Law on the Administration of Free Trade-Industrial Zones of the Islamic Republic of Iran
Section One: Objective Article 1 In order to accelerate the accomplishment of infrastructures, development, economic progress, investment, increase of public income, creation of productive employment, regulating of goods and labour market, to be actively present in regional and world market and to produce and to export the industrial and processing goods as well as rendering public services, the government is hereby authorized to administer the following zones as the Free Trade-Industrial Zones in accordance with the present Law and the other legal principles:
- a) Kish Island Free Zone, as delineated on the map attached hereto.
- b) Qeshm Free Zone, a contiguous area not exceeding three hundred square kilometers situated at northeastern part of the island whose boundaries shall be determined by the Board of Ministers.
- c) Chabahar Free Trade-Industrial Zone (according to the map attached hereto).
- d) Aras Free Trade-Industrial Zone
- e) Maku Free Trade-Industrial Zone
- f) Arvand Free Trade-Industrial Zone
- g) Anzali Free Trade-Industrial Zone
Note 1 Free Zones shall benefit from the facilities and privileges provided by this law
Note 2 (Amended on July 21, 1999) The coastal water boundary adjacent to the Free Zones, whose area of jurisdiction shall be specified and decreed by the board of ministers, shall enjoy the advantages of this law- solely on the grounds of ship bunkering activities.
Note 3: The establishment of new Zones and their boundaries shall be ratified by the Islamic Consultative Assembly upon such proposal by the government.
Article 2: The revenues of the Free Zones shall be spent solely within their annual budget which would be approved by the Board of Ministers. Development aid for areas outside the Free Zones (with the priority to neighboring areas) shall be granted solely upon approval by the Board of Ministers and any other aid shall be considered unlawful use of public property.
Section Two: Definitions
Article 3 In this law, the following terms are used in lieu of the following phrases: Country: The state of the Islamic Republic of Iran. Zone: Free Trade-Industrial Zone. Authority: Authority responsible for the administration of each Free Zone. The Majlis: The Islamic Consultative Assembly.
Section Three: Functions
Article 4 The Board of Ministers is responsible for:
- a) Approval of regulations and coordination of all activities of each Zone;
- b) Approval of the charter of the authority and companies affiliated thereto;.
- c) Approval of the annual development, cultural programs and budgets, and projected financial operations of the Zone Authorities;
- d) Approval of the security and law enforcement regulations of the Zones upon confirmation by the supreme commander of the armed forces;
- e) Overall supervision of the activities in the Zones.
Article 5 Each Zone shall be administered by an Authority organized as a company, with autonomous legal status, whose capital shall belong to the government. Such companies and their affiliates and subsidiaries shall be exempt from the laws and regulations governing state-owned companies and from other general regulations decreed by the government; they shall be administered solely on the basis of the present law and its respective bylaws, with respect to cases not provided in this law and charter, these companies shall be subject to the Commercial Code.
Article 6 A Board of Directors, consisting of three or five persons, shall administer the Authority. The Board of Ministers shall appoint members of the board of directors. The Managing Director, who shall be the ex officio chairman of the Board, shall be appointed by Presidential decree from amongst the members of the board of directors and shall be the highest executive authority in the economic affairs and infrastructure in the Zone. The managing director and the Members of the board of directors shall be appointed for tenure of three years and their reappointment is permissible. Dismissal from the office of the managing director and the board members rests with the same appointing authorities. The responsibility for and the power of general meetings of each Zone Authority are vested with the Board of Ministers.
Article 7 Upon approval by the Board of Ministers, the Authority of each Zone is empowered to set up, as deemed necessary, companies, which shall be established in accordance with the provisions of the Commercial Code.
Section Four: General regulations
Article 8 The Authority and its affiliated companies are permitted to conclude the necessary contracts with natural or legal persons, whether foreign or domestic, and to participate with domestic or foreign investors for the implementation of development and productive projects, in compliance with the due provisions of the Constitution. Disputes and claims arising out of the concluded contracts, shall be examined and settled in accordance with the mutual agreements and the contractual commitments of both parties concerned.
