Securities Market Act of The Islamic Republic of Iran

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Securities Market Act of The Islamic Republic of Iran

Chapter One – Definitions and Terms
Article 1‐ The following definitions shall apply for the purposes of the terms and phrases
used in this law:
1. Securities and Exchange High Council means a council which is formed under article 3 of
the present Law and is hereinafter named the Council.
2. Securities and Exchange Organization means an Organization which is established under
article 5 of the present law and is hereinafter referred to as the Organization.
3. Stock Exchange means an organized and self‐regulating market in which the securities are
traded by brokers and/or dealers in accordance with the provisions of this law. The Stock
Exchange (hereinafter named the Exchange) shall be established and administered in the
form of a public joint‐stock company.
4. Arbitral on Board means a board which shall be formed under article 37 of this law.
5. Association means the self‐regulatory organizations of brokers, dealers, market‐makers,
advisors, issuers, investors and other similar associations which are duly registered subject
to the regulations approved by the Organization in the form of non‐governmental, noncommercial
and non‐profit entities so as to regulate the relationships among the persons
that are involved in the Securities market as per the rules of this law.
6. Self‐Regulatory Organization (SRO) means an organization which is authorized to
establish and enforce professional and disciplinary standards and rules in conformity with
the present law for the good performance of functions entrusted to it under this law as well
as regulating its professional activities and relations among its members.
7. Central Securities Depository and Settlement Company means a company which shall
provide services relating to registration, depository, transfer of securities ownership, and
settlement of accounts.

8. Over‐the‐Counter (OTC) Market means a market which is operating in the form of an
electronic and non‐electronic network where the securities transactions are conducted on
the basis of negotiations.
9. Primary Market means a market where the initial offering and subscription of newlyissued
securities is carried out and the proceeds derived from securities offering are
transferred to the issuer.
10. Secondary market means a market in which the securities are transacted after the initial
offering.
11. Derivative Market means a market in which the the futures and options contracts based
on securities and commodities are transacted.
12. Issuer means a legal entity that issues securities in its name.
13. Broker means a legal entity that engages in securities transactions in the name of other
persons and for their account.
14. Broker/Dealer means a legal entity that engages in the securities transaction in the
name of other persons and for their account and/or in its own name and account.
15. Market‐maker means a broker/dealer that, upon obtaining the required license,
engages in trading specified securities with a commitment to increase liquidity, regulate the
bid and offer of such securities and limit their price range fluctuations.
16. Investment Advisor means as legal entity that provides advisory services to investors
concerning the securities trading (buying and selling) on the strength of a specific contract.
17. Portfolio Manager means a legal entity that, under a specific contract, engages in buying
and selling securities for investors so as to gain profit.
18. Investment Bank means a company which is operating as an intermediary between the
securities issuer and all investors and may get involved in brokerage, dealership, marketmaking,
consulting, portfolio management, subscription, underwriting and similar
operations by obtaining a license from the Organization.
19. Pension Fund means an investment fund that provides supplementary benefits for the
retirement period of its members by utilizing savings and investment schemes.
20. Mutual Fund means a financial institution whose main activities are investing in
securities and their holders shall share in the fund’s profit and loss in proportion to their
investments.

21. Financial Ins?tu?ons means the financial institutions which are active participants in the
securities market including, inter alia, brokers, broker/dealers, market‐makers, investment
advisors, rating agencies, mutual funds, investment companies, financial data processing
companies, investment banks and pension funds.
22. Parent (Holding) Company means a company that, by investing in an investee company
for gaining profits, acquires sufficient right to vote to elect members of the board of
directors to exercise control over the company operations and/or plays an effective role in
electing the board members.
23. Assessor means a financial analyst who makes an assessment/ appraisal of the assets
and securities under the present law.
24. Securities mean any paper of document which shall bear the transferable financial rights
for the owner of an asset and/or its profit. The council shall establish and announce the
marketable securities. The concepts of financial instruments and securities have been
regarded as equivalent in the text of the present law.
