In the name of God

Ministry of Economic Affairs and Finance

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

Supreme Council for Implementation of General Policies of Principle (44) of the Constitution in its session of 15/2/2009, upon proposal of the Divestiture Board and on the strength of Note (1) of Article (16) of the Law on Implementation of General Policies of Principle (44) of the Constitution, approved the "Directive on the Mechanism of Application of  Financial and  Non-Financial Incentives" subject of the above–mentioned Article, as follows:

 Directive for the Mechanism of Application of Financial and Non- Financial Incentives        

 Article 1- Divestiture Board will have to give financial or non-financial incentives to the purchasers of control shares of the companies who are ready to increase the staff during the installment period, to a number more than what is mentioned in the divestiture document.

Article 2- Divestiture Board will have to give financial and non-financial incentives to the companies who train and recruit the extra work force of other divested companies in their units, as provided in this directive.

Article 3- Financial and non-financial incentives subject of this directive, will be given upon proposal of Privatization Organization and approval of Divestiture Board, subject to the submission of a program in writing by the purchasers for maintaining and increasing the level of employment and training the staff.

Article 4- Privatization Organization will have to announce to the public and applicants in the sale advertisements or related correspondence, at the time of divestiture of shares, the issue of financial and non-financial incentives and obligations subject of this directive.

Article 5- In order to reach a proper criteria for determination of the financial incentives subject of this directive, Privatization Organization, at the time of divestiture, has to classify in the following manner, the size of divestible companies, on the basis of total base value of the divestible shares of the company or number of the staff. In assessment of the size of the company on the basis of criteria (a) and (b) below, the criteria which set the company in a higher category, will be the criteria for the size of the company.

a-    Size of the company on the basis of total base value of divestible shares of the company is equal to the base price of each share multiplied by the total number of shares;

b- Size of the company on the basis of staff number

Article 6- Financial incentives subjects of this directive, given to the qualified purchasers, consist of three kinds of incentives including: reduction of the principal price of transaction to the ceiling of 5 percent; reduction of the interest of the installment sale to the ceiling of 30 percent; extension of installment period for 2 years at the most, without taking into account the interest of installment sale; are as follows:

Rate of incentives given to the purchasers for increasing the staff number mentioned in the divestiture document

Note 1: Enjoyment of incentives subject of this Article, is subject to the increase of annual average of the staff number after divestiture, comparing to the staff number mentioned in divestiture document, considering the persons substituted for the persons retired and the persons who received severance during the years after divestiture, provided that reduction of staff number is never more than 10 percent during the period in question.

Note 2: The criteria for assessment of employment changes in divested companies is constant payment of insurance premium for at least one year for new employees after divestiture until the date of request and submission of valid document for the payment of insurance premium by purchasers, in the circumstances of raising employment.

Article 7- Financial incentives subject of this directive will be calculated and applied twice at the most, at the request of purchasers, within five years after divestiture (in the case of cash divestiture) and within installment period (in the case of cash and installment divestiture), after two fiscal years of companys operation have passed from divestiture.

Note-   If the date of cash payment of the price of transaction by purchasers of the shares subject of this directive, falls within the first half of fiscal year of the company, that year will be regarded as the fiscal year of the purchaser, other wise, the said year will be regarded as companys operation before divestiture.

Article 8- Type and rate of financial incentives in each case will be determined upon proposal of the Privatization Organization and approval of the Divestiture Board.

    Article 9- Privatization Organization will have to introduce and appreciate the purchasers who have been subject to the incentives of this directive, every year.

Article 10- All resources required for incentives of this directive will be funded from the purchasers remaining installments. In case, in installment or cash sale,  the purchasers remaining installments are not sufficient to provide required resources for securing funds for incentive of this directive, the mentioned resources, will be funded and paid, in coordination which the State Treasury General, from the account for refunding incomes resulting from sale of companies shares.

Article 11- With respect to the companies with special conditions, incentives subject of this directive will be determined and approved by Divestiture Board upon proposal of Privatization Organization.

Seyed Shamseddin Hosseini

Minister of Economic Affairs and Finance