1. TOROSSIAN, AVANESSIAN & ASSOCIATES
OFFICE:
17 Magnolia, Golriz Street
GhaemMaghamFarahani Avenue
Tehran
1588636517
Iran
TEL: +98 21 8884 3139 /40 - 8884 2843
FAX: +98 2188841725
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WEBSITE: .taalawfirm.co [under construction]
Last Reviewed/Updated: May 29, 2016
This document is designed to highlight for recipients some of the questions they should consider before working with commercial
intermediaries in Iran. It provides general information and does not constitute legal advice on any specific facts. In addition, laws
and regulations change and this information may not be the most current available. The advice of legal counsel should be obtained
for specific questions.

2. Flat Fee:
Commission:
Discounts:
Is the retention of a commercial intermediary paid on a flat fee
(hourly, daily, and monthly) basis generally permitted for non­
military sales to the government?
There are no specific regulations under Iranian laws with regard to
manner of payment to commercial intermediaries whether for
military or non-military sales to the government. In most cases,
however, purchases by the government shall be conducted
through tenders and it is possible that in some tenders
retention/participation of commercial intermediaries are
completely exempted.
Is the retention of a commercial intermediary paid on a contingent
(success fee) basis generally permitted for non-military sales to
the government?
There are no specific regulations under Iranian laws with regard to
manner of payment to commercial intermediaries whether for
military or non-military sales to the government. In most cases.
purchases by the government shall be conducted through tenders
and it is possible that in some tenders participation of commercial
intermediaries are completely exempted.
Are there any legal restrictions on discounts offered to a
commercial intermediary in connection with sales to the
government (such as set minimum or maximum rates or whether
the discount may be included in the sales price charged to the
government)?
There are no legal restrictions/provisions in connection with
discounts offered to a commercial intermediary in relation with
sales to the government.
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3. Disclosure of
Discounts:
Military:
Registration:
Compensation:
Disclosure of
Compensation:
Must the discount granted to a commercial intermediary in
connection with sales to the government be disclosed to or
registered with the government? If so, what is the name of the
government entity or office where the disclosure must be made?
There are no legal provisions with regard to disclosure or
registration of discounts offered to a commercial Intermediary in
relation with sales to the government.
Do regulations differ for military sales? If so, what are the practical
aspects of those differences?
No, the regulations are not different for military sales.
Must the commercial intermediary be registered with or disclosed
to any government entity? (Or military entity for the sale of
military goods?).
There are no laws obliging commercial intermediaries to be
registered with or disclosed to any government entity, however,
such obligation may be placed on case by case basIs.
Are there any legal restrictions on the amount of the fee or
commission paid to a commercial intermediary?
No. There are no legal restrictions on the amount of the fee or
commission paid to a commercial intermediary.
Must the compensation be disclosed for sales to the government?
If so, what is the name of the government entity or office where
the disclosure must be made?
There is no legal obligation to disclose the compensation for sales
to government. ,
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4. Exclusivity:
Revolving Door:
Employee Status:
Non-Citizens:
Is a non-exclusive relationship with a commercial intermediary
permitted?
The subject Issue is no regulated under Iranian laws.
Must a government official wait a specific period of time before
working as a business intermediary promoting sales to the
government?
No, the current regulations do not require a wait time before a
previous government official can work as a business intermediary
promoting sales to the government.
Is there any risk that a commercial intermediary will be deemed an
employee under local law?
If the required provisions are provided in the contract between
the original seller and the commercial intermediary, there will be
no risk for the commercial Intermediary to be deemed as an
employee. It is almost impossible to be specific wi hout complete
review of a given contract, however, In general, the contract
should not be similar to the form of employment contracts or
include provisions that are specific to employment relationships.
Further, it should be expressly provided in the contract that the
relationship between the parties is not and shall in no way
considered to be an employee-employer relationship.
Is the retention of a non-citizen commercial intermediary
generally permitted?
There are no legal provisions prohibiting the retention of a non­
citizen commercial intermediary.
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5. Non-Residents:
Corporate Form:
Government:
Payment:
Expiration:
Is the retention of a commercial intermediary residing or
incorporated outside Iran generally permitted?
There are no legal prOVisions prohibiting the retention of a
commercial Intermediary residing or incorporated outside Iran.
Must the commercial intermediary be organized in any particular
form?
No, there are no regulations reqUiring the commercial
intermediary to be organized in any particular form.
May current government officials or government ent ities have an
ownership interest in a commercial intermediary marketing to the
government?
No. Under Iranian laws, the entities in which current government
offiCials individually hold 5% or more Interest or collectively hold
20% or more Interest cannot enter into transactions with the
government.
Are there any restrictions on the place or currency of payment of
the commercial intermediary's fee?
No, there are no restrictions on the place or currency of payment
of the commercial intermediary's fee.
Will agreements of definite duration expire according to their
terms without additional notice, de-registration or liability?
If the necessary contractual provisions are provided correctly in
definite duration agreements, such agreements will expire
according to their terms, without additional notice, de-registration
or liability.
