Iranian Securities Market Act

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In the name of God
The Law Governing the Securities Market in the
Islamic Republic of Iran ratified by the Islamic
Consultative Assembly on 22 November, 2005
Chapter One – Definitions and Terms
Article 1- The terms and words applied in the present Law have the
following meanings: –
1. Securities and Exchange High Council means a council
convened based on Article 3 of the present Law, hereinafter
referred to as the “Council”.
2. Securities and Exchange Organization means an
organization convened based on Article 5 of the present Law,
hereinafter referred to as the “Organization”.


3. Stock Exchange means an organized and self-regulatory
market where securities are transacted by dealers and/or
brokers according to the provisions of the present Law. Each
Stock Exchange (hereinafter referred to as the “Exchange”)
shall be established and administered in the form of a public
joint stock company.
4. Arbitration Board means a board convened based on Article
37 of the present Law.
5. Association means self-regulatory organizations of brokers,
broker/dealers, market makers, investment advisors, issuers,
investors, etc., duly registered as per the approved guidelines of
the Organization, in the form of non-governmental, noncommercial
and non-profit institutes, regulating the relations
between the parties which are engaged in the securities market
based on the present Law.
6. Self-regulatory Organization means an organization which is
allowed to set and implement professional and disciplinary
rules and standards by observing this Law to regulate
professional activities and create discipline in the relations
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among its members for good performance of the tasks and
duties entrusted to them by this Law.
7. Central Securities Depository means a company which
conducts and handles the affairs related to the registration,
depository, clearing and settlement of securities.
8. OTC Market means an electronic or non-electronic market
which implements securities transactions on the basis of
negotiations.
9. Primary Market means a market where the initial offer and
subscription of newly issued securities are affected, and related
proceeds are transferred to the issuer.
10.Secondary Market means a market where securities are
transacted after their initial offering.
11.Derivative Market means a market where futures and options
contracts in transactions are transacted based on securities or
commodities.
12.Issuer means a legal entity that issues securities under its
name.
13.Broker means a legal entity that transacts securities in the
name and for the account of the others.
14.Broker/Dealer means a legal entity that transacts securities in
the name and for the account of the others or itself.
15.Market Maker means a broker/dealer who, after obtaining the
required permission, commits to deal in certain securities in a
way to increase liquidity and regulate supply and demand for
such securities with the aim to limit price fluctuations.
16.Investment Advisor means a legal entity which, based on a
particular contract, renders advisory services to the investors
relating to the sale and purchase of securities.
17.Portfolio Manager means a legal entity which, based on a
particular contract, purchases and sells securities for the
investors with the aim of generating profit.
18.Investment Bank means a company which is active as an
intermediate between the issuer of securities and public
investors and can involve in dealing, brokerage, market
making, investment advisory, portfolio management,
subscription, underwriting, and similar activities after obtaining
permission from the Organization.
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19.Pension Fund means an investment fund that provides
complementary benefits for the retirement period of its
members by utilizing savings and investment schemes.
20.Investment Fund means a financial institution whose main
activity is investment in securities and its owners participate in
the profit and loss of the fund with respect to the ratio of their
investment.
21.Financial Institutions mean financial institutions which
participate in the Securities Market including Brokers,
Broker/Dealers, Investment Advisors, Rating Agencies,
Investment Funds, Investment Companies, Financial
Information Providers, Investment Banks and Pension Funds.
22.Holding Company means a company that by investing in a
company with the aim of generating profit acquires sufficient
votes to elect members of the board of directors of that
particular company, or, is effective in the election of members
of the board of directors for the purpose of controlling the
operations of the latter company.
23.Assessor means a financial expert assessing assets and
securities under the present Law.
24.Securities means any paper or instrument bearing the
transferable financial rights for the owner of an asset and/or
related interest. The Council shall determine and define
securities. The concepts of financial instruments and securities
are considered equivalent in the context of the present Law.
25.Issue means a publication which offers securities to the public.
26.Public Offering means offering newly issued securities to the
public for sale.
27.Private Placement means the direct sale of securities by the
issuer to institutional investors.