Article 9 Ministries, organizations, institutes and companies owned by or affiliated to the government, may enter into contracts with the Authority or its affiliate companies for the purpose of providing facilities or services in each zone, within the stipulations of the Board of Ministers decrees. The terms and conditions of such contracts should be drawn up in a manner to safeguard the competitive position of the respective authority as against the Free Zones of other countries.
Article 10 Upon approval by the Board of Ministers, the Authority of each Zone is empowered to collect charges from natural or legal persons residing in the Zone in return for provision of municipal services and communications, health, cultural, educational and welfare facilities.
Article 11 Issuance of permits for any kind of permissible economic activity, construction of buildings and installations and embarking on various occupations which do not require immediate charge, by a natural or legal person within the boundaries of the Zone, rests solely with the Authority.
Article 12 Regulations governing the employment of workforce, social insurance and security and the issuance of entry visa to foreign nationals, shall be based on rules which are to be approved by the Board of Ministers.
Article 13 Natural and legal persons engaged in any kind of economic activity in a Zone are exempt from payment of income and property tax subject to Direct Taxes Law as for a duration of 15 calendar year from the date of the commencement of the operation mentioned in the permit with respect to any type of economic activity in the Free Zone, and upon the lapse of the initial 15 years in issue shall be subject to the tax regulations to be enacted by the Majlis, upon the proposal by the Board of Ministers.
Article 14 Exchange of goods between the Zones and outside the Country is excluded from the provisions of the Export–Import Regulations after being registered at the customs office. Government Regulations for the export and import of goods and customs formalities within the scope of each Zone shall be approved by the Board of Ministers. Trade transactions between the Zones and the rest of the country, whether of commercial nature or by travelers is governed by the general Export- Import Regulations of the country.
Article 15 Upon approval by the Board of Ministers, importation of goods produced in a Free Zone to other parts of the country shall be exempt from payment of all or a part of customs duties and commercial benefit tax up to the added value thereof in the Zone.
Article 16 Importation of goods produced in a Zone, into the other parts of the country, whose raw materials are wholly or partly supplied domestically, is exempt (Proportionally) from all or a part of the customs duties and commercial benefit.
Article 17 Goods transported from the rest of the country for use and consumption in a Zone shall be constituted as domestic movement of goods, but their exportation from a Zone abroad shall be subject to the general Export–Import Regulations.
Article 18 (Amended on July 21, 1999) A bank and credit institute, in the form of public limited company or private joint stock company, owning registered shares, carrying out banking operation, utilizing the bank title and or credit institute in the Free Zones shall be established solely in accordance with the present law, and the bylaw thereof drafted by the Central Bank of Iran and ratified by the Board of Ministers.
Note 1 : Iranian bank and credit institute, with domestic and external investment in the Zones shall be established upon the proposal of the Zone Authority, and the approval of their article of association made by the “Money and Credit Council” and issuance of license by the Central Bank of Iran.
Note 2 : Opening of a branch, by the Banks and credit institutes, whether Iranian or foreign shall be upon the proposal of the Zone Authority, and approval of the Central Bank.
Note 3 : The governing order in determining the equivalence of the Iranian Rial against the foreign exchange in the Free Zones, shall be ordained by the Board of Ministers.
Note 4 : Transactions in the banking units located in the Free Zones shall be on the basis of the Iranian Rial and shall be subject to the Islamic Banking Regulations. Banking units, having obtained the license for offshore banking operations, are banned from transactions with the Iranian Rial.
Article 19 Upon approval by the Board of Ministers, the Authority is empowered, within the framework of its approved plan and budget, to obtain and guarantee credits from domestic and foreign sources for the purpose of implementing of infrastructures and productive projects. Repayment of these credits shall take place only through drawing on revenues of the Zone concerned.
Article 20 Inflow and outflow of capital and expatriation of profits generated by economic activities in each Zone are permitted. The required regulation for attraction and protection of investment in each Zone and the modality and participation of foreigners in activities in each Zone shall be approved by the Board of Ministers.