25. Issue means the issue of securities for public offering.
26. Public Offering means the offer of issued securities to the public for sale.
27. Private Placement means the direct sale of securities by the issuer to institutional
investors.
28. Subscription means the process of securities purchase from the issuer and its legal agent
and commitment to the payment of full price as per an agreement.
29. Underwriting means the guarantee furnished by a third party to take up the securities
which have not been sold within the subscription period.
30. Prospectus means a notice which provides information concerning the issuer and the
securities eligible for subscription to the general public.
31. Registra?on Statement means a set of forms, information, documents and records
which are submitted to the Organization during the course of application for the company
registration.
32. Inside Information means any type of undisclosed information to the public which is,
directly or indirectly, related to the securities, transactions and the issuer thereof and in the
case of securities issuance, it shall affect the price and/or the investors’ decisions for trading
in the related securities.
33. Portfolio means total financial assets purchased out of the investors’ funds.

Chapter Two – Securities Market Bodies
Article 2‐ In order to protect the investors’ rights, maintain and develop a transparent, fair
and efficient market securities and supervise the proper enforcement of this law, the
Council and the Organization shall be formed with the composition, function and powers
stipulated in the present law.
Article 3‐ The Council is the highest ranking body of the securities market which shall be
charged with the adoption of the macro‐policies of such market. The members of the
Council shall include:
• Minister of Economic Affairs and Finance
• Minister of Commerce
• Governor of the Central Bank of I.R.I
• Heads of the Iranian Chamber of Commerce, Industries and Mines and the Chamber
of Cooperatives
• President of the Organization acting as the secretary of the Council and spokesman
of the Organization
• Public prosecutor or his deputy
• one representative on behalf of the Associations
• Three financial experts solely from the private sector in consultation with the
professional entities in the securities market as recommended by the Minister of
Economic Affairs and Finance and approved by the Council of Ministers.
• One expert solely from the private sector as recommended by the concerned
minister and approved by the Council of Ministers of each commodity exchange.
Note‐1 The Minister of Economic Affairs and Finance shall be acting as chairman of the
Council.
Note 2‐ The office‐term of the members stated in paragraphs 7, 8 and 9 shall run for 5 years
and they cannot be elected from among the members of the board of directors and the staff
of the Organization.
Note 3‐ The reelection of the members referred to in paragraphs 7, 8 and 9 of this article
shall be possible for a maximum of two terms.
Note 4‐ The members stated in paragraph 9 shall merely have to attend the meetings held
to take decisions on the same exchange.
Article 4‐ The functions of the Council are set out as follows:
1. to adopt proper measures towards promotion and development of securities market
and exercise of supreme control over the application of this law;
2. to frame the securities market policies in line with the government’s macro‐policies
and in conformity with the relevant laws and regulations;
3. to propose the by‐laws for approval by the Council of Ministers as deemed necessary
for the enforcement of this law;
4. to approve new financial instruments;
5. to issue, suspend and revoke the activities of exchanges, OTC markets, Central
Securities Depository and Settlement company and investment banks;
6. to approve the budget and financial statements of the Organization;
7. to monitor and exercise control over the Organization’s operations and handle the
complaints against it;
8. to approve the type and amounts of receipts/collectibles by the Organization and
exercise supervision over them;
9. to appoint the Organization’s auditor/inspector and establish their fees and
remuneration;
10. to elect the members of the board of directors of the Organization;
11. to determine the salary, fringe benefits, bonus and remuneration for both the
president and members of the board of directors of the Organization;
12. to select members of Arbitration Boars and determine their fees and remuneration;
13. to grant permission to the Exchange for offering the securities of its listed companies
on the foreign markets;
14. to grant permission to the Exchange for the listing of foreign securities on the
Exchange;
15. to grant permission to the Exchange to facilitate transactions by foreign
persons/entities on the Exchange;
16. to address other issues which are, at the discretion of the Council of Ministers,
related to the Securities Market.
