Resolving Insolvency

Resolving Insolvency

Below is a detailed summary of the strengths and weaknesses in existing insolvency regulations in four areas: commencement of proceedings, management of debtor’s assets, reorganization proceedings and creditor participation.

This information was collected as part of the Doing Business project, which measures and compares regulations relevant to the life cycle of a small- to medium-sized domestic business in 189 economies. The most recent round of data collection was completed in June 2014.

 

 

Answer

 

 

Score

 

Commencement of proceedings index (0-3)

 

 

     2.0

 

What procedures are available to a DEBTOR when commencing insolvency proceedings?

 

 

(b) Debtor may file for liquidation only

 

0.5

 

Does the insolvency framework allow a CREDITOR to file for insolvency of the debtor?

 

 

(b) Yes, but a creditor may file for liquidation only

 

0.5

 

What basis for commencement of the insolvency proceedings is allowed under the insolvency framework?

 

 

(a) Debtor is generally unable to pay its debts as they mature

 

1.0

 

Management of debtor’s assets index (0-6)

 

 

3.0

 

Does the insolvency framework allow the continuation of contracts supplying essential goods and services to the debtor?

 

 

 

No

 

 

0.0

 

Does the insolvency framework allow the rejection by the debtor of overly burdensome contracts?

 

 

 

Yes

 

1.0

 

Does the insolvency framework allow avoidance of preferential transactions?

 

 

Yes

 

1.0

 

Does the insolvency framework allow avoidance of undervalued transactions?

 

 

Yes

 

1.0

 

Does the insolvency framework provide for the possibility of the debtor obtaining credit after commencement of insolvency proceedings?

 

 

 

No

 

 

0.0

 

Does the insolvency framework assign priority to post-commencement credit?

 

(c) No priority is assigned to post-commencement creditors

 

0.0

 

Reorganization proceedings index (0-3)

 

 

0.0

 

Which creditors vote on the proposed reorganization plan?

 

 

N/A

 

0.0

 

Does the insolvency framework require that dissenting creditors in reorganization receive at least as much as what they would obtain in a liquidation?

 

 

No

 

0.0

 

Are the creditors devided into classes for the purposes of voting on the reorganization plan, does each class vote separately and are creditors in the same class treated equally?

 

 

No

 

0.0

 

Creditor participation index (0-4)

 

 

2.0

 

Does the insolvency framework require approval by the creditors for selection or appointment of the insolvency representative?

 

 

No

 

0.0

 

Does the insolvency framework require approval by the creditors for sale of substantial assets of the debtor?

 

 

No

 

0.0

 

Does the insolvency framework provide that a creditor has the right to request information from the insolvency representative?

 

 

Yes

 

1.0

 

Does the insolvency framework provide that a creditor has the right to object to decisions accepting or rejecting creditors’ claims?

 

 

Yes

 

1.0

 

Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice”.

Enforcing Contracts

Below is a detailed summary of the efficiency of contract enforcement. It follows the evolution of a sale of goods dispute, tracking the time, cost and number of procedures involved from the moment the plaintiff files the lawsuit until actual payment.

This information was collected as part of the Doing Business project, which measures and compares regulations relevant to the life cycle of a small- to medium-sized domestic business in 189 economies. The most recent round of data collection was completed in June 2014.

  • Court name: Tehran First Instance Court
  • Claim value: IRR 175,595,061
  • City: Tehran
 

Indicator                                                

 

 

Time (days)

 

 

505

 

 

Filing and service

 

 

30

 

 

Trial and judgment

 

 

295

 

 

Enforcement of judgment

 

 

180

 

 

Cost (% of claim)    

 

 

          17

 

 

Attorney cost (% of claim)

 

 

10

 

 

Court cost (% of claim)

 

 

2

 

 

Enforcement Cost (% of claim)

 

 

5

 

 

Procedures (number)                                         

 

 

40

 

 

Filing and service

 

 

 

Trial and judgment

 

 

 

 

Enforcement of judgment

 

 

 

 

* Not counted in the total number of procedures.

