Tehran Stock Exchange: Final Approval Of The By-Law For Foreign Portfolio Investment

The by-law for “Foreign Portfolio Investment (FPI)” which had been under consideration in the Majlis (Iranian Parliament), finally approved and became operational in June 2005.

Important conditions included in this by-law are:

• Foreign companies and individuals shall invest in the TSE after receiving license from “Organization for Investment, Economic & Technical Assistance of Iran (OIETAI)” – an affiliation of the Ministry of Economics and Financial Affairs.
• Foreign investors shall introduce a domestic bank for their banking activities.
• Based on current “TSE disclosure regulations”, foreign investors shall announce their financial and quarterly reports and quarterly value of their portfolio to the TSE.
• Foreign investors shall invest a maximum of 10 percent of each listed company.
• Foreign investors shall not withdraw their main capital and capital gain at the first three years of their investment, while repatriation is possible under current regulations.
• Such limitations are not mentioned in the by-law for “Foreign Direct Investment (FDI)”.

TSE Kish Floor, located in Kish Island Free Trade Zone, has more relaxed conditions for foreign investors. Unlike mainland, foreign individuals shall easily obtain their “trading code” in few minutes without any need to grant the license from OIETAI; while establishing a company in Kish will be considered as “Iranian”, and bear no such limitations existing in the mainland for foreign entities.

This by-law has been translated in English and can be downloaded on clicking here.