28.Subscription means the process of purchasing securities from
the issuer and/or its legal representative against payment of the
full price according to a mutual agreement.
29.Underwriting means the undertaking by a third party to
purchase the securities not sold within the subscription period.
30.Prospectus means a notice which informs the public about the
issuer and the offered securities.
31.Registration Statement means all forms, information and
documents submitted to the Organization by the applicant
during the procedure of application for registration.
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32.Inside Information means any information not disclosed to the
public, directly or indirectly related to particular securities and
the issuer or transaction of which, and in case of becoming
public affects the price and/or decision of investors relating to
such securities.
33.Portfolio means the total financial assets purchased out of the
investors’ funds.
Chapter Two: Securities Market Organs
Article 2-
To protect the rights of investors, to organize, operate and develop a
transparent, just and efficient securities market, and to supervise a
proper execution of the present Law, the Council and the
Organization shall be established, having the composition, tasks,
duties, powers and authorities as stipulated in the present Law.
Article 3-
The Council shall be the highest official executive organ of the
securities market, being responsible for setting the macro policies of
the market. Members of the Council shall include the following:
1- Minister of Economic Affairs and Finance;
2- Minister of Commerce;
3- Governor of the Central Bank of the Islamic Republic of Iran;
4- Secretaries General of the Iranian Chamber of Commerce,
Industries and Mines and the Chamber of Cooperatives;
5- Chairman of the Organization, who shall act as secretary to the
Council and spokesman of the Organization;
6- Public Prosecutor or his deputy;
7- One representative from the Associations;
8- Three financial experts from the private sector recommended
by professional institutions of securities market, proposed by
the Minister of Economic Affairs and Finance and approved by
the Council of Ministers;
9- One expert strictly from the private sector proposed by the
related minister and approved by the Council of Ministers for
each commodity exchange.
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Note 1: Minister of Economic Affairs and Finance shall act as
chairman of the Council.
Note 2: The term of office of the members mentioned in
paragraphs 7, 8 and 9 of this Clause shall be 5 years and they
cannot be elected from among the members of board of
directors and the employees of the Organization.
Note 3: Re-election of the members mentioned in paragraphs 7,
8 and 9 of this Clause shall be possible for a maximum of two
periods.
Note 4: Members mentioned in paragraph 9 shall participate
merely in sessions adopting resolutions on their Exchange.
Article 4
Duties of the Council shall be as follows:
1. To make necessary arrangements for establishing and
developing a securities market and exercising supreme
supervision over execution of this Law;
2. To determine the macro policies of securities market in line
with the overall economic policies of the country in
compliance related laws and regulations;
3. To propose bylaws for approval by the Council of Ministers,
as deemed necessary for the execution of this Law;
4. To approve new financial instruments;
5. To issue, suspend and cancel the activity permit/license of
the Exchanges, OTC Markets, Central Securities Depository
and Investment Banks;
6. To approve the budget and financial statements of the
Organization;
7. To supervise the activities of and consider complaints
against the Organization;
8. To approve the type and amount of collectibles of the
Organization and have supervision over them;
9. To elect the inspectors/auditors of the Organization and to
determine their remunerations;
10.To appoint the members of the board of directors of the
Organization;
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11.To determine the remuneration of the chairman and
members of the board of directors of the Organization;
12.To select the members of the Arbitration Board and to fix
their remuneration;
13.To grant permission to the Exchange for offering, in foreign
markets, the securities of companies listed there in;
14.To grant permission to the Exchange for listing of foreign
securities at the Exchange;
15.To grant permission to the Exchange for transactions of the
foreign entities at the Exchange;
16.To conduct other activities related to securities market at the
discretion of the Council of Ministers.
Note: Resolutions of the Council shall be enforceable after
being approved by the minister of Economic Affairs and
Finance.
Article 5-
The Organization shall be a public non-governmental institute with
legal and financial independence and shall be funded through a
service charge and admission fee collected from companies listed in
the Exchanges and other revenues. The required funding for
commencement of activity of the Organization shall be provided out
of the trust fund of the Stock Exchange Council deposited with the
Tehran Stock Exchange Brokers’ Organization.