Article 21 (Amended on July 21, 1999) The legal rights of investors, the acceptance of whose capital investment has been decreed by the Board of Ministers, shall be guaranteed and protected. Should the capital of such investors be nationalized to the favor of the public or their properties being dispossessed of, a fair compensation shall be undertaken by the government. The regulations thereto the manner of acceptance of such investments and the manner of compensation shall be in accordance to the bylaw decreed by the Board of Ministers.
Article 22 (Amended on July 21, 1999) Registration of companies, intellectual and industrial property rights, as well as registration of ships, vessels and the aircraft in the Zone, shall be, accomplished with due to consideration of the article 81of the constitution, and in accordance with the bylaw decreed by the Board of Ministers. Note : Registration of companies and intellectual and industrial property rights in each Zone shall be accomplished by the Organization of that Zone.
Article 23 : The Authority is entitled to open representative offices wherever deemed necessary.
Article 24 Utilization of land and national resources belonging to the government within each Zone and the sales or lease thereof to Iranian nationals shall be determined by regulations as approved by the Board of Ministers and with regard to the development plans of each Zone. The Authority of each Zone shall be responsible for the enforcement of relevant regulations.
Note 1: Renting of land to foreign nationals is permitted but its sale thereto is strictly forbidden.
Note 2 : Iranians residing in the islands, subject to the Free Zones, shall enjoy the same rights of ownership of the land and improvements thereto as the rest of the country. The registry of the Deeds and Properties Organization is obliged to issue title deeds to individuals in accordance with laws and regulations.
Article 25 The president and directors of each Zone Authority, managing directors and board members of affiliated companies, all the ministers and the heads of government organizations, heads of the judiciary power, the Supreme Court and Administrative Justice Tribunal, the public prosecutor, the chief of state inspectorate, their respective deputies and advisors, Members of the Majlis, governors – general, mayors and their deputies and their respective first degree relatives are not authorized to hold shares in companies established by a Zone Authority or in private companies operating in the Zones.
Article 26 The bylaws for implementation of this Law shall be approved by the Board of Ministers.
Article 27 In order to maintain co-ordinations in the activities carried out in the Free Zones and as the case calls for, one of the two following procedures shall be determined based on the approval of the relevant minister: The executive departments (affiliated to the Executive Power) shall entrust their authorization in Zone, to the chairpersons and managing directors of the Free Zones; Any one of the officials to act, in the Free Zone, as the head, chief and the acting director for a government department shall be appointed in accordance with the proposal of the Chairperson and managing director of the Free Zone and ordinance of the highest official of the relevant government executive department.
Article 28 (Ratified on July 21, 1999) Establishment and activity of Iranian insurance institutes with domestic and foreign capital investment, the branches and representative as well as insurance agency representative in the Free Trade-Industrial Zones of the Islamic Republic of Iran is permitted and shall be only subject to the regulations proposed by the Bimeh Markazi Iran and approval of the Board of Ministers.
Statute of Arvand Free Zone Organization
Generalities and Definitions
Board of Directors
Head of the Board of Directors and CEO
Inspector or legal inspectors
Chapter One – Generalities and Definitions
Article 1: Name of the organization: Arvand Free Trade Zone…, hereinafter referred to as the Organization in its Statute.
Article 2: The organization’s registered office: The registered office of the organization is within the boundaries of the free industrial zone.
Article 3: Duration: The organization shall be for an indefinite period.
Article 4: Organization’s capital: The organization’s capital is one billion (100,000,000 / 100,000) Rials, which is obtained from non-revenue sources (land and facilities) of the organization. The organization’s capital is entirely owned by the government and is divided into 100,000 shares (100,000) one million (100,000,000) Rials.
Chapter Two – Objectives of the organization
Article 5: The objectives of the organization are as follows:
Infrastructure, development and economic growth, investment and increase of public incomes, creation of perfect and productive employment, market regulation of labors and goods, active participation in global and regional markets, production and export of industrial and conversion goods and delivery Public services.
