to the general assembly.
5- Preparation of the Organization chart and presentation of the same to the executive board for approval.
6- Preparation and proposing to the executive board necessary by-laws, legal fee, and charges and commissions for sale of the stock.
7- Presenting the Organization before legal persons and judicial authorities, governmental institutions and organizations, public, private and cooperative entities both domestic and foreign, with the right to appoint attorney, proposing arbitration and reconciliation to the executive board, with due consideration of the relevant laws and regulations.
8- Defining job description of each member of the executive board including executive duties, responsibilities and authorities of each member for proper administration of the organization’s affairs.
Note: The managing director may delegate part of his and foreign, with the right to appoint attorney, proposing authorities to any member of the executive board or any employee of the Organization.
9- Performing all the employment affairs within the constraints of the Organization and its approved budget, and to sign all letters and correspondence.
10- All the financial and obligatory papers and documents must be signed jointly by the managing director or his authorized representatives and one of the members of the executive board and the financial director.

Article 19- The auditor (legal inspector) is appointed for one year according to the regulations, his reappointment is permissible.

Article 20- Duties of the Organization’s auditor (legal inspector) shall be in accordance with the relevant laws and regulations.


Chapter three- Miscellaneous regulations

Article 21- The Organization’s fiscal year commences on the twenty first of March of each year and terminates in the twentieth of March of the following year, with the exception of the first year in which it commences on the date the Articles of Association of the Organization is communicated.

Article 22- The Organization is bound to prioritize divestment of its own shares which are in its possession on the date of approval of this Articles of Association.

Article 23- The Organization expenses will be met from the revenues and other resources such as legal fees, commissions and charges for sale of the stock.

Article 24- In the case operations of the Organization lead to profit, the balance of accrued profit after tax and other legal deductions shall be settled with the related account with the Treasury as dividend, and in the case the expenses exceed revenue, the balance upon ratification of the general assembly will be provided for through the appropriation to be proposed through the state general budget bill for this purpose.
Note: The Organization is bound to transfer each year ten percent of its net profit to the legal reserve account. Once the legal resave becomes equivalent to the capital, no further reserve will be necessary.

Article 25- Detailed Organization chart shall be prepared by the general assembly and shall be executed upon approval of the State Management and Planning Organization.

Article 26- Any change and amendment in this Article of Association shall be proposed by the Minister of Economic Affairs and Finance and approved by the State Management and Planning Organization.
By virtue of the letter of the Guardian Council, No 80/21/1264 dated 6 May 2001; this text has met ratification of the said Council.

Hassan Habibi
First Vice President