Iranian Privatization Organization

Ministry of Economic Affaires and Finance

In the Name of God

Decree of Supreme Council of Implementation of the General Policies of Principle (44) of the Constitution

Supreme Council of Implementation of the General Policies of Principle (44) of the Constitution in its session of February 15, 2009, on the strength of note (1) of paragraph (a) of article (40) of the law on Implementation of General Policies of Article 44; and on the basis of proposal of the Divestiture board which is made as per paragraph (2) of paragraph (a) of Article (40) of the said law, approved the by-law for "installment- based divestiture system and the procedure for receiving price for transferable rights " as fallows:

"By-Law for the installment–based divestiture system and the procedure for receiving price for transferable rights"

Article 1- Terms in this by–law are defined as:

Law: means law on Law on Implementation of General Policies of Article 44,

b- Transaction case: means shares, stocks and priority right derived therefrom, ownership right of the government, governmental insinuations and companies in governmental and non–governmental companies and firms and the right of operation and management, subject of activities of groups 1 and 2 of Article (2) of the law.

Article 2- Where, due to the market conditions, block divestiture of transaction cases in cash is not possible, upon proposal of Privatization Organization and approval of the Divestiture Board, divestiture will take place in cash and installment form.

Note 1- Divestiture of shares of the companies in the form of justice shares, preferential shares and shares saleable to other experienced, expert and efficient directors, shall be subject to specific regulations and conditions provided for each of the mentioned cases.

Note 2- Transfer of governments right of operation and management through rental contract, management contract and general contract work, shall be subject to its related by- law.

Note 3- Divestiture of assets is permissible, subject to the provision of paragraph (b) of Article (21) of the law, within the frame work of this by-law and as per its provisions, where it is in accordance with this procedure.

Article 3- The price of transaction in block divestiture; is the price which is determined in each case in the Stock Exchange Market in accordance with related regulations or the highest price proposed by applicants in tender in the Stock Exchange Market or outside of the Stock Exchange Market; or negotiation, plus interest accrued from installment sale, in respect of the amount received in installments.

Note 1- Countable interest rate of installment sale is equal to interest rate of installment sale in the banking system which will be specified based on IPO suggestion and transfer board approval.

Those buyers who commit to their liabilities can benefit from 50 percent discount for the interest of installment sale; it should also be under IPO suggestion and transfer board approval.

Note 2- Date of transaction in the Stock Exchange Market, date of tender and date of approval of the Divestiture Board, in the case of negotiation, shall be regarded as the final date of the transaction. The day after the last deadline of the buyer for payment of the cash portion of the transaction shall be regarded as starting date for repayment of installments or starting date for grace period in block installment transactions.

Article 4- details of installment sale, including cash portion, installment portion, equal or step-by-step installments, maximum period for payment of installments, number of installments, installment intervals, grace period for the payment of first installment (without accrued interest) will be determined as per the following table by the Privatization Organization and publicized through Divestiture advertisement.

Row Base price Minimum cash portion Maximum period for payment of installments (year) Grace period

1 Up to 70 billion Rials 20% 6 None

2 70 to 200 billion Rials 20% 6 Up to 3 months after the cash portion payment deadline

3 200 to 500 billion Rials 20% 6 Up to 6 months after the cash portion payment deadline

4 500 to 1000 billion Rials 15% 8 Up to 9 months after the cash portion payment deadline

5 1000 billion Rials and more 15% 8 Up to one year after the cash portion payment deadline

Note – Cases which do not fall under the provision of this Article, will be approved by the Divestiture Board upon proposal of the Privatization Organization, if necessary.

Article 5: kinds of valid guarantees which maybe presented by the purchaser(s) are:

a- Bank guarantees

b- Guarantees issued by non-bank credit institutions which has obtained necessary license from Central Bank of the Islamic Republic of Iran.

c- Insurance guarantee

d- Real estate, equivalent to the 90% of the official expert evaluation.

e- Kinds of bonds guaranteed by the government or banks.

f- Shares of public joint-stock companies accepted in the Stock Exchange Market, equivalent to 70% of its market value.

g- Promissory note having signature of authorized signatories and seal of the company.

h- Contractual claims fixed by executive organs and related accountants.

i- Combination of the above guarantees.

Note 1- Submission of the above guarantees, at least equivalent to 50% of the installment portion and other obligations is mandatory. In any case until complete settlement of the installment by the purchaser(s), "transaction case" will remain as mortgage with the Privatization Organization in proportion to the remaining debt and as long as the "transaction case" is mortgaged, purchaser(s) can not transfer the transaction case wholly or partially without the permission of the Privatization Organization. In such cases, it must be declared that title deeds of the transaction case are mortgaged to the Privatization Organization.

Note 2- In order to guarantee fulfillment of obligations, purchaser(s) shall provide the Privatization Organization at the time of signature of transfer documents or transfer book, with an official, irrevocable letter of attorney for ownership or transfer of transaction case to any person, with any condition and at any price at its discretion.

Note 3- Substitution of guarantees is possible upon request of the purchaser(s) and approval of the Privatization Organization.

Article 6- In the installment sale contract, observation of directive related to paragraph (4) of paragraph (b) of Article 40 of the law and following conditions is mandatory:

6-1- In case, the purchaser(s) who have taken necessary measures according to this by–law such as exchange of contract, mortgaging the transaction case, submission of guarantees and official letter of attorney, request for the release of a part of the mortgaged transaction case after payment of cash portion and related installments, Privatization Organization will have to release the transaction case to the extent that the price of it has been paid by the purchaser(s) on the basis of the price of the day of transfer. Interest of the paid installments will not be included in the above calculations.

6-2- Commitment of the purchaser(s) to accept and bear all the expenses such as cost of proceedings and attorneys fees in case of legal action of the seller to receive installments and bind him to pay the guarantee as compensation in case of late payment of the installments, as per regulations of the Central Bank of the Islamic Republic of Iran (monetary and credit council). All or part of the guaranties, as penalty of delay in payment of purchasers could be forgiveness by providing reasonable evidence by purchasers that incidence of factors are out of their authorities, in the case of completing settlement of the principle and interest of the installment, by Proposal of Privatization Organization and approval of the Divestiture board.

6-3- Debts of purchaser(s) become mature in case of dissolution or bankruptcy. In the case of death of the real persons, the contract will be renewed with the same conditions upon agreement of the heirs and Privatization Organization.

Article 7- If two consecutive installments are not paid back (so that it does not exceed one year) the IPO can settle it from the place of buyers’ transfer debts and given cashes as collaterals in line with rules and regulations. If necessary, it can receive its exact claims under regulations of Article (48) of General Accounting Act.

The realization of the article’s contents will not annul the deal.

Article 8- In case, due to the valid reasons confirmed by Privatization Organization, whole or part of the cash portion of the transaction is paid after the date determined in each case in accordance with the regulations of the Stock Exchange Market or law of tenders and by-law of the government transactions, the interest for the delayed period will be determined and received from the purchaser, unless Divestiture board approves not to include the mentioned interest.

Article 9- In case, purchaser(s) pay all the remained installments at once, the interest of the installments which are paid before they are mature, will be deducted from their debt.

Seyed Shamseddin Hosseini

Minister of Economic Affairs and Finance