Note: The articles of association of the Organization shall be
composed by the Council and approved by the Council of
Ministers at most within three months from the date of
ratification of this Law.
Article 6-
The board of directors of the Organization consists of 5 members,
elected by the Council from among the trusted and reputable nongovernmental
sector financial specialists based on a proposal of the
chairman of the Council. The chairman of the Council shall issue the
appointment letters of the members of the board of directors.
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Article 7-
Duties and authorities of the Organization’s board of directors shall
be as follows:
1. To prepare the by-laws for implementation of this Law and
propose them to the Council;
2. To draft and codify the implementary instructions of this
Law;
3. To supervise the good performance of this Law and related
rules and regulations;
4. To register and issue the permission for public offering in
the securities market and to supervise thereon;
5. To apply for issuance, suspension and cancellation of the
establishment permit / license of Exchanges and other
institutes who require approval by the Council;
6. To issue, suspend and cancel the establishment
permit/license of Associations and Financial Institutions
subject to the present Law which are not under direct
activities of the Council;
7. To approve the articles of association of the Exchanges,
Associations and Financial Institutions subject to this Law;
8. To take necessary measures to prevent violations in the
securities market;
9. To report such violations in securities market whose
reporting shall be done according to this Law by the
Organization to the concerned authorities and follow up the
same;
10.To present financial statements and periodical reports on the
operations of the Organization and also the status of the
securities market to the Council;
11.To take necessary measures and required actions to protect
the rights and benefits of investors in securities market;
12.To establish the required coordination in securities market
and co-operation with other policy-making and supervisory
institutions;
13.To suggest new financial instruments in securities market to
the Council;
14.To supervise the investment of foreign real persons and
legal entities in the Exchanges;
15.To plan the budget and propose various income and service
fees of the Organization for approval by the Council;
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16.To approve the ceiling of the services fees and charges of
the Exchanges and other Financial Institutions subject to
this Law;
17.Issuance of confirmation letter of the Organization for
public joint stock companies before their registration with
the Company Registrar and supervise the activities of those
companies;
18.To check and supervise the disclosure of material
information by the companies registered with the
Organization;
19.To establish close co-operation and coordination with the
accounting authorities, especially the board for codifying
the auditing standards;
20.To perform macro and long-term research to develop the
future policies of the securities market;
21.To co-operate with and participate in other international
institutions and to join related regional and international
organizations;
22.To perform all other affairs entrusted to the Organization by
the Council.
Article 8-
The term of office of each member of the board of directors shall be
five years and their re-election for second term shall be allowed.
Article 9-
The chairman of the Organization shall be elected from among the
members of the board of directors by recommendation of the
members and approval by the Council for duration of 30 months.
Note 1: The chairman of the board of directors shall be the
chairman of the Organization and considered as the highest
ranking executive official.
Note 2: The tasks, duties and scope of powers and authorities
of the chairman of the Organization shall be defined in the
articles of association of the Organization.
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Article 10-
The employment of members of the board of directors shall be
compensated on a full time basis and they shall have absolutely no
right to accept any other employment or responsibility in other
governmental and non governmental departments, agencies or
institutions.
Article 11-
In case of dismissal, death and/or resignation of any member of the
board of directors, his substitute shall be appointed for the remaining
term of office within 15 days, subject to the regulations specified in
Article 6. The conditions for dismissal of members of the board shall
be stipulated in the Organization’s articles of association.
Article 12-
Members of the board of directors shall take an oath in front of the
Council before starting their work in the Organization, to perform
their legal tasks and duties to their best abilities, to apply their utmost
attention and impartiality in performing their tasks and duties, to
ensure that all resolutions adopted by them are in the best interest of
the country, and to observe the secrecy of information of the
Organization and the board of directors. The text of the oath shall be
stipulated in the articles of association of the Organization.
Article 13-
The chairman and members of the board of directors of the
Organization shall be compensated out of the Organization’s budget.
Note: The attendance fee of the Council’s non-governmental
members for attending the meetings shall be approved by the
Council pursuant to the proposal of the Council’s chairman and
shall be payable out of the Organization’s budget.