Note‐ the Council’s resolutions shall become enforceable when they have been approved by
the Minister of Economic Affairs and Finance.
Article 5‐ The Organization is a public non‐governmental entity with legal and financial
independence which shall be funded through the service charges and fees collected from
the companies listed on the Exchange as well as other revenues. The funds required to
commence the operations of the Organization shall be raised out of the trust funds of the
Stock Exchange Council deposited with the Tehran Stock Exchange Brokers’ Organization.
Note‐ The statute and administrative structure of the Organization shall, within three
months as of the ratification date of this law, be compiled by the Council, and approved by
the Council of Ministers.
Article 6‐ The Organization board of directors shall consist of 5 members who are elected
from among the trusted and reputable individuals with financial experiences solely from the
non‐governmental sector professionals as recommended by the chairman of the Council
and approved by the Council. The chairmen of the Council shall issue letters of appointment
for the members of the board of directors.
Article 7‐ The functions and powers of the Organization board of directors are set out as
follows:
1. to compile the by‐laws required for the enforcement of this law and recommend
them to the Council;
2. to draft the implemental regulations of this law;
3. to monitor the strict application of this law and pertinent rules;
4. to register and issue the license for the public offering of securities and exercise
control over the procedures thereof;
5. to request the issuance, suspension and revocation of the establishment license of
exchanges and other institutions/entities which fall under the Council’s jurisdiction
for approval;
6. to issue, suspend and revoke the establishment licenses of associations and financial
institutions subject of this law which do not fall under the direct jurisdiction of the
Council;
7. to approve the statutes/constitutions of the exchanges, associations and financial
institutions subject of the present law;
8. to adopt the necessary measures to prevent the occurrence of violations in the
securities market;
9. to report such types of violations in the securities market whereby the reporting task
has been entrusted to the Organization as per this law to the appropriate authorities
and follow up the same;
10. to present the financial statements and periodic reports on the Organization’s
performance as well as the status of the securities market to the Council;
11. to take the appropriate measures and required actions to protect the rights and
benefits of investors in the securities market;
12. to provide the required coordination and cooperation with other supervisory boards
and policy‐making entities;
13. to propose the utilization of new financial instruments in the securities market to the
Council;
14. to supervise the investments made by foreign natural and legal persons in the
Exchanges;
15. to draft the budget and propose various revenues and service fees of the
Organization for approval by the Council;
16. to approve the limit of service fees and charges of the Exchange and other financial
institutions subject of this law;
17. to issue the confirmation letter of the Organization prior to the registration of the
public joint‐stock firms with the Companies Registration Authority and the
Organization’s oversight of such entities;
18. to examine and oversee the disclosure of material information by the companies
registered with the Organization;
19. to provide cooperation and coordination with accounting authorities, in particular,
the Board in charge of Codifying the Auditing Standards;
20. to conduct the long‐term and macro‐research programs towards formulation of
future policies of the securities market;
21. to cooperate with and participate in the international institutions and join the
related regional and global organizations,
22. to perform all other affairs entrusted to the Organization by the Council.
Article 8‐ The office‐term of each member of the board of directors shall run for five years
and their re‐election for the second term shall meet no impediment;
Ar?cle 9‐ The chairman of the Organization board of directors shall be appointed from
among the board members on the advice of the members and with the approval of the
Council for a period of 30 months.
Note 1‐ The chairman of the board of directors shall be acting in the capacity of the
Organization president and regarded as the highest ranking executive official.
Note 2‐The functions and the scope of powers of the Organization president shall be
described in the of Organization’s statute.
Article 10‐ The engagement of the members of the board of directors shall be on a full time
basis as an executive member and shall not absolutely be allowed to engage in or assume
another responsibility whatsoever in other establishments, agencies and entities whether
governmental or non‐governmental.
