Over the past years, we have dedicated ourselves to providing foreign investors with guidelines on how to invest in Iran.
You can find answers to recurring questions about “How to invest in Iran” here.
Q1- What is the structure of Iran’s capital market?
The Securities & Exchange Council is the highest authority and is responsible for all related policies, market strategies, and supervision of the market in Iran. The Securities and Exchange Organization (SEO) is responsible for administration and supervisory duties, governed by the Board of Directors. Following chart demonstrates Iran’s Capital Market structure.
Q2- What are the business hours of Tehran Securities Exchange (TSE)?
The TSE is open for trading five days a week from Saturday to Wednesday, excluding public holidays. Trading takes place through the Automated Trade Execution System from 9:00 am to 12:30 pm, which is integrated with a clearing, settlement, system. Besides, the preopening period is 8:30 to 9:00 am.
Q3- What financial instruments are being traded on TSE?
The following instruments are available on TSE:
- Stocks (common and rights)
- Bonds (Participants Certificate and Sukuk)
- Derivatives (Single stock future and Stock options)*
- Housing Mortgage Rights (HMR)
- Exchange Traded Funds (ETF)
The Central Securities Depository of Iran (CSDI) was established to register, collateralize, and transfer the ownership of securities thus allowing for the clearing and settlement of transactions in securities between different parties in the capital markets.
You may find more details on CSDI Here.
Q5- What are the daily price fluctuation ranges on TSE and IFB?
The range of price movements on TSE and IFB is typically restricted to 5% daily either way from last closing. Restriction on Rights is 10%. This can be changed in specific situations by the Board of the TSE or IFB in case of unusual price movements resulting in an extremely high or low P/E ratio.
Q6- What are the fees and taxes on TSE and IFB?
As of July 2010, TSE trading fees include:
Also trading fees on OTC are listed below:
As of July 2010, taxes on both TSE and OTC transactions are as follows:
- Cash dividend: no tax (22.5% at source from Company).
- Share transfer: the Tax Amendment has changed the regulations regarding calculation of tax on transfer of shares and their rights in Iranian corporate entities.
- In case of shares listed on Tehran Stock Exchange (TSE), the tax on transfer of such shares and other rights is 0.5 percent of the sales price.
- In case of transfer of the shares and their rights to other corporate entities (i.e. those not listed on the TSE), a flat rate of 4 percent of value of the shares and rights transferred applies. No other taxes will be charged. The amendment has removed the requirement to value the shares in this category.
Q7- Is it possible to invest directly on TSE?
Yes. In order to invest directly on TSE, investors, individuals and entities, must have a valid investment license and also a trading code through a brokerage firm. Therefore choosing a stock broker may be the very first step of the procedure. For more information on issuance of an investment license and a trading code, please Contact Us.
Q8- What is the mutual fund’s unit issuance procedure?
In fact the fund’s unit’s issuance process is very simple and straightforward. On the following chart you will find everything may be needed.
Q9- Who exactly are recognized as foreign investors?
Non-Iranians and Iranians who are living overseas. To be more specific, if the incoming source of capital is not based in the main land, it is considered as “foreign investment” and investors shall go through processes of fund transfer and opening necessary bank accounts for their investment.
Each of the following persons is considered to be a foreigner/ foreign entity:
- An individual person who does not enjoy the Iranian citizenship;
- Any legal entity that has been registered in a country other than Iran;
- Any legal entity that has been registered in Iran whereby the total shares of the persons stated in subparagraphs (a) and (b) above in the capital of such entity shall exceed fifty (50%) percent. In the event that the mutual fund is regarded to be a foreign entity, it shall remain to be the same (foreign entity) as long as the shares of the persons stated in subparagraphs (a) and (b) above in its capital have not reduced to 40%.
Q10- What does the phrase “base volume” refer to?
Base Volume means the number of securities of the same type which is to be traded daily so that the total percentage of the spread during the day can serve as a base to determine the price for the following day. This was ratified by the regulatory body, SEO, to control the unreasonable rise in equity prices. The base volume differs for various companies in diverse industries. However, the O.T.C. Market is not restricted to Base Volume.
Q11- What does the phrase “trading halt” mean?
A temporary suspension in the trading of a particular security on one or more exchanges, usually in anticipation of news announcements or to correct an order imbalance. A trading halt may also be imposed for purely regulatory reasons.
Q12- In what currency are the TSE and IFB trades denominated?
TSE and IFB trades are denominated in Iranian Rial (IRR). The money is transferred through exchange offices, calculated based on that day’s market spot exchange rate. Due to limitations imposed by international sanctions, it is not possible to electronically transfer money to Iran from abroad.