Trading Across Borders

Trading Across Borders
Below is a detailed summary of the procedural requirements for exporting and importing a standardized cargo of goods. Documents associated with every official procedure are counted—from the contractual agreement between the 2 parties to the delivery of goods—along with the time necessary for completion.This information was collected as part of the Doing Business project, which measures and compares regulations relevant to the life cycle of a small- to medium-sized domestic business in 189 economies. The most recent round of data collection was completed in June 2014.

  • Port Name: Bandar Abbas
  • City: Tehran
 

Nature of Export Procedures

 

 

Duration (days)

 

US$ Cost

 

Documents preparation

 

 

12

 

270

 

Customs clearance and inspections

 

 

2

 

175

 

Ports and terminal handling

 

 

4

 

225

 

Inland transportation and handling

 

 

7

 

680

Totals251350
 

Nature of Export Procedures

 

Duration (days)

 

US$ Cost

 

Documents preparation customs

 

24

 

330

 

Customs clearance and inspections

 

 

2

 

220

 

Ports and terminal handling

 

 

5

 

250

 

Inland transportation and handling

 

 

6

 

755

Totals371555
 

Export documents

 

 

Bill of lading
Certificate of Origin
Commercial Invoice
Customs export declaration
Insurance policy
Packing List
Technical standard certificate
 

Import documents

 

 

Bill of lading
Cargo release order (store receipt)
Certificate of Conformity
Certificate of Origin
Commercial invoice
Cover letter from Ministry of Trade
Customs import declaration
Document (receipt) certifying payment of customs fees
Insurance policy
Packing list
Registration form/order with the Ministry of Trade (Sabte sefaresh)

Note: Deflated and non-deflated values are identical in DB2015 because it is defined as the base year for the deflator.

Paying Taxes

Paying Taxes

Below is a detailed summary of the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year, as well as measures of administrative burden in paying taxes.

This information was collected as part of the Doing Business project, which measures and compares regulations relevant to the life cycle of a small- to medium-sized domestic business in 189 economies. The most recent round of data collection was completed in 2013 (January 1, 2013 – December 31, 2013).

 

Tax or mandatory contribution

 

 

Payments (number)

 

Notes on Payments

 

  Time (hours)

 

Statutory tax    rate

 

Tax base

 

Total tax rate (% profit)

 

Notes on TTR

 

Employer paid – Social insurance contributions

 

 

12

 

 

240

 

23%

 

Gross salaries

 

25.94

 

 

Corporate income tax

 

 

1

 

 

32

 

25%

 

Taxable profits assessed

 

17.77

 

 

Property transfer tax

 

 

1

 

 

 

5%

 

value of land

 

0.36

 

 

Tax on check transactions (stamp duty)

 

 

1

 

 

 

IRR 200 per check

 

number of checks issued

 

0.00

 

 

Property tax

 

 

1

 

 

 

various rates

 

assessment of property value

 

0.00

 

small amount

 

Value added

 

 

4

 

 

72

 

5% up until 21 March 2013 and 6% thereon

 

value added

 

0.00

 

not included

Totals:20.0344.044.1

 

Notes:
Name of taxes have been standardized. For instance income tax, profit tax, tax on company’s income are all named corporate income tax in this table.
The hours for VAT include all the VAT and sales taxes applicable.
The hours for Social Security include all the hours for labor taxes and mandatory contributions in general.

Protecting Minority Investors

Protecting Minority Investors

Below is a detailed summary of the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain.

This information was collected as part of the Doing Business project, which measures and compares regulations relevant to the life cycle of a small- to medium-sized domestic business in 189 economies. The most recent round of data collection was completed in June 2014.