Chapter Three – Organizational Organs
Article 6: The Pillars of the organization are:
Board of directors
CEO and Chairman of the board
Inspector or legal inspectors
Article 7: The Cabinet of Ministers is the representative of the owner of shares in the public assemblies, which, pursuant to the resolution No. 16632/30 dated 02/05/1994, has delegated its powers to the ministers of the Supreme Council of the Free Industrial Trade Zone under the President of the Republic of Iran.
Article 8: The duties and powers of the General Assembly are as follows:
- To agree on the establishment and dissolution of subsidiary companies.
- Ratification, amendment and modification of the statutes of the organization and subsidiaries in accordance with Article 85 of the Constitution.
- To apply high oversight to the activities of the organization.
- Approval of development plans, cultural programs, annual budgets, financial statements and organizational performance.
- Approval of the organization’s regulations.
- Approval of the security and police regulations of the zone with the approval of the commander-in-chief.
- Making a decision on increase or decrease of the capital amount.
- Appoint and depose of board members.
- Choosing an inspector or inspectors and determining their remuneration.
- Determining the general policy of the organization.
- To determine the salaries, benefits and any rewards of the members of the board of directors and the managing director.
- Determining the amount and manner of taking tolls in the area of free trade-industrial zone
- To make a decision on any matter that is subject to the provisions of this Statute on the agenda of the General Assembly.
- To decide on the deposit of all or part of the annual profit of the shareholder’s interest in the account of the organization’s reserves.
Article 9: The General Assembly of the Organization shall be formed at least once a year for the consideration and approval of the financial statements by the end of July each year and at least once for the consideration and approval of the next year budget, until the end of January of the same year.
Article 10: The invitation to convene the General Assembly of the Organization shall be at any time subject to the approval of the President.
Article 11: The place of formation and how to find meetings and how to approve the issues of the agenda of the general meeting shall be based on the internal rules of the Supreme Council of the Free Trade-Industrial Zone.
Board of Directors
Article 12: The organization is governed by a board of directors consisting of three or five persons appointed by the General Assembly. Members of the Board of Directors are elected by the General Assembly. Dismissing the members of the board will be with the same selection authority.
Article 13: The members of the Board of Directors shall be elected for a term of three years. Re-election is allowed. Until the members of the new board of directors are elected, the board of directors will continue to function.
Article 14: Meetings of the Board of Directors shall be held at least once a month with the invitation of the Chairman of the Board of Directors and the Managing Director of the Organization. Members of the Board of Directors may discuss their issues through the head of the board of directors and the CEO in order to put their issues on the agenda of the board meeting.
Article 15: Meetings of the Board of Directors shall be official by at least two thirds of the members, and the decisions of the meeting shall be valid and binding with the majority of the votes of the members present.
Article 16: For each meeting of the board of directors, a minute shall be conducted by the board of directors (secretary of the board of directors) and signed by all members of the board of directors present at the meeting. The minutes of the meeting consists of, names of the present and absent members, a summary of the negotiations and decisions made in the meeting. Any member of the board who disagrees with all or some of the decisions contained in the minutes, his opinion must be stated in the minutes.
Article 17: The Board of Directors shall have all the powers within the framework of the Law on the Management of Free Trade-Industrial Zones for the performance of the duties specified in this Statute, including the following powers and duties:
- Determine the procedures for the conclusion of any contract and participation with real and legal persons, both domestic and foreign.
- B) The manner of taking tolls shall be in accordance with the relevant regulations.
- The registration of companies and industrial and intellectual property, as well as the registration of ships, vessels and planes in the zone, according to the relevant regulations and without the granting of a franchise and monopoly.
- Agreement to establish a representative office in the necessary places.
- How to use the land and national resources and the order of selling or renting it within the boundaries of the industrial free trade zone shall be according to the law and the executive code approved by the general assembly.
- To make a decision on the purchase, sale, renting and contracting of all commercial and production affairs, and to export and import within the framework of the approved regulations.