Article 14-
At the time of appointment as well as the end of office term, members
of the board of directors shall provide to the Council a list of their
own assets and the assets of their spouses and persons under their
dependency.
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Article 15-
The auditor/inspector of the Organization shall be elected by the
Council from among the members of the Association of Certified
Accountants for one year. Election of the auditor/inspector shall be
possible for a maximum of two periods.
Article 16-
Any transactions in securities, registered or in the process of
registration with the Organization, or any direct or indirect activity
and participation in the said transactions by members of the Council,
Organization, directors and partners of the Organization’s auditing
firm and also their dependants shall be forbidden.
Article 17-
The members of the Council and the Organization shall report to the
head of the judiciary about their economic and financial activities and
also their full-time or part-time jobs held during the past two years.
Article 18-
Members of the Council, Organization, and directors and partners of
the auditing firm of the Organization shall refrain from direct or
indirect disclosure of confidential information they become aware of
in execution of their tasks and duties even after termination of their
term of office. Violators shall be punished according to Article 46 of
the present Law.
Article 19-
The Organization may request for furnishing the information required
in the context of the present Law, in the execution of its legal tasks
and duties by permission of the public prosecutor general, from all
banks, credit institutes, governmental companies, governmental and
public organizations, including the entities whose names have to be
mentioned or specified, and also non-governmental real persons or
legal entities. All the said organizations and parties shall present the
information requested by the Organization in due time.
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Chapter Three: Primary Market
Article 20-
Public offerings of securities in the primary market shall be registered
with the Organization in accordance with the present Law. Public
offerings of securities in any way and means without observing the
provisions of this Law shall be forbidden.
Article 21-
Registration of securities with the Organization shall ensure that the
regulations and decrees of the Organization are observed and the
information is transparent, but does not provide any confirmation of
proceeds, guarantee of profitability and/or any recommendation as to
the companies or projects related to the securities by the
Organization. This shall be stipulated in Prospectus.
Article 22-
The issuer shall submit to the Organization the application for
registration of the securities together with the Registration Statements
and Prospectus for obtaining the permission for the public offer.
Note: The securities registration form, the content of the
Registration Statements and Prospectus which shall be
submitted to the Organization and also the ways and means for
publishing the Prospectus and the ways and means for
coordination between the Company Registrar and the
Organization shall be based on the instructions composed by
the Organization after being approved by the Council.
Article 23-
The Organization, after considering the application for registration of
securities and attachments of which, and assurance as to their
compliance with the rules and regulations, shall take action for
approval of the Prospectus.
Note 1: Public offerings of securities shall be closed within a
period prescribed by the Organization. The period shall not
exceed 30 days. The Organization may extend the subscription
period for another maximum of 30 days, according to an
application by the Issuer giving justifiable reasons.
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Note 2: The Issuer shall inform the Organization of the results
of distribution and sales of securities in a manner determined
by the Organization in a period not more than within 15 days
upon completion of the public offering deadline. The steps
taken by the Issuer, in case not all securities have been sold,
shall be specified in Prospectus.
Note 3: The Organization shall permit utilization of the
collected funds after completion of the Public Offering
procedure is confirmed by the Organization.
Note 4: In case the Public Offering procedure is not
successfully completed, the collected funds shall be returned to
the investors within a maximum of 15 days.
Article 24-
If the application received for the issuance of securities is considered
by the Organization to be incomplete, the foregoing shall be declared
to the issuer within 30 days with the request for correction. In case of
a complete set of documents the Organization shall announce its
agreement or disagreement regarding registration of the securities to
the issuer within a maximum of 30 days from filing of the application
with the Organization.
Article 25-
As of the effective date of this Law, permission for publication of
Prospectus, relating to the registration of public joint stock companies
or increase of their capital, shall be issued by the Company Registrar
upon approval of the Organization.
Article 26-
As of the effective date of this Law, duties and powers mentioned in
Article 4 of the Law on the Ways and Means for Issuance of
Participation Bonds, approved on September 22, 1997 shall be
transferred from the Central Bank of the Islamic Republic of Iran to
the Organization.