 

 

Extent of disclosure index (0-10)

 

 

Score

 

Score Description

 

Which corporate body can provide legally sufficient approval for the Buyer-Seller transaction? (0-3)

 

 

2

 

Board of directors excluding interested members

 

Is disclosure by the interested director to the board of directors required? (0-2)

 

 

1

 

Existence of a conflict without any specifics

 

Is disclosure of the transaction in published periodic filings (annual reports) required? (0-2)

 

 

2

 

Disclosure on the transaction and on the conflict of interest
 

Is immediate disclosure of the transaction to the public and/or shareholders required? (0-2)

 

 

2

 

Disclosure on the transaction and on the conflict of interest
 

Must an external body review the terms of the transaction before it takes place? (0-1)

 

 

0

 

No

Total score                             7.0

 

 

 

Extent of director liability index

 

 

score

 

Score Description

 

Can shareholders sue directly or derivatively for the damage caused by the Buyer-Seller transaction to the company? (0-1)

 

 

1

 

Yes

 

Can shareholders hold the interested director liable for the damage caused by the transaction to the company? (0-2)

 

 

1

 

Liable if negligent

 

Can shareholders hold members of the approving body liable for the damage cause by the transaction to the company? (0-2)

 

 

1

 

Liable if negligent

 

Must the interested director pay damages for the harm caused to the company upon a successful claim by a shareholder plaintiff? (0-1)

 

 

1

 

Yes

 

Must the interested director repay profits made from the transaction upon a successful claim by a shareholder plaintiff? (0-1)

 

 

0

 

No

 

Can both fines and imprisonment be applied against the interested indrector? (0-1)

 

 

0

 

No

 

Can a court void the transaction upon a successful claim by a shareholder plaintiff? (0-2)

 

 

0

 

Only in case of fraud or bad faith

Total score4

 

 

 

Ease of shareholder suits index

 

 

Score

 

Score Description

 

Before filing suit, can shareholders owning 10% of the company’s share capital inspect the transaction documents? (0-1)

 

 

0

 

No

 

Can the plaintiff obtain any documents from the defendant and witnesses during trial? (0-3)

 

 

0

 

No

 

Can the plaintiff request categories of documents from the defendant without identifying specific ones? (0-1)

 

 

0

 

No

 

Can the plaintiff directly question the defendant and witnesses during trial? (0-2)

 

 

0

 

No

 

Is the level of proof required for civil suits lower than that of criminal cases? (0-1)

 

 

0

 

No

 

Can shareholder plaintiffs recover their legal expenses from the company? (0-2)

 

 

1

 

Yes if successful

Total score1

 

 

Extent of shareholder rights index (0-10.5)

 

 

score

 

Score Descriotion

 

Can shareholders amend company bylaws or statutes with a simple majority?

 

 

0

 

No

 

Can shareholders owning 10% of the company’s share capital call for an extraordinary meeting of shareholders?

 

 

0

 

No

 

Can shareholders remove members of the board of directors before the end of their term.

 

 

1.5

 

Yes

 

Must a company obtain its shareholders’ approval every time it issues new shares?

 

 

1.5

 

Yes

 

Are shareholders automatically granted subscription rights on new shares?

 

 

1.5

 

Yes

 

Must shareholders approve the election and dismissal of the external auditor?

 

 

1.5

 

Yes

 

Can shareholders freely trade shares prior to a major corporate action or meeting of shareholders?

 

 0

 

No

Total score6

 

 

Strength of governance structure index (0-10.5)

 

 

score

 

Score Description

 

Is the CEO barred from also serving as chair of the board of directors?

 

 

0

 

No

 

Must the board of directors include independent board members?

 

 

0

 

No

 

Must a company have a separate audit committee?

 

 

    1

 

Yes for listed companies

 

Must changes to the voting rights of a series or class of shares be approved only by the holders of the affected shares?

 

 

1.5

 

Yes

 

Must a potential acquirer make a tender offer to all shareholders upon acquiring 50% of a company?

 

 

0

 

No

 

Is cross-shareholding between 2 independent companies limited to 10% of outstanding shares?

 

 

0

 

No

 

Is a subsidiary barred from acquiring shares issued by its parent company?

 

 

0

 

No

Total score2.5

 

 

Extent of corporate transparency index (0-9)

 

 

Score

 

Score Description

 

Must ownership stakes representing 10% be disclosed?

 

 

1

 

Yes for listed companies

 

Must information about board members’ other directorships as well as basic information on their primary employment be disclosed?

 

 

0

 

No

 

Must the compensation of individual managers be disclosed?

 

 

0

 

No

 

Must financial statements contain explanatory notes on significant accounting policies, trends, risks, uncertainties and other factors influencing the reporting?