Article 11‐ In the case of dismissal, death and/or resignation of any member of the board of
directors, his subs?tute shall be elected for the remaining office term within 15 days as the
case may be, subject to the rules specified in article 6. The conditions for dismissal of the
board members shall be stipulated in the statute of the Organization.
Article 12‐ The members of the board of directors shall, prior to assuming their
responsibility in the Organization, take an oath at the Council’s meeting so as to perform
their legally assigned duties in the best possible manner, take the utmost care and
impartiality in the exercise of their functions, ensure that all the resolutions adopted are in
the interests of the country and observe the secrecy and confidentiality of the information
provided by the Organization and the board of directors. The text of the oath shall be
included in the statute of the Organization.
Article 13‐ The salaries and benefits of the president and of the board members of the
Organization shall be paid out of the budget allocated for this Organization.
Note‐ The attendance bonus/fees of the Council’s non‐governmental members at the
meetings shall be fixed and approved by the Council as recommended by the Council
chairman and shall be paid out of the Organization budget.
Article 14‐ From the start of their appointment and at the termination of their office‐terms,
the members of the board of directors shall have to report the list of their own assets and
property and the assets of their wives and dependents to the Council.
Article 15‐ The auditor/inspector of the Organization shall be chosen by the Council from
among the auditing firms being members of the Association of Certified Accountants for the
term of one year. The re‐election of the auditor/inspector shall be possible for a maximum
of two terms.
Article 16‐ Any transaction in the securities registered or in the process of registering with
the Organization or any direct or indirect activity and engagement in such transactions by
the Council members, Organization, directors and partners of the Organization’s auditing
firm as well as by their dependents shall be forbidden.
Article 17‐ The members of the Council and the Organization shall, within two years, have to
report their economic and financial activities as well as the full‐time or part‐time jobs that
they have had for the past two years to the Head of the Judiciary.
Article 18‐ The Council members, Organization, directors and partners of the Organization’s
auditing firms shall have to refrain from direct or indirect disclosure of confidential
information they become aware of in the discharge of their functions even after the expiry
of their office‐terms. The offender shall be sentenced to the punishments prescribed under
article 46 of this law.

Article 19‐ The Organization may, in performance of its legally assigned duties upon the
authority of the state public prosecutor, request the furnishing of the required information
within the framework of the existing law from all banks, credit institutions, governmental
(state) corporations, public and government organizations including the establishments
whose names have been mentioned or specified for the applicability of this law as well as
natural persons or non‐governmental legal entities. All such establishments and persons
shall have to present information to the Organization in the specified period of time.
Chapter Three – Primary Market
Article 20‐ The public offering of securities in the primary market shall be subject to their
registration with the Organization pursuant to this law whilst the public offering of securities
in any manner whatsoever shall be forbidden without applying the provisions of the rules
herein.
Article 21‐ Registration of securities with the Organization shall provide assurance of the
compliance with prevailing rules, the Organization’s approvals and information transparency
and shall not entail confirmation of any privileges, guarantee of profitability and/or any
recommendation and advice as to the companies or the securities‐related projects by the
Organization. This matter shall be specified in the prospectus.
Article 22‐ The issuer shall have to submit its application for registering the securities in
conjunction with the registration statement and the prospectus so as to obtain the required
license for public offering.
Note‐The application form of securities registration, the contents of registration statement
and prospectus which shall have to be submitted to the Organization and also the
procedures of publishing the prospectus and providing coordination between the
Companies Registration Authority and the Organization shall be set forth subject to the
directive issued by the Organization and approved by the Council.
Article 23‐ The Organization shall have to take action for the approval of the prospectus
after it has duly considered the request for securities registration and obtained assurance as
to their compliance with the rules in force.
