Legislation No. 204537
Date: March 3, 2009
Board of Divesting
In His Name
Islamic Consultative Assembly; Ministry of Economic Affairs and Finance; Ministry of Justice Administration; Presidential Department of Strategic Planning and Oversight; Commercial, Industrial and Mines Chamber of Iran; the IRI Central Chamber of Cooperation
In its meetings dated February 9, 2009 and in view of the recommendation of the Ministry of Economic Affairs and Finance, and on the strength of Subparagraph 1 of Paragraph A of Article 40 of the Law Partially Amending the 4th Economic, Social and Cultural Development of the IRI and the Implementation of General Policies of Article 44 of the Constitution, the executive bylaw on the manner of insurance of divesting administrators and officials is approved as detailed hereunder:
Executive Bylaw on the Manner of Insurance of Divesting Administrators and Officials
Article 1) As the insurer, the IPO as the insurer shall be required to insure with one or more insuring companies, all the civil liability, financial criminal condemnations, condemnations for the compensations of losses resulting from crimes and any condemnations, which may appraised in cash punishment committed by all the administrators and managers of divesting in lieu of their unintentional transgressions, in relation to the divesting, under the title of the group responsibility, and under the title of individual responsibility, in a manner that the insurer may pay all the expenses and losses, which each of the administrators and officials of divesting shall be required to pay under each of the aforementioned titles.
Amount of expenses and losses, intentionality and non-intentionality of the crime or transgression, shall be determined by the juridical courts and or any other competent authorities.
Article 2) Tariffs of insurance premiums and general conditions, subject of this Bylaw, shall be drawn up and notified within four months of the approval of this Bylaw, by the Iranian Central Insurance.
Article 3) The Board of Divesting shall approve the list of administrators, officials and authorities of divesting, subject of this Bylaw and the description of responsibilities of each job at least once in a year.
Article 4) The IPO shall be required to conclude one or more agreements with one or more insurance companies, in order to completely cover the insurance of all the administrators, authorities and officials of the divesting. In the framework of this agreement, regarding each divesting and at the time of conclusion of the related contract, the list of persons covered, accompanied by the amount of the maximum liability of the insurer for each one of these persons shall be announced by the IPO to the insurer and the related insurance certificate shall be duly issued.
Article 5) In case of emergence of any type of problems detailed in Article 1 of this Bylaw for administrators, authorities, and official of divesting, regarding the divesting cases before the legislation of this Bylaw, the issue shall be reported by the IPO to the Board of Divesting and the decisions shall be duly made.
Article 6) The IPO shall provide necessary credits for the implementation of this Bylaw, as the divesting expense, out of the revenues of the divesting.
In His Name
Manner of Obtaining Commitments, Detailing Conditions and Granting Allowances to Buyers of Controlling Shares of the SOEs
Chapter One: Scope of Application
Article 1) Persons, who have bought controlling shares of divested SOEs and carry out the measures detailed in this Directive, following each case of divesting, shall be authorized to use the allowances subject of this Directive. The Board of Divesting shall approve allowances subject of this Directive in view of the recommendations of the IPO.
Note 1: Controlling shares include the minimum amount of shares, the holder of which is able to determine the majority of the members of the BD of the company.
Note 2: The buyers, who are changed to controlling shareholders because of the purchase of shares of SOEs from the IPO, and taking into consideration the balance of the former shares in their hand, and during the time they have purchased shares from the IPO until the time they are entitled to use allowances, take measurements to elect the majority of the members of the BD of the purchased company, they shall be authorized to use the allowances subject of this Directive.
Chapter 2: Conditions and Manner of Granting of Allowances
Article 2: The IPO shall be required to announce in the Notice for Divesting, conditions such as new investment in that Company, promotion of efficiency and productivity of the Company, maintenance of production and the promotion of its level, promotion of the technology and increase or stabilization of the employment level in the concerned SOE. If the buyers accept the above conditions at the time of conclusion the contract and within at maximum five years of the divesting time, they take the related measures, they may be entitled to the allowances detailed in this Directive.