- Provide and recommend the organization’s annual program and budget to the General Assembly for approval.
- Preparing and approving the report of the board of directors, financial statements and annual performance of the organization and submitting it to the general assembly for approval.
- Examining and drafting internal regulations and presenting it to the General Assembly for approval.
- The formation or dissolution of subsidiary companies in accordance with the rules of business law by the approval of the general assembly.
- Agreement on the granting and acceptance of warranties and denominations and commercial guarantees, and mortgages and bail of movable and immovable property within the framework of the relevant regulations.
- The board of directors may delegate some of its powers to the chairman of the board of directors and the managing director.
Chairman of the Board of Directors and CEO
Article 18: The managing director of an organization that heads the board of directors is appointed by the president and among the members of the board of directors and the highest executive body of the organization.
The managing director’s term of management is three years and his re-election is valid. However, the management period will not be longer than the term of membership in the board of directors.
Article 19: The Chairman of the Board of Directors and the CEO in the execution of the resolutions and decisions of the Board of Directors shall have all kinds of rights, powers and credits and represent the organization in relation to third parties. Other duties and powers are as follows:
- All current and ongoing communications of the organization are signed by the chairman of the board of directors and the director.
- Deposing and appointing the staff of the organization.
- To determine the amount of salaries and benefits, promotion and award of remuneration, and also the amount of salaries of employees, and to decide on all employment matters of employees in accordance with the relevant regulations.
- Receipt of claims and payment of debts and opening of IR Rials and foreign exchange accounts in domestic and foreign banks with authorized organization signature.
- Issuing permits for any type of economic activity allowed within the Free Trade-Industrial Zone.
- Issuance of visa for foreign nationals in accordance with the relevant regulations.
- The appointment of staff members for a variety of businesses that are not directly involved in the free trade zone.
- The chairman of the board of directors and CEO may delegate some of his powers to the members of the board of directors or staff of the organization to his discretion and responsibility.
- The head of the board of directors and the managing director is responsible for the good performance guarantee of all affairs of the free trade zone of industry and maintaining the rights and interests of the organization.
Inspector or legal inspectors
Article 20: The General Assembly shall select a main inspector and a substitutive inspector from among eligible individuals or legal entities for a period of one year. Their reelection is permitted and the former inspector will continue to serve until the election has been re-elected.
In case of death or resignation or dismissal of the main inspector, the substitutive inspector will assume his duties.
Article 21: The legal inspector may conduct any inspection within the limits of the legal authority and duties assigned to all the offices, records and contracts of the organization, and examine the documents relating to the organization. The duties and powers of the Inspectorate are as follows:
- Implementation of the organization’s operations with approved budget.
- To review the financial statements of the organization and confirm their conformity with the offices of the organization and to prepare a report and comment on the operation of the organization for submission to the General Assembly. The report shall be submitted to the chairman of the board of directors and the director at least 20 days before the general meeting.
- Comment on the veracity of the report of the Board of Directors to the General Assembly.
- The performance of the duties of an inspector, determined in accordance with the provisions of this statute, shall not in any way prevent the normal course of work of the organization.
Chapter Four- Financial statements
Article 22: The financial year of the organization starts from the twenty first of March each year and ends at the twentieth of March next year. All offices of the organization will close on the last day of the financial year. The financial statements of the organization and the report of the board of directors must be made available to the legal inspectorate up to 40 days prior to the date of the General Meeting.
Article 23: All documents and bonds of the organization, as well as all cheque book, bills and promissory notes are always valid with the signature of the co-chairman of the board of directors and the director or his representative, and one person is elected by the board of directors.
Article 24: The number and types of legal offices are determined by the Board of Directors in accordance with the provisions of the Commercial Code.
Article 25: Accounts of the organization shall be regulated and maintained in accordance with the principles of good accounting and accounting in accordance with the rules of the law of commerce.
Article 26: The law of commerce is governed by the provisions of this Statute, the Law on the Administration of Free Zones, the Acts of the General Assembly and the relevant implementing regulations.