Note 1‐ The securities public offering shall take place within the period of time specified by
the Organization. Such period shall not exceed 30 days. The Organiza?on may extend the
subscription period for a maximum of another 30 days at the issuer’s request based on the
reasonable evidence.
Note 2‐ The issuer shall, within 15 days a?er the expiry of the public offering period, no?fy
the Organization of the results of securities sales and distribution in a manner determined
by the Organization. The steps due to be taken by the issuer, where the securities have not
been entirely sold, shall be specified in the prospectus.
Note 3‐ Utilization of the funds so collected shall be authorized when the Organization has
confirmed the completion of the public offering process.
Note 4‐ In the case that the process of public offering has not been completed, the proceeds
so collected shall have to be refunded to the investors within 15 days at the latest.
Article 24‐ If the Organization finds out that the application forms and the annexes thereto
received for registration and issuance of the securities are incomplete, it shall, within 15
days, reflect the matter to the issuer and request for an amendment. Where the
documentation has been completed, the Organiza?on shall, within 30 days at the latest as
of the date of filing the application with this Organization, announce its agreement or
disagreement with the securities registration to the issuer.
Article 25‐ As of the effective date of this law, a license for publication of the prospectus
shall be issued by the Companies Registration Authority upon the Organization’s approval in
order to have the public joint‐stock companies or their capital increase registered.
Article 26‐ As of the effective date of this law, the functions and powers of the Central Bank
of I.R.I under article 4 of the Law on the Issuance of Participation Certificates (Musharakah
Sukuk) enacted on September 21, 1997 shall be delegated to the Organization.
Note‐ The participation certificates which are, subject to this law, exempt from registration
with the Organization shall also be excluded from the application of this article.
Article 27‐ The following securities shall be exempt from registration with the Organization:
1. the participation certificates issued by the Government, Central Bank and
municipalities;
2. the participation certificates issued by the banks and financial and credit institutions
which are under the supervision of the Central Bank;
3. the securities offered in the form of private placements;
4. the shares of any public joint‐stock company whose total shareholders’ equity is less
than the figure set by the Organization,
5. other securities which shall not require registration at the discretion of the Council,
such as the bonds/certificates issued by other organizations and competent
authorities.
Note‐ The issuer of securities which are exempt from registration shall have to report the
specifications and features of the securities and the procedure and requirements of their
distribution and sales to the Organization as per the conditions laid down by this
Organization.
Article 28‐ Establishment of exchanges, OTC markets and financial institutions subject of this
law shall require their registration with the Organization. These entities shall be operating
under the supervision of the Organization.
Article 29‐ The professional competency and qualifications of the members of the board of
directors and executives, the minimum required capital, subject of the business area as set
down in the statute, reporting system and type of special audit reports of financial
institutions under this law, shall be approved by the Organization.
Chapter Four – Secondary Market
Article 30‐ The securities listing on the exchange shall be implemented in accordance with
the regulations which shall be approved by the Organization upon the recommendation of
each exchange. The exchange shall not be authorized to list the securities which have not
been registered with the Organization.
Note‐ The securities exempted from registration shall be excluded from the provisions of
this article.
Article 31‐ The exchange shall have to prepare the list, number and price of securities
traded on business days as per the standards approved by the Organization and shall be
publicly announced. Such list shall be deemed as an official instrument and filed in the
exchange archives.
Article 32‐ The Organization shall, upon identification of emergency conditions, be
authorized to issue instruction for suspension and/or halting of transactions on each one of
the exchanges for a maximum period of three business days. In the case of continuation of
emergency state, such period may be extended by the Council.
Note‐ The emergency conditions shall be specified in a regulation which shall be approved
by the Council as recommended by the Organization.
Article 33‐ Commencement of activities by brokers, broker/dealers and market‐makers in
any manner and under any designation shall be subject to their membership in the
appropriate association and compliance with the provisions of this law, regulations and
directives.
