The Law of the Fourth Economic, Social and Cultural Development
Plan of the Islamic Republic of Iran, Ratified in 2004, (2005-2009)
fundamental preparation for rapid economic growth
(orders related to divesture of the shares)
Article 6: In context of general policies of the Fourth Economic, Social and Cultural Development Plan of the Islamic Republic of Iran including the cases subject mentioned in initial part of the forty four (44) Principle of the Islamic Republic of Iran Constitutional Law, for purpose of continuation of privatization plan and strengthening the non-governmental sectors in development of Iran, the government is permitted and authorized:
To use all the possible methods including de-regularization, outsourcing of the management (like lease, general contracting and management contract) and ownership/possession (like lease subject to possession, sales of shares totally or partially, assignment of the properties), analysis for divesting, dissolution and integration of companies.
Article 7- For the purpose of organizing and desirable and optimized use of the governmental companies and increment of output and efficiency and desirable administration of the companies which are needed to be remained in public sectors and also for providing the grounds for divesting the companies whose activity continuation isn’t necessary in public sector, to the non-governmental sector, the administration is permitted to take action for divesting, dissolution, integration and re-Organization of the governmental companies, amendment and approval of the companies articles of association, approval of the financial and transaction by-laws, approval of the employment and insurance by-laws, subject to observing related rules and regulations and replacement and transfer of tasks, human resources, shares and assets of the governmental companies and the subsidiaries, and subject to observing the following points:
A- All the affairs related to policy making and exercise of the tasks and duties of state sovereign shall be separated from the state companies and entrusted to the concerned specialized ministries and governmental establishments by the end of the second year of the plan.
B- The governmental companies are to be organized merely in context of the specialized holding companies and the operational companies (the second generation ) and shall be administer under supervision of the general assembly in context and scope of the company articles of association. Such companies shall be subject to rules and regulations of the related specialized ministries as far as policies and sector plans may concern.
Note 1- Formation of the governmental companies shall be permissible merely by ratification of Islamic Consultative Assembly and it is forbidden to convert the companies in where governmental companies hold less than 50% of their shares into to the governmental ones .
Note 2- Partnership and investment of the governmental companies except the state banks, state credit institutes and the state insurance companies in the other companies subject of this Clause shall require obtaining the prior permission form Council of Ministers.
Note 3- The companies that less than 50% of their shares are hold by the government and governmental companies, are considered non-governmental and are not subject to rules and regulations governing the state companies.
Note 4- The government is obliged, at most within two years as of implementation commencement of the Fourth Development Plan based on proposal of State Management and Planning Organization, to change the status of the companies having sovereignty nature into suitable Organization al form and divest the same to the related executive Dept.
Note 5- The governmental companies who have been inoperative and inactive by early 2004, at discernment of State Management & Planning Organization and Ministry of Economic Affairs and Finance, are not permissible to commence their activity and are declared dissolved.
Note 6- The government is obliged to dissolve all the offices and branches of governmental companies stationed abroad by end of the first year of the Plan. The necessary cases shall be approved by High Council of Administrative based on proposal of Ministry of Economic Affairs and Finance and State Management & Planning Organization.
C- The governmental companies which are liable to divesting to the non-governmental sector by approval of the Council of Ministers, shall not subject of rules and regulations governing the governmental companies merely within the fixed moratorium in High Commission of Divestiture and they are run and administered in context of the Commercial Law.
D- Continuation of the activity of the governmental companies shall be possible merely in the following conditions:
1- Their activity is exclusive.
2- The non-governmental sector has no motivation for activity in that field.
E- Conversion of the status of the employees of companies subject of Note (4), Item (B) of this Article by observing the acquired rights to the ministries and governmental establishments, is in context of a By-Law which shall be approved by the Council of Ministers.
F- Transaction of the shares in relation with execution of this Article (due to integration, dissolution and re-Organization) shall be exempted from tax payment.
G- The ownership right of the government in specialized holding companies (except the companies whose chair is assigned to the President) shall be exercised at discernment of the government through Ministry of Economic Affairs and Finance or the Organization for Ownership of Governmental Companies which shall be formed under supervision of the President (by discernment of government), based on instrument of this Act and the government is obliged to take legal action for amending the articles of associations of these companies group in an appropriate manner. The probable financial charges for convention of the said Organization shall be financed from the concentrated items available to the President. All the companies whose subjection to laws and regulations necessitates that their names be mentioned or stipulated, all are subject to this clause.
Note: The articles of association of this Organization shall be approved by the Council of Ministers based on proposal of the State Management and Planning Organization.
H- The specialized holding companies could be divested subject to observing the forty four (44) Principle of the Islamic Republic of Iran Constitutional Law and the partnership of the private and cooperative sectors are permissible and authorized. The ways and means and partnership method of the private and cooperative sectors in specialized holding companies shall be approved by the Council of Ministers based on proposal of the concerned General Assembly of the companies and confirmation by the High Commission of Divestiture.
I- The government is obliged, at most by the third year of the Plan, to take action for correction of the structure and profitability of the governmental companies which are considered loss-making companies based on financial statement of the first year of the Plan, or otherwise, to dissolve them.
O- All the executive bodies subject of Article (160) of this Act shall be liable and subject to provision of this Article.
Article 8- The fund earned from sales of governmental companies shares shall be concentrated before the Islamic Republic of Iran Central Bank in the name of Treasury and shall be allocated as follows and is transferred to the related accounts:
A- Equal to 20% as in part-payment of tax on performance of the concerned specialized holding companies or companies under their coverage ( account of state general revenue)
B- Equal to 10% as in part-payment of interest of government portion in concerned specialized holding company ( account of state general revenue )
C- Equal to 70% to the account of concerned specialized holding company for the following affairs :
1- payment of the debts of specialized holding company to the government (ministries, governmental establishments and Treasury)
2- Preparation, betterment and correction of the structure of governmental companies for divesting.
3- Assistance for supplying the charges for modification of human resources and technical and professional education/training of the employees of the companies could be divested.
4- Assistance for enabling and strengthening the private and cooperative sectors as to their economic activities in context of annual budgets.
5- Completion of semi-finished projects and investment in context of the approved budget.
Note 1- The entire sums due sales of shares belonging to the government (in name of the ministries and governmental establishments) must be deposited to the state general revenue account.
Note 2- The difference of the book price of shares and their sales price in shares sales year shall be included in the profit and loss account of the same years of the concerned specialized holding company (or the companies under their coverage and supervision).
Article 9- The Articles 10, 12 to 18 and 20 to 27 of the Third Economic, Social and Cultural Development Plan of the Islamic Republic of Iran, ratified on April.6, 2000 and its amendments, for the Fourth Plan period (2005-2009) are hereby confirmed to be effective.
Article 16 -The government is permissible to divest the shares of commercial insurance companies to private sector or cooperative, upon correction of the structure, based on specific scheduled plan and according to the By-Law approved by Council of Ministers in context of Item (47) of policies of Fourth Development Plan - which shall be notified-