 

 

1

 

Yes for listed companies

 

Must annual financial statements be audited by an external auditor?

 

 

1.5

 

Yes

 

Must audit reports be disclosed to the public?

 

 

1

 

Yes for listed companies

Total score4.5

 

Getting Credit

Getting Credit

Below is a detailed summary of two sets of issues—credit information registries and the effectiveness of collateral and bankruptcy laws in facilitating lending.

This information was collected as part of the Doing Business project, which measures and compares regulations relevant to the life cycle of a small- to medium-sized domestic business in 189 economies. The most recent round of data collection was completed in June 2014.

 

No

 

Depth of credit information index (0-8)

Private credit bureauPublic credit registry 

Score

 

1

 

Are data on both firms and individuals distributed?

 

 

Yes

 

Yes

 

1

 

2

 

Are both positive and negative credit data distributed?

 

 

Yes

 

Yes

 

1

 

3

 

Are data from retailers or utility companies – in addition to data from banks and financial institutions – distributed?

 

 

No

 

No

 

0

 

4

 

Are at least 2 years of historical data distributed? (Credit bureaus and registries that distribute more than 10 years of negative data or erase data on defaults as soon as they are repaid obtain a score of 0 for this component.)

 

 

Yes

 

No

 

1

 

5

 

Are data on loan amounts below 1% of income per capita distributed?

 

 

Yes

 

Yes

 

1

 

6

 

By law, do borrowers have the right to access their data in the credit bureau or credit registry?

 

 

No

 

Yes

 

1

 

7

 

Can banks and financial institutions access borrowers’ credit information online (for example, through an online platform, a system-to-system connection or both)?

 

 

Yes

 

Yes

 

1

 

8

 

Are bureau or registry credit scores offered as a value-added service to help banks and financial institutions assess the creditworthiness of borrowers?

 

 

Yes

 

No

 

1

 

Score (“yes” to either public bureau or private registry)

 

 

7

 

 

No

 

Strength of legal rights index (0-12)

 

 

1

 

Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity and enforcement of functional equivalents to security interests in movable assets exist in the economy?

 

 

No

 

2

 

Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without requiring a specific description of collateral?

 

 

No

 

3

 

Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring a specific description of collateral?

 

 

No

 

4

 

May a security right extend to future or after-acquired assets, and may it extend automatically to the products, proceeds or replacements of the original assets?

 

 

No

 

5

 

Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be secured between parties; and can the collateral agreement include a maximum amount for which the assets are encumbered?

 

 

No

 

6

 

Is a collateral registry in operation for both incorporated and non-incorporated entities, that is unified geographically and by asset type, with an electronic database indexed by debtor’s name?

 

 

No

 

7

 

Does a notice-based collateral registry exist in which all functional equivalents can be registered?

 

 

No

 

8

 

Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be performed online by any interested third party?

 

 

No

 

9

 

Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency procedure?

 

 

Yes

 

10

 

Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is liquidated?

 

 

Yes

 

11

 

enforcement when a debtor enters a court-supervised reorganization procedure? Does the law protect secured creditors’ rights by providing clear grounds for relief from the stay and/or sets a time limit for it?

 

 

No

 

12

 

Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law allow the secured creditor to sell the collateral through public auction and private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt?

 

 

No

 

Score (number of “yes” responses)

 

 

2

 

CoveragePrivate credit bureauPublic credit registry
 

Number of individuals

 

 

18,423,000

 

24,357,037

 

Number of firms

 

 

154,000

 

345,820

 

Percent of total

 

 

33.8
 

45.0

Registering Property

Registering Property

Below is a detailed summary of the steps, time and cost involved in registering property in Iran, Islamic Rep.. It assumes a standardized case of an entrepreneur who wants to purchase land and a building that is already registered and free of title dispute.

This information was collected as part of the Doing Business project, which measures and compares regulations relevant to the life cycle of a small- to medium-sized domestic business in 189 economies. The most recent round of data collection was completed in June 2014.