Note‐ As long as the Association of Broker/Dealers and Market‐makers has not been
formed, the functions and duties of such association shall be performed by the
Organization. When the number of the association members reaches 11 persons across the
country, it shall be mandatory to form the Association of Broker/Dealers and Market‐
Makers.
Article 34‐ The operations and activities of brokers, broker/dealers and market‐makers on
each exchange shall be subject to their admission into this exchange in accordance with the
guidelines recommended by the related exchange and approved by the Organization.
Article 35‐ The board of directors of the exchange shall investigate the disciplinary violations
committed by brokers, broker/dealers, market‐makers, issuers and other related members
in breach of each provision of this law or appropriate rules in accordance with the prevailing
disciplinary regulations. The verdict rendered by the exchange may be appealed with the
Organization within one month as of the date of its service. The decision so taken by the
Organization shall be absolute and enforceable.
Article 36‐ The deputies among brokers, market‐makers, broker/dealers, investment
advisors, issuers and other concerned parties arising from their professional activities shall
be investigated by the Arbitration Board if no settlement and compromise can be reached
by the associations.
Article 37‐ The Arbitration Board shall be composed of three members whereby one
member shall be chosen by the Judiciary Head from among the experienced judges and two
members shall be appointed by the Council from among the financial and economic
professionals as recommended by the Organization so as to investigate the disputes. In
addition to their principal representatives, the Head of the Judiciary and the president of the
Organization shall, upon the Council’s approval, each designate and introduce their
alternate members so as to attend the Arbitration Board sessions in case a principal
member is absent. The qualifications for the alternate members shall be the same as those
for the principal members.
Note 1‐ The representative of the Judiciary shall preside over the Arbitration Board.
Note 2‐ The office‐term of the principal and alternate members shall be two terms at the
latest and their reappointment shall be allowed for another two terms at the latest.
Note 3‐ The Arbitration Board has a secretariat which is based at the premises of the
Organization.
Note 4‐ The budget of the Arbitration Board shall be drafted and paid out of the
Organization budget.
Note 5‐ The awards issued by the Arbitration Board shall be absolute and enforceable and
shall be implemented by the Offices and Divisions of the Deeds and Real Estates Registration
Department.
Article 38‐ In the event that the brokers, broker/dealers, market‐makers, investment
advisors and other similar organizations apply for temporary or permanent withdrawal from
their activities, they shall report the matter to the Organization, Association and accordingly
to the appropriate exchange and shall deposit their business licenses with the Association.
The related guarantees and collaterals shall remain valid until when the status of the
transactions conducted and other obligations has been cleared and settled. The latter part
of this article shall also apply to brokers, broker/dealers, market‐makers, investment
advisors and other similar organizations whose memberships have been suspended or
revoked in accordance with article 35 of this law.
Article 39‐ The brokers, broker/dealers, market‐makers, investment advisors and other
similar Organizations shall have to prepare the required reports and submit them to the
appropriate authorities subject to the guidelines compiled and notified by the Organization.
Chapter Five ‐ Information Disseminating in the Primary and Secondary
Markets
Article 40‐ The Organization shall arrange a manner that the set of information collected in
the process of securities registration shall, within 15 days at the latest, be made available to
the public pursuant to the relevant by‐laws.
Article 41‐ The Organization shall have the exchanges, securities issuers, brokers, dealers,
market‐makers, investment advisors and all organizations active in the capital market
release full information on their operations as per the National Auditing and Accounting
Standards.
Article 42‐ The issuer of securities shall have to prepare its financial statements subject to
the legal requirements, accounting and financial reporting standards, implemental
regulations and directives as communicated by the Organization.
Article 43‐ The issuer, investment bank, auditor, assessors and the issuer’s legal advisors
shall be accountable for compensation of damages to the investors that have sustained a
loss due to the failure, negligence, violation and/or on the grounds of presenting incomplete
and false information in the course of initial offering arising from an act or omission of an
act.