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6. Termination:
Severance:
Disputes:
Are there any restrictions on termination of an agreement prior to
its expiration? If so, what steps should the company take to
protect its interests in the event it would like to terminate an
agreement early?
Depending on the type of agreement, unilateral termination prior
to expiration of the term of the agreement may create
complications; therefore, it is necessary to foresee early
termination provisions in the agreement.
Are commercial intermediaries entitled to severance pay if their
agreement is terminated - or simply not renewed upon
expiration?
No, commercial intermediaries are not entitled to severance pay if
their agreements are terminated or not renewed upon expiration,
unless the relationship between the seller and the commercial
intermediary is an employment relationship.
Will a contract stipulating foreign law and foreign courts for
dispute resolution be upheld in Iran?
According to Iranian laws, the contracts are subject to the laws of
the place where such contract IS made, i.e. last signed, except if
both parties are foreign nationals and explicitly or Implicitly make
their contract subject to the laws of another jurisdiction. In case
the choice of foreign law IS made in accordance with the
foregoing, then such choice of law can be upheld in Iran. However,
it should be pointed out that it is the policy of Iranian government
for parties to require the governing law of their contracts to be
Iranian law.
Nothing under Iranian law bars Iranian parties to a contract,
including government agencies, from submitting their disputes 0
the jurisdiction of foreign courts.
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7. Arbitration:
Distributors:
Debarment:
Reporting:
Will an arbitration clause be upheld in Iran?
Yes, Iranian law generally recognizes arbitration as means of
dispute settlement. However, the Constitution of Iran bars
settlement or referral to arbitration of disputes involving Iranian
governmental or public assets with foreign parties, except with
the approval of the Council of Ministers or Parliament. Further,
Iran is a party to the New York Convention on Enforcement of
International Arbitral Awards; however, the practice of enforcing
foreign arbitral awards through Iranian courts under the New York
Convention is not well developed.
Are there any restrictions on the use of distributors or resellers?
No, there are no restrictions on the use of distributors or resellers.
Does Iran have laws or regulations debarring companies that have
pleaded guilty to or been convicted of corruption from competing
in government contracts? (Please note whether debarment is
mandatory or discretionary).
There are no legal provisions debarring companies that have
pleaded guilty to or been convicted of corruption from competing
in government contracts.
Does Iran have a government agency to which companies can
report requests for bribes? If so, can reports be made either
confidentially or anonymously?
Almost all government organizations have a separate sector for
supervision and inspection of the conduct of employees and
officers of the government organization to which companies can
report requests for bribes. In addition, there is an organizatIOn
named State Inspectorate Organization to which also companies
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8. Lobbying:
Internal Controls:
can report requests for bribes. Reports can be made confidentially
but not anonymously.
What are the regulations, requirements or laws that govern
lobbying or influencing government officials for policy, regulatory
or legislative changes in Iran?
The only law with connection to lobbying is the Law of Punishment
of Applying Unlawfullnflu nee. This is applicable to the cases
where: (1) a person for the purpose of applying his alleged
influence over government or municipality employees, civil
servants or public officials, accepts any cash or secures any
interest for himself or another person or secures a commitment to
this end; and (2) a person who uses his personal relationship with
the officials referred to in (1) above by unlawfully applying
influence for or against interests of another person.
Above (1) will subject such person to imprisonment of six months
to two years and cash penalty, in addition 0 reimbursement or
returnlllg of the acquired cash or property. If benefit such as
cash, interest or commitment, is secured and acquired allegedly
for the benefit of said authorities and officials, then the acqUiring
person will be sentenced to one to three years and cash penalty,
in addition to reimbursement or returning of the acquired cash or
property. Above (2) will subject such person to imprisonment of
one month to one year.
Are publicly-traded companies operating in Iran required under
local laws to maintain accurate books and records and a system of
internal controls?
Yes, publicly-traded companies operating in Iran are required to
maintain accurate books and records and internal control systems
such as mandatory auditIng.
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9. Commercial
(Private) Bribery:
Does Iran have laws prohibiting bribery of owners, employees or
directors of private, non-government customers? If so, please
provide a citation to the law and a brief summary.
Under Iranian laws, bribery is defined and is punishable if the
bribe is given to government/public sector officials.
Bribes, as generally defined, given to owners, employees or
directors of private companies is not defined as bribery under
Iranian laws and therefore not punishable as such. Nevertheless,
if such action, considering all other relevant circumstances, falls
under the definition of any other punishable act, then It can be
punishable.
This document was prepared by Torossian, Avanessian & Associates.
CONTACT: Sofie Djagharbekian
EMAIL: s.djagharbekian@taalawfirm.com
TEL: +982188843139/40-88842843
FAX:+982188841725
This document is designed to highlight for recipients some of the questions they should consider before working with commercial
intermediaries in Iran. It provides general information and does not constitute legal advice on any specific facts. In addition, laws
and regulations change and this information may not be the most current available. The advice of legal counsel should be obtained
for specific questions.
Page 9