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Note: Participation bonds which are exempted from
registration with the Organization by this Law shall be
excluded from this clause.
Article 27-
The following securities shall be exempted from registration with the
Organization:
1- Participation bonds issued by the government, Central Bank
and municipalities;
2- Participation bonds issued by banks and finance and credit
institutions under supervision of the Central Bank;
3- Securities offered in form of a private placement;
4- Shares of any public joint stock company whose total rights of
its shareholders are less than the figure determined by the
Organization;
5- Other securities that do not require registration at the discretion
of the Council, such as bonds issued by organizations and other
legal authorities.
Note: The Issuers of Securities which are exempted from
registration shall report to the Organization as per the
conditions determined by the Organization, the specifications
and characteristics of the instruments and the ways and means
for their distribution and sales.
Article28-
Establishment of the Exchanges, OTC Markets and Financial
Institutions subject to this Law requires registration with the
Organization. Their activities shall be performed under supervision of
the Organization.
Article 29-
Professional competence of members of the board of directors and
managers, minimum capital, subject of activity as per articles of
association, reporting system and means and types of special audit
reports of Financial Institutions subject to this Law shall be approved
by the Organization.
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Chapter Four: Secondary Market
Article 30-
Securities shall be admitted by the Exchanges according to
procedures proposed by each Exchange and approved by the
Organization. The Exchange is not allowed to accept securities which
have not been registered with the Organization.
Note: Securities exempted from registration shall not be
subject to this Clause.
Article 31-
Each Exchange shall prepare a list with the names, numbers and
prices of transacted securities on the transaction days according to the
approved rules and regulations of the Organization and inform the
public of the same. This list shall be considered as an official
document and filed in the Exchange.
Article32-
The Organization shall be entitled to issue the order for closing and/or
suspension of the transactions of each Exchange for maximum three
working days by declaring emergency conditions. In case of
continuation of emergency conditions, the said duration may be
extended by the Council.
Note: Emergency conditions shall be based on the executive
regulations proposed by the Organization and approved by the
Council.
Article33-
Commencement of the activity of brokers, broker/dealers and market
makers in any manner and under any title whatsoever, shall be subject
to membership in the related Association and observing the
provisions of the present Law, by-laws and implementary regulations
thereof.
Note: As long as the Associations for the broker/dealers and
market makers have not been convened, tasks and duties of
such Associations shall be accomplished by the Organization.
When the number of the Association members reaches 11
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persons all across Iran, the convention of Associations for
broker/dealers and market makers shall be compulsory.
Article 34-
Activity of the dealers, broker/dealers and market makers in each
Exchange shall be subject to admission to that Exchange according to
regulations proposed by the Exchange and approved by the
Organization.
Article 35-
The board of directors of the Exchange shall investigate and consider
the disciplinary violations of brokers, broker/dealers, market makers,
issuers and other members of any provisions of the present Law or the
related by-laws. Judgments of the Exchange may be appealed within
one month from the notification date. The decision of the
Organization shall be final and enforceable.
Article 36-
Disputes among brokers, broker/dealers, market makers, investment
advisors, issuers, investors and other concerned parties relating to
their professional activities shall be considered by the Arbitration
Board in the case(s) when no amicable solution can be reached in the
Associations.
Article 37-
Arbitration Board shall be composed of three members. One member
shall be appointed by the head of the judiciary from among the
experienced judges. Two members shall be economic and financial
experts proposed by the Organization and approved by the Council.
The head of the judiciary and the Organization shall appoint and
introduce each an alternate member in addition to their principal
representatives to participate in Arbitration Board in case of absence
of a principal member. Qualifications for alternate members shall be
the same as for principal members.
Note 1: Representative of the judiciary shall preside over the
Arbitration Board.
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Note 2: The term of office of principal and alternate members
shall be two years and re-election of whom shall be allowed for
another two periods.
Note 3: Arbitration Board shall have a secretariat located at the
premises of the Organization.
Note 4: The budget of Arbitration Board shall be formed and
paid out as a part of the Organization’s budget.
Note 5: Awards issued by the Arbitration Board shall be final
and enforceable and shall be executed by the executive
authorities of the Property Registration Organization.
