Setting Up a Branch or Representative Office in Iran

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Setting Up a Branch or Representative Office in Iran

Setting Up a Branch or Representative Office in Iran

The Law Authorizing Registration of Branch or Representative Office of Foreign Companies passed in November 1997 to regulate business of representative and branch offices in Iran. Foreign companies which are registered in their own country can establish branch or representative office in fields which are allowed by the Government.  The subject of branch or representative office should fall within at least one of the following fields:

1) Providing aftersales services for goods and services of foreign company;

2) Conducing operational activities pertinent to agreements which are concluded between Iranian nationals and foreigners;

3) Appraisal and preparation of grounds for investment of foreign company in Iran;

4) Cooperation with Iranian technical and engineering companies for doing business a third country;

5) Increase of non-petroleum exports;

6) Providing technical and engineering services and transfer of know-how and technology; and

7) Conducting business which requires license such as transportation, insurance, banking, marketing and etc.

Branch office is the local office of the head office and conducts business on behalf of the principle company. The branch office functions with the responsibility of the head office and does not have legal personality.

Representative office which can be a registered by a natural person or legal entity undertakes to perform duties of the head office in Iran. What distinguishes representative from branch office is the matter of responsibility. In branch office, the head company is solely responsible for all obligations. However, in representative office, the representative shall be liable personally for all obligations.

 

Type of business entity

Pros

Cons

Representative office

  • The representative shall bear the responsibility to conduct the business. (legal personality of representative office)
  • Office requires a license
  • The administration of a representative office shall be conducted by an Iranian national
  • Management should be conducted by an Iranian resident or a number of Iranian residents
  • Business scope is restricted to the said 7 fields
Branch

  • Lower  Registration expenses and less documents are needed comparing to representative office
  • Parent company is solely responsible for all obligations. (lack of responsibility of branch)
  • Management should be conducted by an Iranian resident or a number of Iranian residents
  • Business scope is restricted to the said 7 fields

One thought on “Setting Up a Branch or Representative Office in Iran

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