Note 1‐ The parties suffering from a loss under this article may, within one year at the latest
after detection of violation, lodge a complaint with the Exchange board of directors or the
Arbitration Board providing that not more than three years has lapsed as of the public
offering date by the issuer.
Note 2‐ Only those individuals who have purchased the securities of the issuer subject of
this article prior to the detection and announcement of violation shall be entitled to claim
damages.
Article 44‐ If the Organization becomes aware that the issuer has provided false,
incomplete, or misleading information in the registration statements or in the prospectus, it
may stop the public offering of securities at any stage.
Article 45‐ Any issuer that has obtained its license for securities issuance from the
Organization shall be obligated to submit at least the following items to the Organization in
accordance with the directive issued by this Organization:
1. the audited annual financial statements;
2. the mid‐year financial statements including the audited semiannual and quarter (3
month‐period) financials;
3. the board of directors’ report to the general meetings and the opinion expressed by
the auditor,
4. any information having a material effect on the securities price and the investors’
decision‐making.
Chapter Six ‐ Offences and Punishments
Article 46‐ The following persons shall be sentenced to (discretionary) imprisonment from
three months to one year or to cash penalty being equal to two or five times of the profit
gained or the non‐incurred loss or to both punishments:
1. any person who, prior to the public offering, takes advantage of the inside
information relating to the securities subject of this law being available to him exofficio
which may, in one way or another, be served against the interests of other
parties or be served in his own interest or in favor of the persons from whom he is
represented under any designation or causes such information to be disclosed or
released in the circumstances not permissible;
2. any person who trades in securities by using the inside information;
3. any person whose actions will typically result in a deceptive appearance of the
securities transactions trend or will create false prices or lure persons into securities
trading,
4. any person who, without observing the provisions of the present law, publishes a
notice or a prospectus aimed at public offering securities.
Note 1‐ The following persons shall be regarded as insiders in a company:
15
a) directors/executives of the company including members of the board of directors,
executive board, managing directors and their deputies;
b) inspectors, advisors/consultants, accountants, auditors and lawyers/ attorneys of the
company;
c) the shareholders who, individually and/or jointly with their dependants hold more
than ten (10%) percent of the company shares or such shares are in possession of
their representatives;
d) the managing director and board members and the directors concerned or the
representatives of the parent (holding) companies who own at least ten (10%)
percent of shares or fills at least one seat in the board of directors of the investee
company,
e) other persons who have access to the inside information with a view to their
functions, powers and/or their positions (ex‐officio).
Note 2‐ The persons under Note 1 of this ar?cle shall, within 15 days a?er the conduct of
transactions, have to report that portion of their securities trading which is not based on the
inside information to the Organization and the Exchange.
Article 47‐ The persons who present false information or forged documents to the
Organization or the Exchange or certify such information and documents and/or use false
information and forged documents and records in compiling the reports required under the
present law shall be sentenced, as the case may be, to the punishments prescribed in the
Islamic Punishment Act ratified on May 27, 1996.
Article 48‐ The broker, broker/dealer, market‐maker, investment advisor who, without
permission, disclose the secret/confidential information of the persons whereby they exofficio
become aware of or is made available to them, shall be sentenced to the
punishments prescribed in the Islamic Punishment Act ratified on May 27, 1996.
Article 49‐ The following persons shall be sentenced to (discretionary) imprisonment from
one to six months or to cash penalty being equal to one or three times of the profit gained
or non‐incurred loss or to both punishments:
1. any person who, without applying the provisions of this law and under any
designation whatsoever, is engaged in the activities such as brokerage,
broker/dealership and market‐making which shall require obtaining a license and/or
introduces himself under any of such designations;
2. any person who is obligated under this law to submit all or parts of the information,
records and/or material documents to the Organization and/or to the appropriate
exchange and refrains from doing so;
3. any person who is responsible to compile and gather documents, records,
information, registration statement or prospectus and the like for submission to the
Organization and accordingly any person who is responsible to examine and
comment on or prepare the financial, technical or economic reports or is responsible
to certify in any manner such documents and information and violates the provisions
of this law in the performance of the assigned duties,
4. any person who intentionally and purposefully misuses any information, documents,
records or false reports relating to securities in any manner whatsoever.
