In His Name
“Divesting Board Legislations”
Ministry of Economic Affairs and Finance (MEAF) - Presidential Deputy of Strategic Planning and Oversight- Ministry of Justice Administration- Islamic Consultative Assembly- Cooperative Chamber of the Islamic Republic of Iran- Chamber of Commerce, Industries and Mines of the IRI
In view of the recommendation of the MEAF and on the strength of the Subparagraph 5 of the Paragraph B of Article 40 of the Law on Implementation of General Policies of Principle (44) of the Constitution, and on the strength of the provisions of Note 2 to Article 20 of the aforementioned Law, in its meeting on February 7, 2009, the Board of Divesting approved the “Directive for the Divesting of Divestible Shares or SOEs through Negotiations and Necessary Qualifications and Manner of Appointment of Managers and Specialists for Divesting in this Manner” as detailed hereunder:
Directive for the Divesting of Divestible Shares or SOEs through Negotiations and Necessary Qualifications and Manner of Appointment of Managers and Specialists for Divesting in this Manner
Chapter 1: Divesting of Divestible Shares or SOEs through Negotiations
Article 1) Where there exists no buyer for the divestible SOEs or shares of the same, after the public supply in the domestic or foreign stock exchanges or following two rounds of tenders, divesting through negotiations in view of the Iranian Privatization Organization (IPO) and upon the approval of the Board of Divesting in the framework of this Directive to all the nongovernmental real or legal persons shall be authorized.
Article 2) Selling of the divestible SOEs or shares of the same through negotiations to managers or a group of managers and specialists of the same SOE in the case of public joint stock companies, which are mainly dependent on special managerial skills, or the consultative or basic science companies, with limited physical and financial assets and mainly intangible assets, the divesting shall be authorized in view of this directive at the discrete and in view of the recommendation of the IPO and the approval of the Board of Divesting.
Note: The use of negotiations method for divesting of divestible SOEs or shares of the same to the National Wide Cooperatives in the framework of the distribution plan of the justice share shall be authorized.
Article 3) In order to carry out the negotiations subject of this Directive, the IPO shall be required to establish the negotiation teams, consisting of the following individual; such a team shall consist of seven (7) individuals, two of whom shall have no right of voting:
3.1. IPO president or the representative of the same (Head of the Team);
3.2. Two individuals from the Managing Board of the IPO;
3.3. Two individuals elected by the Board of Divesting, as the case arises, in a manner that one of them is from the nongovernmental sector;
3.4. An observer from the related organ of the divestible SOE (lacking any voting right);
3.5. One of the Member of the Islamic Consultative Assembly, who is a member of the Managing Board as the observer (lacking any voting right);
Article 4) Following the obtaining of the negotiations permit from the Board of Divesting, the IPO shall be required to publish the selling notice of the concerned divestible SOE or shares of the same through negotiations within one month in two wide circulation newspapers at least in two rounds or at a ten-day interval. Provision of the following minimum information in the notice is required:
4.1. Name, place and the scope of activities of the SOE;
4.2. Number of the divestible share and its proportion to the total shares of the SOE;
4.3. Announcing the number and conditions of divesting of the preferential shares to the managers and employees of the same SOE and other specialists and experienced mangers;
4.4. Announcing the combination of major shareholders of the divestible SOE;
4.5. Details of the widespread newspapers, in which the former notices of the supply through the stock exchange or tender were published, in relation to the cases dealt with in Article 1;
4.6. Base price of the shares supplied through the former notices regarding the Article 1 cases;
4.7. Determination of the place to receive the forms and information related to the divestible SOE;
4.8. Determination of the duration and manner of the submission of recommendations;
4.9. In case of applicability, announcing the conditions stated in the executive bylaw of Article 16 of the aforementioned Law, subject of financial and non-financial incentives for buyers of controlling shares and the executive bylaw of Article 25 of this Law, subject of obtaining guarantees and granting of allowances to the buyers of the controlling shares of the divestible SOEs.
4.10. Announcing the readiness for the visit of the divestible SOE by the potential buyers;
4.11. Announcing the fact that the share alienation shall be in the framework of the Contract and participation in negotiations shall be deemed as the full information of the conditions provisioned in the Contract, as well as accepting and observance of the same;
4.12. Announcing the necessary time span for the examination of the recommendations of the applicant(s) and manner of their official invitation to participate in the negotiations meeting;
4.13. Announcing the necessity of avoidance of some measures resulting in the monopolization of competition and commercial limitations, in view of the type of the divestible SOEs or shares of the same and manner of provision of the same in the Contract.
4.14. Announcing the essentiality of the proving or the meeting of regulations and features subject of Article 10 of this Directive in divestitures subject of Article 2.
