The Law on Attraction and Protection of Foreign Investment

Article 1: Foreign private persons and companies and establishments that by permission of the Iranian government and in accordance with the provisions of Article 2 of this Law bring into Iran their capital in the form of cash, factories, machinery and their parts, equipment, patent rights, expert services and the like, for the purpose of development and rehabilitation and productive activities in the areas of industry, mining, agriculture, and transport, shall enjoy the facilities set out in this Law.

Article 2: For considering and adoption of decisions with respect to the applications concerning the import of foreign capital, a Board shall be formed in the Ministry of Economy* under the chairmanship of the Economy Minister or his substitute, consisting of the Deputy Minister of Economy, General Manager of the Plan Organization**, deputy of the Iran Central Bank, the President of the Iran Chamber of Commerce, Industries and Mines or one of the vice-presidents. The Economy Minister shall propose the decisions of the Board to the Council of Ministers for approval and issuance of permission. Applications received for investment of foreign capital in the provinces shall be given priority over those submitted for Tehran as regards consideration and granting of permission. The Ministry of Economy and the Central Bank of Iran shall arrange the assignment of the functions of the Center for Attraction and Protection of Foreign Investments from the Central Bank to the Ministry of Economy.

Article 3: The capital imported into Iran in compliance with Article 1 of this Law, as well as profits accrued from the investment of the said capital, shall be subject to the legal protection of the Government, and all the rights, exemptions and facilities accorded to domestic capital and private productive enterprises shall also apply to foreign capital and corporations. In the event that due to the promulgation of a certain legislation, the investor is dispossessed of his ownership, the Government shall guarantee fair compensation of the damage, provided that within three months after the date of divesting of the ownership, an application for damage compensation is submitted to the Board mentioned in Article 2 and in case of disputes, consideration of the claims for fair compensation guaranteed by the Government, shall be undertaken by competent Iranian courts and in such cases the Government can permit the transfer of the capital abroad without observance the conditions set forth in Article 5 of this Law.

Note 1: The Law Concerning the Ownership of Immovable Properties by Foreign Nationals, approved on 6 June 1931, shall remain in force.

Note2: Private persons and companies and establishments mentioned in Article I are not allowed to transfer their shares and profits and rights to their own or other governments.

Article 4: The owner of capital is authorized to send out from Iran every year the net profits gained from his investment in Iran in the same currency that he originally computed or imported his capital into Iran and up to the extent that shall be determined in the regulations for implementation of this Law.

Article 5: The transfer abroad of the original capital and the profits accruing therefrom, and/or the balance remaining from the capital and profits in the Country shall be permitted, by giving three months prior notice to the Board mentioned in Article 2, with due observance of the provisions of the Agreement of July 1944 of the International Monetary Fund, and after fulfillment of all obligations. However, the owner of capital is required to retain in Iran, for a period of six months after the exit of the capital, at least 10 percent of his original capital in order to meet his contingent obligations.

Article 6: The provisions of this Law shall apply to establishments and nationals of the countries where engagement in economic activities and enjoyment of reciprocal facilities are made possible for Iranian nationals and establishments.

Article 7: The amendment draft of the Regulations Implementing the Law Concerning Attraction and Protection of Foreign Investments, approved on 9 October 1956, shall be prepared by the Ministry of Economy and upon the ratification of the Economy and Finance Commissions of the Parliament will be effective. As long as the said Regulations are not approved, the former Regulations shall be binding***.

* Minister of Economic Affairs & Finance.

** The Plan and Budget Organization.

*** This Article was amended as such in January 1971