 

  • Standard Property Transfer
  • Property value: IRR 4,391,133,065.4
  • City: Tehran
NOProcedure

 

Time to completeAssociated costs
 

1

 

Obtain a certificate of completion of the building
Agency: Municipality

A certificate of completion of the building erected on the land must be obtained from the Municipality.

 

 

30 days (simultaneous with Procedures 1, 2, 3, 4, 5, 6, and 7)

 

no cost

 

2

 

Obtain a certificate of occupation and insurance liquidation
Agency: Department of Labor & Social Affairs

In case the building is used for administrative purposes and has a certificate of completion of the building, a certificate of occupation and insurance liquidation must be obtained from the Department of Labor & Social Affairs for all insured workers.

 

 

19 days (simultaneous with Procedures 1, 3, 4, 5, 6 and 7)

 

no cost

 

3

 

Obtain a social security clearance certificate
Agency: Social Security Organization

A social security clearance certificate must be obtained from the Social Security Organization.

 

 

7 days (simultaneous with Procedures 1, 2, 4, 5, 6 and 7)

 

no cost

 

4

 

Conduct a check on the property at the Real Estate Registration Department
Agency: Real Estate Registration Department

The time of administrative formalities have been changed. Earlier replies to the real estates inquiries have been done manually. This was before the computer inquiry approach was introduced, and now it is performed by the computer systems and online websites of the registation organization that replaced long physical inquiries, many legel formalities, more paper usage and higher costs. Now the formalities last at least 3-4 days. The copy of the title deeds or replica copy is valid for one months untill the asnwer of the Land Registry is displayed on its official website. The fee of the procedure is 80.000/- IRR.

 

 

3 days (simultaneous with Procedures 1, 2, 3, 4, 6, and 7)

 

IRR 80,000

 

5

 

Obtain a tax clearance certificate from the Tax Affairs Organization
Agency: Tax Affairs Organization

The clearance of taxes is determined according to official regional values. The certificate is valid for 1 month. The Law on the Facilitation of Administration of Notary Public Office of July 2006 introduced changes to ease the property registration process and limit rent seeking. Article 1 of the new law introduced more flexible requirements. Rather than obtain these documents from the relevant authorities, buyers can obtain a sworn declaration from the sellers that all taxes, social security payments, and changes to the building are in good order and have been paid. In practice, agents still obtain the certificates.

 

 

1 day (simultaneous with Procedures 1, 2, 3, 4, 6, and 7)

 

5% of property price of “Mantaghe Bandi”

 

6

 

Payment of transfer tax at Bank Melli
Agency: Bank Melli

The legal stamp should be paid at Bank Melli Iran before drafting the sale purchase agreement. According to the laws and regulations of the Registration Department, transfer tax is calculated according to the “Mantaghe Bandi” (zoning) price, so transfer tax for deeds up to IRR 40,000,000 would be 3% and for deeds of over IRR 40,000,000 would be 5% of the total amount. The price mentioned in the deed may be the ”Mantaghe Bandi” price or the market price. In any way ‘‘Mantaghe Bandi” is the basis of calculation which is between 7% to 10% of the real price. Even if the real price is mentioned in the deed, the basis of calculation for transfer tax is the ”Mantaghe Bandi” price which is calculated by the notary.

 

 

1 day (simultaneous with Procedures 1, 2, 3, 4, 5, and 7)

 

5% of property value (transfer tax) + 0.5% of property value (legal stamp transferred to government)

 

7

 

Obtain settlement certificate for reconstruction duty from the Municipality
Agency: Tax Affairs Organization

A tax clearance certificate must be obtained from the Municipality to account for all the renovations made to the property.

 

 

Less than a day (online procedure; simultaneous with procedures 1, 2, 3, 4, 5, and 6)

 

no cost

 

8

 

The deed is prepared and notarized at the notary public’s office 
Agency: Public Notary

The notary public collects an amount according to legal tariffs determined by the Organization of Deeds and Properties Registration at the time of drawing up the deed, which includes writing fee and the registration fee. According to the decree 87/8039 of the Deputy Head of the Organization for the Registration of Deeds and Properties.

