Understanding Company Liquidation in Iran
In Iran, companies can choose to enter liquidation and dissolve. As this process can take years, it is important to understand the different stages of liquidation and their markers in public records when a company is still active in its liquidation process.
Conditions for Company Liquidation
A joint-stock company (JSC) may liquidate under the following conditions:
- The company has carried out the task for which it was formed or if the carrying out of such a task becomes impossible.
- When a company was formed for a fixed period which has expired (unless the period has been extended before such expiry date).
- The company goes bankrupt.
- An extraordinary general meeting has passed a resolution to this effect.
- A final judgement has been issued by the court.
A Limited Liability Company (LLC) may liquidate under the following conditions:
- A number of partners representing more than half of the company’s capital decides to liquidate.
- When, owing to losses, more than half the company’s capital has disappeared and one of the partners having asked for the dissolution of the company, the court finds his reasons adequate, but the other members fail to agree to pay him the share which would be paid to him in the event of dissolution; or
- One of the partners dies (if covered by the articles of association).
For more on the different types of companies in Iran, see our article on Iranian corporate structures.
The Stages of Company Liquidation
In Iran, logs of a company’s liquidation processes are spread across two resources—the Iran Official Gazette (Rooznameh) and ILENC.
A company seeking to liquidate must first announce its intent in Rooznameh. For any subsequent announcements or appearances in the gazette the company must include the word ‘Liquidation’ (تصفیه) as part of its official name.
The date that the announcement is officially published in Rooznameh is then added to its ILENC filing under the field “Date of Dissolution” (تاریخ انحلال).
The company is also required to appoint a liquidation director (مدیر تصفیه). This appointment is announced as a change in Rooznameh, similarly to how a change in managing director is reported. A company may have multiple liquidation directors. They are not required to have any previous affiliation with the company. The liquidation directors—or liquidators—are legal representatives of the company and they have all necessary powers to facilitate the liquidation of the company. This includes any resulting lawsuits or arbitration proceedings.
As the liquidation process can be lengthy, each year following the announcement, the company is required to call a general meeting to review a balance sheet and report on the status of liquidation proceedings. The meeting is primarily used to announce to company shareholders—or anyone interested—that they may file claims against the company against its assets. The company itself remains active until liquidation proceedings are completed.
In ILENC, a company that has completed liquidation but has not yet become inactive or lost its national ID number will also have a field for this status indicating it has dissolved (منحل شده).
Liquidation/Closing Vocabulary in Iran:
|Inactive||غیر فعال||ILENC Document|
|Tax/Financial Inactive||غیر فعال مالیاتی||ILENC Main Page|
|According to Article 186, Section 4 of Iran’s tax code.||به موجب تبصره ۴ ماده ۱۸۶ قانو…||ILENC Main Page|
|Dissolved||منحل شده||ILENC Main Page|
|Liquidation||تصفیه||Rooznameh Announcement of Company in Liquidation|
|Invalid||غیر نا معتبر||ILENC Main Page|
|National ID Revoked||ابطال شناسه ملی توسط دفتر تو…||ILENC Main Page|