Note 1: Any type of deletion of the conditions provided in this Article or determination of conditions in addition to them, and determination of the allowanced in regard to them, as the need arises and based upon the status of the divestible company, in view of the recommendations of the IPO, shall be approved by the Board of Divesting.
Note 2: Allowances subject of this Directive shall be assessed and granted upon the request of the buyer(s) within five years of the date of divesting, at maximum in two times and after the passage of two fiscal periods of the business activities of the companies.
Note 3: If at the time of payment of the cash price of the transaction by the buyers of the share, subject of this Directive is determined to be made in the first six-month period of the fiscal year of the company, the aforementioned year, shall be deemed as the fiscal year of the business activities of the buyer, otherwise, the aforementioned year shall be deemed as the business activity before the divesting of the company.
Article 3) The IPO shall be required to classify the size of the divestible company based upon the total value of the base price of the share and or number of its employees at the time of divesting, and announce the same in the Notice for Selling of the related share. In the assessment of the size of the company based upon the criteria A and B, detailed hereunder, any status that put the company in a higher class, shall be deemed as the criterion of determination of the company’s size.
A: The size of company based on the total value of the base price of the share of the company amounting to the base price of the share multiplied by the total number of shares
B) Size of the company based on the number of employees
Article 4) The bases for measurement of new investment, shall be the increase in non-current assets and or registered capital out of the cash contributions of the shareholders (buyers) of the company, for any amount of increase of these criterion, 20 percent of the same shall be deemed as the allowance out of the principal price of transaction and shall be granted to buyers.
Note: Granting of allowances to the buyers out of these criteria shall be conditional upon the fact that the non-current assets and the registered capital added is effective in the promotion and development of the production process of the company, and the increase in non-current assets is not out of the increase in the capital of the company. The recognition of this matter shall be the responsibility of the IPO.
Article 5) The criteria for the measurement of the promotion of the efficiency and productivity, shall be the increase of coefficients of per capita selling and the return of capital, which are detailed hereunder and shall be assessed in proportion to the size of company in view of the following Table.
Selling divided by number of the workers = coefficient of the per capita selling
Operational profit divided over the non-current assets – 100= return of the capital
Article 6) The criterion for measurement of the promotion of the production level shall be a function of increase of the total production of the SOE and in proportion to the size of the company in view of the following table; the related allowance in case of failure of the buyers to use it, subject of the “increase of annual selling,” as detailed in Article 5 of this Bylaw, shall be granted.
Note: Regarding the companies, whose subject of activities merely includes the provision of services, the production amounting to selling shall be taken into account.
Article 7) The amount of allowance in regard to the increase of the employment level, i.e. the number of employees registered in the divesting document of the company, shall be considered in view of the Directive on the Manner of Application of the Financial and or Non-Financial Incentives subject of the Article 16 above.
Note: In case of stabilization of the employment level, the amount of allowance merely in the interest on the installment based selling shall be in view of the following table:
Article 8) In order to determine the criterion of the level of technology of the divested company, the IPO may use the consultative services of the company to specify the technological level of the company at the time of divesting and the time of examination of the possibility of granting allowances based upon the request of the buyer, and compare the two. The related assessment as a result of this criterion shall take into account the criteria such as the change in formulation of the product or change of process and methods of production and or control of processes. Promotion of the criterion of the technological level of the divested company, shall be determined in view of the recommendation of the IPO and approval of the Board of Divesting. The maximum amount of allowance out of this criterion shall be 2.5 time of the principal price of the transaction.
Article 9) In case of taking the effective and positive measures detailed in Articles 4 to 8 above and the certification of the IPO, an allowance equal to the sum of the allowance resulted from the aforementioned obtained criteria and at maximum amounting to 25 percent of the price of the transaction of the divested share, shall be granted to the buyer(s), with the observance of the provisions of this Directive.
Note 1: Any type of adjustment of coefficients for the assessment of allowances subject of the above-mentioned Articles 4 to 8 regarding the companies with special cases shall be authorized.