 

2 days

 

According to the laws and regulations of the registration department and updating the tariffs, writing fee in notary is calculated according to the “Mantaghe Bandi” (Zoning) price, so writing fee for Deeds up to 2,000,000 IRR would be 250,000IRR and for deeds of over two million Rials up to 10,000,000 would be 4% and for deeds of over ten million Rials up to 200,000,000 would be o.4% and for deeds of over two hundred million Rials up to 1,000,000,000 would be o.3% and for deeds of over thousand million Rials would be o.1% of total amount.

 

9

 

The title is registered at the Real Estate Registration Department
Agency: Real Estate Registration Department

“The title is registered at the Real Estate Registration Department by the notary public, who sends an abstract of the deed.

According to the law of “”the fifth economic ,social and cultural development plan(2011-2015)in Iran””) Replace old title deeds and land property documents with new one, in order to increase security of deeds and also digitize deeds information and make executive modern registration method with the applying of Information Technology (IT).”

 

 

3 d

Getting Electricity

Getting Electricity

Below is a detailed summary of the procedures, time and cost required for a business to obtain an electricity connection for a newly constructed building in Iran, Islamic Rep..

This information was collected as part of the Doing Business project, which measures and compares regulations relevant to the life cycle of a small- to medium-sized domestic business in 189 economies. The most recent round of data collection was completed in June 2014.

  • STANDARDIZED CONNECTION
  • Name of utility: Great Tehran Electricity Distribution Company (GTEDC)
  • City: Tehran
NoProcedureTime to completeAssociated costs
 

1

 

The client applies for electricity connection with Great Tehran Electricity Distribution Company (GTEDC) and awaits estimate of connection fees
Agency: Great Tehran Electricity Distribution Company (GTEDC)

The client needs to submit an application for electricity connection with Great Tehran Electricity Distribution Company (GTEDC) in person, and attach to that a certificate with the type of activity.

 

 

9 calendar days

 

USD 0

 

2

 

The client obtains external inspection from Great Tehran Electricity Distribution Company (GTEDC)
Agency: Great Tehran Electricity Distribution Company (GTEDC)

After the application process, an engineer from the utility will visit the site to assess whether the grid will have enough capacity to accommodate the new connection. The site visit is necessary because the utility’s maps are not up to date. Furthermore, the utility will also inspect to check that the estimated consumption submitted by the applicant is correct.
Then they prepare an estimate of the connection fees for the client to later pay at a bank. The client also signs a contract with the utility at the time of applying.

 

 

1 calendar day

 

IRR 5,000,000

 

3

 

The client obtains approval of the design of the private substation by Great Tehran Electricity Distribution Company (GTEDC)
Agency: Great Tehran Electricity Distribution Company (GTEDC)

In the case of 140 kVA a substation is most likely needed. A private electrical firm (possibly the same as the one that did the internal wiring) designs the substation and submits it to Great Tehran Electricity Distribution Company (GTEDC) for approval.

 

 

7 calendar days

 

USD 14,000

 

4

 

The client obtains material for the external works
Agency: Market

External works consist of the utility’s contractor building a private distribution substation.

Transformers are often missing in the utility’s stock. The customer can buy the materials, or pay the market price to the utility and the utility will then buy the materials. For smaller projects, it is usually the utility who would buy the materials. For larger projects, the customer might want to buy the materials themselves. 140 kVA is considered a medium project. It is becoming more common with time for the utility to purchase the material.
If the customer purchases the material, they will need to provide a certification (the utility provides customers with a detailed list of the materials to buy).

 

 

40 calendar days

 

USD 5,000

 

5

 

The client obtains external works from Great Tehran Electricity Distribution Company (GTEDC)
Agency: Great Tehran Electricity Distribution Company (GTEDC)

Great Tehran Electricity Distribution Company (GTEDC)’s contractor completes the external connection works by installing substation and connecting it to its medium-voltage network.

 

 

20 calendar days

 

USD 30,000

 

6

 

The client obtains meter installation and final connection from Great Tehran Electricity Distribution Company (GTEDC)
Agency: Great Tehran Electricity Distribution Company (GTEDC)

When the works are completed, Great Tehran Electricity Distribution Company (GTEDC) installs the meter and electricity is turned on immediately.

