Types of Trading Company in Iran

NAA Law Firm

Iran’s commerce cod predicts eight types of Trading Company; includes:

1)   Public Joint Stock Company;

2)   Private Joint Stock Company;

3)  Limited liability Company;

4)    Relative company;

5)    General partnership;

6)    Mixed Joint Stock Company;

7)    Mixed non-Joint Stock Company;

8)    Cooperative company.

Public Joint Stock Company

The company is a trading company whose capital is divided into shares. Part of the company’s capital is provided through the sale of shares to the people. The founders of the company can publish securities to provide part of the initial capital of the company. In this way, people by buying securities contribute to the company’s capital.

The number of shareholders should not be less than five. Shareholders’ liability is limited to the nominal value of their shares that is, in which the partners are responsible to the extent that they have accepted the share and are not responsible for more than that. If the company somehow sustained a loss and was owed, Owners of shares will not be required to pay company debts. The number of board members should not be less than 5 people. The board is elected by the general assembly and from among shareholders.

Private Joint Stock Company

Private Joint Stock Company is a company that has been fully funded by the founders of the company. Founders do not have the right to issue securities. The number of members in this type of company should be at least 3 people. The capital of the company is divided into shares of equal value.  Each of the partners owns a number of shares and can transfer a number of them to those who want to. Shareholders’ liability is limited to the number of their shares.

Limited liability Company

The company consists of at least two partners. The company’s capital is not divided into stocks. The responsibilities of the partners are limited to what they bring in the company. Corporate creditors do not have the right to refer to partners’ personal assets. Each partner owns a percentage of the capital which is called “Partner’s share”.  The partner is not allowed to transfer its share to third parties except with the consent of a number of partners, of which at least three-quarters of the capital belongs to them. Transfer of shares must be done by setting up an official document.

The company is managed by one or more managers. Decisions about the company should be taken by a majority of holders of at least half the capital. Each of the partners will have vote power in proportion to their share in the company.

Relative company (Responsibility proportionate to share)

A relative company is formed for business purposes between two or more people. The company’s capital is not divided into stocks. The responsibility of each partner is in proportion to the amount of capital that it owns. Relative to share, Partner Personal Assets is collateral for the company debt. If the creditors refer to the company and the company is not able to pay all its debts to the creditors, they can get the rest of the debt from the partners’ assets, proportional to partners’ share. A partner is not a guarantor for all of the company’s debt except in proportion to his share.

General partnership

The number of partners in this type of company is at least two people. Each partner is a guarantor of the company’s total debt. Partner Personal assets are collateral for the company debt. If the creditors refer to the company and the company is not able to pay all its debts to the creditors, they can get the rest of the debt from assets of each of the partners.

Mixed Companies

Sometimes it is seen that joint stock companies or limited liability companies are mixed with General partnership or relative companies and other types of companies appears.

  1. Mixed non-Joint Stock Company

One or more general partnership company + one or more Limited liability Company

  1. Mixed Joint Stock Company

One or more general partnership company + one or more Private Joint Stock Company

Cooperative company

A cooperative company is a company that is formed to improve the economic status of partners and meet their needs.

The cooperative company has a variety of types:

–    Cooperative Production Company; In the production cooperatives, the member must work in the cooperative company.

–    Cooperative Distribution Company

–    Multi-purpose cooperative company

About Hormoz Yazdani Zunuz

first grade attorney at law
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