Article 38-
If brokers, broker/dealers, market makers, investment advisors and
other similar organizations apply for provisional or permanent
termination of their activities, they shall declare the same to the
Organization, and related Association and Exchange and shall deposit
their license with the Association. Related guarantees and collaterals
shall remain valid and effective up to clarifying the status of their
performed transactions and other commitments. The latter part of this
article shall apply also to brokers, broker/dealers, market makers,
investment advisors and other similar organizations whose
membership is suspended or cancelled based on Article 35 of the
present Law.
Article 39
Brokers, broker/dealers, market makers, investment advisors and
other similar organizations shall prepare the required reports
according to the regulations made and notified by the Organization
and submit the same to the competent authorities.
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Chapter Five: Information in Primary and Secondary
Markets
Article 40
The Organization shall ensure that all information retrieved in the
process of registration of securities shall be made available to the
public at most within 15 days according to the related regulations.
Article 41
The Organization shall commit the Exchanges, issuers of securities,
brokers, broker/dealers, market makers, investment advisors and all
other organizations active in the capital market to publish full
information on their activities based on the Iranian national
accounting and auditing standards.
Article 42
The issuers of securities shall prepare their financial statements
according to legal requirements, accounting standards, financial
reporting standards, and implementary regulations and rules notified
by the Organization.
Article 43
The issuer, investment bank, auditor, assessors and legal advisors of
the issuer shall be responsible for compensation of damages to
investors who incurred a loss due to failure, negligence, violations
and /or presenting incomplete and incorrect information in initial
offering due to their actions or omissions.
Note 1: Those who suffer a loss subject to the present Article
may file a complaint with the board of directors of the
Exchange or the Arbitration Board within one year from the
date of discovering the violation, not more than three years
after the public offering.
Note 2: Only those individuals shall be permissible to claim
damages who have already purchased the securities of the
issuer, subject of the present Article, before discovery of
violation.
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Article 44
In case the Organization becomes aware that the issuer has provided
false, incomplete or misleading information in Registration
Statements or Prospectus, the Organization may stop the public
offering of securities at any stage.
Article 45
Any issuer who has received permission for offering his/her securities
from the Organization shall be obliged to submit at least the
followings to the Organization, according to the implementary
regulations notified by the Organization:
1. Annual audited financial statements;
2. Interim financial statements, including semi-annual audited
financial statement and quarterly statements;
3. Reports of the board of directors to the shareholders’
assemblies and related comment of the auditor;
4. Any information having a significant effect on the price of
the securities and the decision of investors.
Chapter Six: Penalties & Punishments
Article 46-
The following persons shall be sentenced to prison from three months
to one year or a cash penalty equal to two to five times of the earned
profit or non-incurred loss, or both:
1. Any person who takes advantage of, before public offering,
and/or discloses or publishes, in such cases not prescribed
before, inside information related to securities subject to the
present Law, being disposed to him/herself due to his/her
tasks and duties, which one way or the other might be
against the interests of the others or in his/her favor or the
favor of the persons he/she is the representative of whom
under any title;
2. Any person trading securities by using inside information;
3. Any person whose actions lead to a distorted picture of
securities and transaction trends or cause the establishment
of false prices or lures persons into securities transactions;
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4. Any person who publishes a notice or Prospectus for a
public offering of securities without observing the
provisions of this Law.
Note 1: The following persons shall be considered to have
inside information about a company:
A. Directors of the company including members of the board of
directors, executive board, managing director and their
deputies;
B. Inspectors, advisors/consultants, accountants, auditors and
attorneys of the company;
C. Any shareholders having more than 10% of the company shares
at their disposal, on their own or jointly with their dependants
or representatives;
D. Managing director, members of the board of directors, related
directors and representatives of the Parent (Holding)
Companies owning at least 10% of the shares or, having at least
one member in the board of directors of the invested company;
E. Other persons having access to inside information due to their
tasks, duties, powers and/or their positions.
Note 2: Persons subject to note 1 of this Article shall report to
the Organization and the related Exchange their transactions in
securities which are not based on inside information within 15
days after such transactions been concluded.