4.15. Collecting the guarantees for participation in the negotiations up to one percent of the price subject of Paragraph 4-6, at the discrete of the negotiating team;
Article 5) Each of the members of the negotiating team, shall be required to sign the Commitment Letter for Secret Information Confidentiality in view of the form determined by the IPO and before participation in the negotiations meeting as a member of the negotiating group, for each case of transaction shall notify the IPO in written of his/her no interest (including professional or personal interests) in the concerned transaction, in lieu of receipt.
Note 1: The violators of the aforementioned provisions shall be duly punished in view of Article 648 of the Islamic Punishment Law.
Note 2: Applicant(s) shall complete the Commitment Letter of Confidentiality of Secret Information, in lieu of the obtaining of the SOE’s information and submit the same to the IPO.
Article 6) The IPO shall be required to hold meeting(s) for negotiations to examine the suggestions of the applicant(s) within the time limits announced in the notice for negotiations, taking into account the date of reception of each suggestion and for each meeting, draft minute(s) of meeting and archive the same.
Article 7) In view of the provisions of the drafted minute(s) of meeting, the IPO shall be required to formulate the necessary expert report for the determination of the winner of the negotiations in the manner detailed hereunder within one month:
A. In case of plurality of applicant(s):
A.1. Prioritizing the negotiations result with the applicant based on the specialty;
A.2. Prioritizing the negotiations result with the applicant based on the suggested price, which was mutually agreed upon in the negotiations meeting;
A.3. In case the specialized applicant suggested the highest price, the same shall be announced as the winner of the negotiations. Otherwise, during the second round of negotiations, which shall be held in view of the official invitation and its date shall be announced in written to the applicant within one week of the making decisions by the negotiating team, one of the 1st to the 3rd highest bidders, with the highest specialization, shall be selected as the final winner. In case the need arises, the announcing to the applicant(s) of the suggested prices of the 1st to 3rdhighest bidders shall be authorized in the second round of the official meeting.
B. In case of the limited number of applicants, the carrying out of negotiations shall depend on the opinion of the negotiating team.
Note: The result of the negotiation shall be reported to the Board of Divesting for the approval of the price.
Article 8) The IPO shall be required to conclude the necessary Contract with the winner of the negotiations, containing all the negotiations conditions and Divesting Contract, within one month of the announcement of the aforementioned result.
Note 1: If the winner of negotiations within the provided time limit (at most 30 working days) of the date of the written notification of the IPO to him/her, shall not call on the IPO for the conclusion of the Contract, the IPO may immediately execute provisions of the Paragraph A.3 of Article 7 of this Directive for the selection of the next winner. In case, there exists no next applicant, the IPO in the first phase, may repeat the abovementioned procedure within six months.
Note 2: If, after the holding of negotiations, finally no applicant calls on for the divestiture, the IPO shall be required to report the result accompanied by the necessary suggestions upon the coordination with the MEAF to the Board of Divesting for making the final decision, within one month of being ensured in this regard.
Chapter 2: Qualifications of Managers and Specialists regarding the Divestiture through Negotiations
Article 9) Qualifications of managers and specialists in the consultative, basic science, and public joint stock companies, requiring their managerial specialties, are detailed hereunder:
9.1. Qualifications of Managers:
Managers of the divestible SOEs, who enjoy the following qualifications shall be authorized to purchase shares of the consultative, basic science, and public joint stock companies:
A) Having at least two years of managerial experience in the same SOE;
B) Commitment for employment and accepting the managerial responsibility in the SOE for at least two years after the divestiture; and
C) At least having a bachelor’s degree in the field and majoring related to the scope of activity of the SOE.
Note 1: Individuals with academic degrees lower than bachelor’s degree, if they enjoy excellent experience, may be qualified at the discrete of the Managing Board of the IPO.
Note 2: Managers with the higher academic degrees, and the field of study or majoring related to the scope of activities of the SOE, shall have priority in the equal conditions.
9.2. Conditions of the Specialized Experts:
The specialists of the divestible SOE, with the following qualifications shall be authorized to buy shares of the consultative, basic science, and public joint stock companies:
A) At least having a bachelor’s degree in the field and majoring related to the scope of activity of the SOE.
B) Having at least ten years of working experience for holders of bachelor’s degree and at least five years of working experience for holders of MS’s degree and at least 3 years of working experience for holders of PhD in the fields related to the SOE scope of activities; and
C) Commitment for employment and accepting the managerial responsibility in the SOE after the divestiture and regarding the members of the Board of Directors, accepting at least one round of membership in the Board of Directors, if approved by the Public Assembly of the SOE.
Note: In cases of the plurality of the applicants for buying shares through negotiations, with the observance of the provisions of this Directive, the bids of managers and specialists in the framework of cooperatives shall have priority in equal conditions.
Seyed Shamseddin Hosseini
Minister of Economic Affairs and Finance