The new Securities Act which is more comprehensive and advanced than the previous one was passed on November 16, 2005 by the Iranian parliament to support investors’ rights and aimed at organizing, preserving and developing a transparent, fair and effective market.
Under the new Act, the Securities & Exchange High Council (Council) and the Securities and Exchange Organization (SEO) were introduced and created as regulators of Iranian capital market and TSE has been demutualized i.e. the membership organization entity was turned into a public joint stock company.
The Council is the highest authority and is responsible for all related policies, market strategies, and supervision of the market. The Chairman of the Council will be the Minister of Economy & Finance; other members are: Minister of Commerce, Governor of the Central Bank of Iran, President of the Chamber of Commerce, Attorney General, Chairman of SEO, representatives of the active market associations, three financial experts requested by the Minister of Economy & Finance and approved by the Council of Ministers, and one representative from each exchange.
The SEO will be responsible for administration and supervisory duties, governed by the Board of Directors. The SEO’s Board of Directors will be elected by the Council.
TSE overriding goal is to provide reliable facilities for the efficient and orderly conduct of trading securities. It is also entrusted to regulate the activities of brokers and safeguard the interests of the investing public through ongoing trading floor and broker supervision and overall market surveillance.
TSE is supervised by a seven-member Board of Directors that sets strategy and operating policy. These individuals, elected for a term of two years by shareholders’ general assembly appoint a Managing Director. The job of the Managing Director is to manage the operations of the Exchange through various department heads who report to him. Managing Director’s term of office is for a two-year renewable term.
Roles of TSE
Legislation establishing Tehran Stock Exchange (TSE) was formally enacted in 1966 and TSE began operation on April 6, 1967. Forty years after the establishment of the TSE, a new Securities Act was passed in November 2005. Under this Act, TSE have been demutualized.
As defined in the Article of Association, TSE’s primary roles are:
- Establishing, organizing and managing of the Stock Exchange in order to trade listed securities
- Listing of securities
- Prescribing membership requirements for members and supervising their performance, and regulating their activities
- overseeing the transactions of the Exchange listed securities
- Monitoring the performance of issuers of the listed securities
- Processing and disseminating the information regarding the securities orders and transactions of securities
Capital and Shareholders
The capital stock of the Company is equal to the sum of 900 billion Rials, which is divided into 900 million registered common shares of 1000 Rials each. Shareholders of the Company shall be classified as follows:
- Class one: Persons who have received the license for brokerage activities in compliance with the Stock Exchange Establishment Law  or those who shall receive the license for broker/dealer activities in compliance with the Securities Act  and shall be accepted as the members of the TSE.
- Class two: Financial institutions other than brokerage firms who shall receive the activity license from the SEO.
- Class three: All persons other than class one or two above.
The maximum percentage of shares belonging to each class of shareholders defined above will be determined by the SEO. At the moment no individual shareholder of any class can hold more than 2.5 percent of the Exchange’s total number of shares.
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