Article 47-
Persons who present or certify false or incorrect information to the
Organization and/or the Exchange and/or use false information and
documentation in execution of the reports mentioned in the present
Law shall be punished in accordance with the Islamic Punishment Act
approved on May 27, 1996.
Article 48-
Brokers, broker/dealers, market makers, and investment advisors who
have, in the execution of their tasks, acquired or is at their disposal
private and confidential information and disclose such information
without permission, shall be punished in accordance with Article 648
of the Islamic Punishment Act ratified on May 27, 1996.
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Article 49-
The following persons shall be sentenced to prison from one to six
months or a cash penalty equal to one to three times the earned profit
or the non-incurred loss, or both:
1. Any person who involves in activities of brokers,
broker/dealers or market makers that require permission,
without observing the provisions of the present Law under
any title whatsoever and/or introduces himself under one of
the said titles;
2. Any person who is obliged to present total or partial
information or documents to the Organization and/or the
related Exchange based on the present Law and refrains to
do so;
3. Any person who is responsible for execution of documents,
information, Registration Statements, Prospectus and the
like for filing with the Organization and also any person
who is responsible for considering and commenting on or
execution of financial, technical or economic reports or any
certification of such documents or information and violates
the provisions of the present Law in the execution of the
entrusted tasks and duties;
4. Any person intentionally and consciously misusing any
information or documents or false and incorrect reports
related to securities, in whatsoever manner.
Article 50-
Brokers, broker/dealers, and market makers who illegally take
advantage of securities and funds deposited with them to keep in
separate accounts and perform transactions, in their own favor or in
favor of others, shall be subject to punishment set forth in Article 674
of the Islamic Punishment Act ratified on May 27, 1996.
Article 51-
In case legal entities commit the violations stipulated in present Law,
related punishments shall be applied upon those real persons who
have had the decision making responsibility on behalf of the aforesaid
legal entities.
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Article 52-
The Organization shall collect evidences and documents relating to
violations of this Law, and present the same to the competent judicial
authorities and follow up the case, respectively, as claimant. If any
loss and damage has been incurred by any person due to the said
violations, the party who has incurred the loss may refer to the
judicial authorities for compensation of the same and submit a loss
and damage petition according to related rules and regulations.
Chapter Seven: Miscellaneous Rules
Article 53-
Brokers, broker/dealers, market makers and others active in the
securities market shall take action for establishment of their
Association upon approval of related articles of association by the
Organization within six months from establishment of the
Organization.
Article 54-
No real or legal person shall be allowed to hold, directly or indirectly,
more than 2.5% of the shares of the Exchange.
Article 55-
No real or legal person shall be allowed to hold, directly or indirectly,
more than 5% of the shares of Central Securities Depository.
Article 56-
Upon establishment of the Organization all records, deeds and
documents of the Stock Exchange Council, subject of the
Establishment Act of Tehran Stock Exchange ratified in 1966, shall
be transferred to the Organization.
Article 57
The properties and assets of the existing stock brokers’ organizations,
including the current and fixed assets, cash, bank deposits, securities,
rights and other assets, as well as the Exchange development deposit
shall be computed by a committee composed of the Chairman of the
22
Organization and selected representatives of the brokers at the
respective Exchange and representatives of the Council, and upon
deduction of liabilities, shall be appropriated between the relevant
Exchange and the Organization and put at their disposal as capital and
financial resources respectively. Decisions adopted by this committee
shall be enforceable upon approval by the Minister of Economic
Affairs and Finance.
Note: Termination benefits of the employees of the stock
brokers’ organization of each Exchange shall be redeemed
based on regulations of the Labor Law.
Article 58
The Government shall take necessary actions to activate commodity
exchanges in compliance with the present Law and, to present legal
guidelines for this purpose.
Article 59
The present Law shall come into force after four months from the date
of ratification and the Council of Ministers and other authorities
mentioned in the present Law shall take action in a manner that the
administrative and organizational regulations and also particular
institutions required under this Law are established and approved
within this period.
Article 60
Upon expiration of deadlines prescribed in this Law, