Decree of the Council of Ministers
Executive By-Law of Increasing Iranian Households’ Wealth
Through Expanding Cooperative Sector’s Share
On the Basis of Justice Shares Distribution
The Council of Ministers in its meeting of 12th Nov. 2006, based on proposal No. 31168 of the Ministry of Economics and Finance and with reference to Article One hundred and Eight of the Constitution of the Islamic Republic of Iran and Article 9 of the Fourth Economic, Social and Cultural Development Plan ratified in 2004, approved the By-Law for increasing Iranian households’ wealth through expanding Cooperative Sector’s share on the basis of “Justice Shares Distribution Scheme”, as follows:
Article 1 – In the Present By-Law the following short terms shall have their full meanings as follows:
1. The Law of Fourth Plan: The Law of the Fourth Economic, Social and Cultural Development Plan of the Islamic Republic of Iran Ratified 2004.
2. Central Headquarters: The Central Headquarters of Justice Shares Distribution which shall be established under the presidency of the President for planning, coordinating and supervising the process of Justice Shares Distribution.
3. Provincial Headquarters: The Provincial Headquarters of Justice Shares Distribution which shall be established in each Province under the presidency of the Governor of the same Province for supervising the process of Justice Shares Distribution in the Province on behalf of the Central Headquarters, within the framework of authorities delegated.
4. Subjects of the Scheme: Individuals included in the two lowest decimal groupings of income classification who by the decision of the Central Headquarters qualify for receiving Justice Shares with priority of first degree.
5. Local Justice Cooperative Companies: Local Justice Cooperative Companies in each city which shall have subjects of the Justice Shares Distribution of the same city as their members.
6. Justice Shares: Shares of the Intermediary Company (the agent company for Justice Shares) which shall be divested to Provincial Investment Companies (Private Joint Stocks).
7. Provincial Investment Company (Private Joint Stocks): Investment Company (Private Joint Stocks) which shall be established by Local Justice Cooperative Companies in each province.
8. The Intermediary Company: The agent company for Justice Shares whose role is to transform the basket of different divested shares into a single unitary share and then divest the shares of the company to Provincial Investment Companies along with other executive works related to the divestiture of the Justice Shares.
Article 2 – Ministry of Economic Affairs and Finance shall have the responsibility of implementing Para “g” of Article 7 of the Law of Fourth Plan and Government ownership right in Specialized Holding Companies (except companies which the President is Chairman of their General Assembly) shall also be exercised through that Ministry.
Article 3 – Ministry of Economic Affairs and Finance, in observing the related laws and regulations and Para “c” of the General Policies of article forty four of the Constitution of the Islamic Republic of Iran decreed by the supreme leader, shall divest all state owned and other government disposable shares to the intermediary company after its formation, and subsequently divest the shares of the intermediary company to Provincial Investment Companies (Private Joint Stock) in proportion to the number of individuals qualified for Justice Shares.
Article 4 – The Central Headquarters shall be composed of the following members:
a. The President of the Islamic Republic of Iran
b. Minister of Economic Affairs and Finance
c. Head of Management and Planning Organization
d. Minister of Interior
e. Minister of Industries and Mines
f. Minister of Cooperation
g. Minister of Agriculture Crusade
h. Minister of Labor and Social Affairs
i. Minister of Justice
j. Minister of Welfare and Social Security
k. Head of Martyrs and Veterans Affairs Foundation (Bonyad Shahid va Omur Issargaran)
l. Minister of Health, Medical Treatment and Education
m. Commander of “Basij” Resistance Force
n. Head of Imam Khomeini Relief Committee (Komite Emdad Imam Khomeini)
o. Head of State Welfare Organization
p. Head of Country’s Less Developed (Deprived) Regions Office
q. Head of National Organization for civil Registration
r. Head of Privatization Organization
Article 5 – The following are included in authorities of the Central Headquarters:
a. Divestiture of Justice Shares, observing Article 14 of the Law of Third Plan, reconfirmed in Article 9 of the Fourth Plan;
b. Setting up priority ranking of the subjects of the Scheme;
c. Setting up priority ranking of the provinces;
d. Approval of executive rules and required directives;
e. Determining responsibilities of Provincial Headquarters and supervising their performance;
f. Taking other necessary executive measures for distribution of Justice Shares in the framework of the present By-Law.
Note 1: The authorities of the Council of Ministers in relation to Article 14 of the Law of Third Plan reconfirmed in Article 9 of the Law of Fourth Plan are delegated to the Ministers who are members of the Central Headquarters described in Article 4 of the present Decree. The basis for the decision making regarding those authorities is the agreement of majority of the Ministers who are members of the said Headquarters and their decision, subject to the approval of the President, could be issued by the Minister of Economic Affairs and Finance.
Note 2: The meetings of Central Headquarters shall be chaired by the President. In the absence of the President, the Vice President, as vice chairman, shall chair the meetings.
Note 3: The Commander of Basij Resistance Force, Head of imam Khomeini Relief Committee, Head of State Welfare Organization, Head of Less Developed Regions Office, Head of Civil Records Registry and Head of Privatization Organization shall take part in the meetings without voting right.
Note 4: The head of Privatization Organization is hereby appointed as the Secretary of the Central Headquarters.
Article 6 – Representatives of Central Headquarters members in Provinces (except Privatization Organization), shall be appointed as members of the Provincial Headquarters.
Note 1: the Governor of the Province represents the President and shall chair the meetings of Provincial Headquarters.
Note 2: Members of Provincial Headquarters with voting rights shall be appointed as to correspond to the Central Headquarters.
Note 3: The head of Organization of Economic Affairs and Finance in each province shall be appointed as the Secretary to the Provincial Headquarters.
Article 7 – The Central Headquarters shall, by the end of Iranian Calendar year of 1385 (20 March 2007), have implemented Justice Shares Distribution Program in all provinces.
Article 8 – The volume of State shares and Government Shares to be divested to the intermediary company shall correspond to Government capacity and potentials. Divestiture of the intermediary company to Provincial Investment Company shall also be in proportion to the number of Local Justice Cooperative Companies’ members.
Article 9 – The maximum number of each family member to be included for distribution of Justice Shares is 5. In cases where the members of the family are more than 5, the corresponding number of shares to 5 shall be divided amongst the family members and no additional share shall be allocated. Each member of the families with members of more than five shall be regarded as an independent member of the Local Justice Shares Cooperative (though with less number of shares) and their share of the Cooperative’s profit shall be in proportion to their number of shares.
Article 10 – Share pricing mechanism of companies which are subject of this Decree shall be the price index of the company’s share for companies quoted in Stock Exchange Market and the normal business practices of demand and supply, and the price mechanism set in the By-Law of Para “f” of Article 14 of the Law of Third Plan reconfirmed in Article 9 of the Law of Fourth Plan, for Stock Exchange non-registered companies.
Article 11 - The Privatization Organization, on behalf of state shareholders, shall by signing a contract with the intermediary company and Provincial Investment Companies (Private Joint Stock) in which operational guarantees shall also be included, take the necessary measures to settle the accounts of divested shares in the installment system, at the end of the installment payment period, which shall not exceed 10 years, and in proportion to the interest received from the intermediary company. The price of the shares of subject of this article shall benefit from a discount of 50 percent and no interest shall be charged on the installments.
Article 12 – To preserve and continue the activity of the firms, parts of whose shares are divested, the High Commission of Divestiture, subject of Article 13 of the Law of Third Plan reconfirmed in Article 9 of the Fourth Plan, shall take necessary measures through supervising and controlling the divestiture process, so that a maximum of 20 percent of the shares of each company is divested as a block of shares, outside the head paragraph of Article 44 of the Constitution. The above blocks of shares (20 percent) shall remain in Government ownership in the case of the companies included in the head paragraph of Article 44 of the Constitution.
Article 13 – This By-Law (Decree) shall be implemented from the date of its approval and replaces the Executive By-Law of Increasing Iranian Household Wealth through Expansion of Cooperatives Share on the Basis of Justice Shares Distribution, the subject of Decree No. H33484 T/72683 dated 6th February 2006. Ministry of Economic Affairs and Finance shall prepare and submit to the council of Ministers its implementation progress report every three months.