 

 

1 calendar day

 

USD 700

 

Dealing with Construction Permits

Dealing with Construction Permits

 

Below is a detailed summary of the procedures, time and costs to build a warehouse in Iran, Islamic Rep.. This includes obtaining necessary licenses and permits, completing required notifications and inspections and obtaining utility connections.

This information was collected as part of the Doing Business project, which measures and compares regulations relevant to the life cycle of a small- to medium-sized domestic business in 189 economies. The most recent round of data collection was completed in June 2014. Read the methodology.

 

  • STANDARDIZED WAREHOUSE
  • Estimated cost of construction: IRR 4,391,133,065
  • City: Tehran
NoProcedureTime to completeAssociated costs
 

1

 

Obtain land tax payment code
Agency: Ministry of Finance

 

 

0.5 days

 

No charge

 

2

 

Apply for zoning approval
Agency: E-service office

BuildCo must obtain zoning permission from the e-service office. BuildCo submits the request and the e-service officer scans the request and supporting documents into the system. An inspection is scheduled usually with a couple of days at most. By the third or fourth day, the inspector will enter the information about the site into the system and it is transferred electronically to the Municipality for approval. The Municipality will usually approve the location permit request within 1 — 2 days and send the approval back to the relevant e-service office. BuildCo can obtain the location approval within 10 days of submitting the application.

The cost for the zoning approval is IRR 350.00 per sq. m. = IRR 450,000.00. Payment is made using an ATM card in POS system available in the e-service offices.

 

 

1 day

 

No charge

 

3

 

Receive site inspection 
Agency: Municipality

 

 

1 day

 

No charge

 

4

 

Obtain zoning approval
Agency: E-service office

 

 

10 days

 

IRR 455,210
 

5

 

Request and obtain construction permit
Agency: Engineering and Technical Services Institution and Municipality

BuildCo submits the construction permit application through the e-service office. The e-service office will send the documents to the Municipality for approval. The application is reviewed and signed by the following people: Head of Masterplan (at the location approval stage), Head of Issuing Permission, Deputy of Urban and City Planning District, and the District Mayor. Once everyone has signed off, the approved application is sent back to the e-service office and the permit is issued.

Applicants are informed by email, SMS, or telephone that their applications have been approved. The whole process takes about 1 month.

The cost for the construction permit is IRR 8,500,000.00. Payment is made using an ATM card in POS system available in the e-service offices.

 

 

30 days

 

IRR  8,500,000

 

6

 

Hire an independent surveillance company
Agency: Surveillance Company

The design and supervision team provides technical supervision through an architectural engineer for the duration of the construction work and directs the workers in accordance with the plans. This team reports on all construction activities to the engineer.

 

 

1 day

 

No charge

 

7

 

Receive inspection from Municipality – I
Agency: Municipality

Construction work does not stop when the inspections take place.

 

 

1 day

 

No charge

 

8

 

Receive inspection from Municipality – II
Agency: Municipality

 

 

1 day

 

No charge

 

9

 

Receive inspection from Municipality – III
Agency: Municipality

 

 

1 day

 

No charge

 

10

 

Receive inspection from Municipality – IV
Agency: Municipality

 

 

1 day

 

No charge

 

11

 

Receive inspection from Municipality – V
Agency: Municipality

 

 

1 day

 

No charge

 

12

 

Apply for building completion certificate
Agency: E-service office

Upon completion of construction works, BuildCo must submit the site file containing all the inspection reports signed by the supervising engineer at each stage of construction to the e-service office. The e-service office will scan and transmit the file to the Municipality which will assign an inspector to come and check that there have been no breaches to the construction permit. The inspector files a no-breach report at the municipality.

The building completion certificate must be signed by:
• The Head of Issuing Permission
• The Head of Technical Supervision
• Deputy for Urban Planning
• The District Mayor

Once all signatures are obtained, the approved building completion certificate is transmitted back to the relevant e-service office who will notify BuildCo.

 

 

1 day

 

No charge

 

13

 

Receive final inspection 
Agency: Municipality

 

 

1 day

 

No charge

 

14

 

Obtain building completion certificate
Agency: E-service office

The cost for the building completion certificate is IRR 860,000. Payment is made using an ATM card in POS system available in the e-service offices. Payment for the completion certificate must be made at the same time that the construction permit is requested.