Article 50‐ The broker, broker/dealer or market‐maker that misuses the securities and the
funds deposited with him, as required to be kept in a separate account for carrying out
transaction, in his own interest or in favor of other parties in contravention of the rules shall
be sentenced to the punishments prescribed in article 674 of the Islamic Punishment Act
ratified on May 27, 1996.
Article 51‐ In the case of committing the violations stipulated in this law by legal entities,
the punishments so prescribed shall be inflicted, as the case may be, on those natural
persons who have been entrusted with the decision‐making responsibilities on behalf of the
said legal entities.
Article 52‐ The Organization shall have to collect the evidence and records relating to the
violations stipulated in this law and submit them to the competent judicial authorities and
shall, as the case may be, follow up the matter as plaintiff/ complainant. If any loss and
damage has been incurred by other parties/persons owing to the the foregoing violations,
the aggrieved party may submit the statement of claim with the judicial authorities for
compensation of the loss and damage so sustained in accordance with the rules in force.
Chapter Seven ‐ Miscellaneous Provisions
Article 53‐ The broker, broker/dealers, market‐makers and other participants in securities
market shall, within six months as of the establishment of the Organization, have to take
action to establish their Association following the approval of their statute.
Article 54‐ Not any shareholder, whether natural or legal, shall be allowed to hold directly or
indirectly, more than two percent and half (2.5%) of the shares in the Exchange.
Article 55‐ Not any shareholder, whether natural or legal, shall be allowed to hold, directly
or indirectly, more than five percent (%5) of the shares of the Central Securities Depository
and Settlement Company.

Article 56‐ Upon the establishment of the Organization, all records and documents of the
Stock Exchange Council subject of the Establishment Act of the Tehran Stock Exchange
passed in 1966, shall be transferred to this Organization.
Article 57‐ The properties and assets of the Brokers’ Organization of the existing exchanges
including movable and immovable, cash, bank deposits, securities, rights, obligations and
other assets shall, after deduction of liabilities and the deposits reserved for the Exchange
development, be computed at a committee composed of the organization president,
elected representative of the Council and shall, when necessary and appropriate, be
apportioned between the joint stock company of the relevant Exchange and the
Organization as capital and financial resources at hand respectively. The decisions taken by
this committee shall be enforceable upon approval by the Minister of Economic Affairs and
Finance.
Note‐ The employers’ records and benefits of the Brokers’ Organization of each Exchange
shall be redeemed in accordance with the Labor Law legislation.
Article 58‐ The government shall take necessary measures to activate the commodity
exchanges in conformity with the present law and introduce legal guidelines and
mechanisms for such purpose.
Article 59‐ The present law shall fully enter into force four months after the date of its
ratification and the Council of Ministers and other authorities referred to herein shall take
action in a manner that the administrative and organizational rules and proper executive
organs required under this law be established and approved within the said period.
Article 60‐ Upon the expiry of the periods specified in this law, the Establishment Act of the
Stock Exchange approved on May 17, 1966 and all laws and regulations which are in conflict
with the present law shall be repealed.

The present law comprising 61 articles, 29 notes was ratified at the opening session of the
Parliament (Islamic Consultative Assembly) on Thursday November 22, 2005 and received
the assent of the Guardian Council on November 23, 2005.

FAR Law Firm

2 thoughts on “Securities Market Act of The Islamic Republic of Iran

  1. An interesting discussion is definitely worth comment. There’s no doubt that
    that you should publish more on this issue, it maay not be a taboo matter but
    generally folks don’t talk about such topics. To the next! Kind regards!!

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