In this case, the Board of Divesting shall approve the adjustment of coefficients in view of the IPO recommendation.
Note 2: Finalized application of allowances to the account of buyer(s) shall be dependent upon the payment of at least half of the principal price of the transaction by the buyer(s).
Article 10) Allowances subject of this Directive allocable to the qualified installment-based buyer(s) in addition to the allowances on the principal price of transaction, decrease of the amount of the interest on the installment-based selling at maximum up to 100 percent of the interest on the installment-based selling and the time allowance, meaning the revision of contract duration resulted from its prolongation, at maximum up to four years, without taking into account the interest on the installment-based selling. The IPO shall be required to suggest to the buyer(s) the prolongation of 2.5 month of the repayment period and or the 5 percent of reduction of the interest rate on the installment-based selling to buyer(s) instead of the obtaining of each 1 percent of allowance in the principal price of the transaction, as the recompensed allowance and upon the request of the buyer(s) to use these allowances, refer the matter to the Board of Divesting.
Note: The IPO shall be authorized to suggest to the Board of Divesting for approval, the grant of allowance to the buyer(s) of shares in the installment-based method, who have observed the provisions of the contract during the period of contract and have fulfilled their obligations resulting from the contract. The allowance at maximum shall amount to 3 percent of the principal price of transaction and shall be granted in addition to other allowances subject of this Directive.
Article 11) All the items provisioned in this Bylaw in Rls., shall be duly adjusted to the price of the year of divesting based upon the criterion of the producer price, announced by the Central Bank of the IRI.
Article 12) Basis for the measuring of criteria subject of Articles 4 to 7 of this Directive shall be as follows:
A) Selling, operational interest and non-current assets based upon the figures detailed in the financial assets assessed by the divested SOE, at the time of divesting and the growth of average of the similar figures in the financial statements audited in the concerned year(s) following the divesting compared to the process of the three years before the divesting.
B) The size of total production based on the figures detailed in the explanatory notes, attached to the audited financial statements of the divested SOE at the time of divesting and in case of non-statement of the size of production in the said notes, the written reports of the Board of Directors of the Company at the time of divesting, which are certified by the inspector and the similar figures with this method in the concerned year(s) after divesting, compared to the process of the three years before the divesting; In case of production of different types of commodities by the company, the rate of growth of the production criterion shall be assessed using the homogenized production criterion of the company. It includes also the total production based on the average weight of growth of produced commodities.
C) The basis for the measurement of employment changes in the divested company, shall be the continuity of the insurance premiums paid by the full time employees detailed in the divesting deed at the maturity date of request and submission of valid documentations paid by the buyer in the conditions of stabilization of employment or continuous payment of insurance premiums at least for one year for all the newly employed workers following the divesting until the maturity date of the request and submission of the valid documentations for the insurance premiums paid by the buyer(s) in the conditions of the promotion of employment.
Chapter 3: Other Cases
Article 13) The buyer(s) undertake to facilitated the oversight on their fulfillment of their obligations, in lieu of the entitlement to the allowances subject of this Directive, including the submission of the required documentations and the possibility of the visiting by the experts or representatives of the IPO to the divested company.
Article 14) Allowances subject of this Directive, shall merely be allocated to those buyers of shares of the SOEs, the share-selling contract of which, have been concluded after the notification of the aforementioned law. The granting of allowances to the buyers of companies, the contract for selling their shares were concluded before the notification of the aforementioned law, shall be made in view of the directive subject of Article 9 of the Bylaw of the Paragraph F of the Article 14 of the Law of the 3rd Development Plan made applicable in the Article 9 of the 4th Development Plan.
Article 15) In case the outstanding installments payable by the buyer or the principal price of the transaction does not suffice the necessary resources for the payment of the allowances subject of this Directive in the installment-based selling and or in the cash methods of selling, the aforementioned resources, in view of the recommendation of the IPO, shall be supplied and paid by the General Treasury out of the account for the settlement of the revenues from the selling of shares of companies.