 

 

1 day

 

IRR 860,000

 

15

 

Obtain water and sewerage connection
Agency: Tehran Water and Wastewater Company

The procedure for obtaining water and sewerage connection depends on the plans and the district.

 

 

270 days

 

USD 14,700

 

Starting a Business

Starting a Business

Below is a detailed summary of the bureaucratic and legal hurdles faced by entrepreneurs wishing to incorporate and register a new firm in Iran, Islamic Rep.. It examines the procedures, time and cost involved in launching a commercial or industrial firm with up to 50 employees and start-up capital of 10 times the economy’s per-capita gross national income.

This information was collected as part of the Doing Business project, which measures and compares regulations relevant to the life cycle of a small- to medium-sized domestic business in 189 economies. The most recent round of data collection was completed in June 2014.

  • Standardized Company
  • Legal form: Limited Liability Company (شرکت با مسئوليت محدود)
  • Paid in minimum capital requirement: IRR 0
  • City: Tehran
NOProcedureTime to completeAssociated costs
 

1

 

Obtain a criminal record clearance

Agency: Police Electronic Service Centers

 

Under articles 111 and 147 of the amendments to the Commercial Code of 1969, a criminal record clearance must be obtained from all company directors and inspections in order to register a new company

 

 

5 days on average

 

IRR 50,000 per criminal record

 

2

 

Reserve a unique company name, Register at the Companies Registration Office and Pay the registration fees

Agency: Companies Registration Office

 

To register with the Companies Registration Office, the company must submit the following documents:

* Articles of association, signed by all shareholders .

* Declaration stating that all shares have been subscribed .

* Minutes of the general assembly of founders and board of directors .

* Bank certificate, showing that at least 35% of all shares have been paid in .

* Minutes of the shareholders’ meeting, reflecting the election of the first directors and inspector(s) .

*Written statement accepting the position of directorship and inspectorship .

*National ID Card (Carte Melli) and birth certificates (certified copies) of the shareholders and inspectors .

*Name of a mass circulation newspaper in which all company announcements will be published.

Application files are assigned a bar code so that each internal desk that receives the file tracks its entrance and exit. In addition, an electronic payment system is conducted with a card and a machine is used to pay registration fees.

 

 

3 days

 

IRR 375,000 for registration and IRR 40,000 for name search and reservation.

 

3

 

Place a notice of the company formation in the Official Gazette and the selected newspaper of general circulation
Agency: Official Gazette

 

It is possible to directly publish the notice of the company formation through the Official Gazette and the selected newspaper or general circulation or submit it to the post office, which then forwards them to the Gazette. This process takes 15 to 30 days. However, businesses do not need to wait until the publication is completed to start their business. Upon submission of the registration notice to the official gazette for publication, a copy thereof is affixed with the stamp of the official gazette office indicating that the notice is in the process of publication. This notice, bearing the stamp of the official gazette, in terms of the start of business operations holds the same value as the notice published in the Gazette. Thus, with this notice, the company can proceed with business operation formalities.

 

1 day

 

IRR140,000 for official Gazette; IRR 240,000 for general circulation newspaper

 

4

 

Retrieve the officially sealed books of account within 30 days of registration
Agency: Authorized Vendor

The cost depends on the number of pages of the official sealed books of account.

 

1 day

 

IRR 100,000

 

5

 

Pay the share certificate stamp duty within 60 days of company registration 
Agency: Bank

The stamp duty must be paid within 60 days of company registration. It is paid at Bank Melli Iran because it is an official government duty.

 

1 day

 

0.2% of the par value of the subscribed share capital

 

6

 

Enroll workers in the social security program at the Iranian Labor Department and Obtain a workplace number
Agency: Labor Department

To open files in the social security program, the applicant sends a copy of the first monthly salary report to the Iranian Labor Department with a premium contribution of 33% of the employee’s monthly salary (7% worker, 23% employer, 3% unemployment contribution, and 3% government).

 

 

1 day

 

no charge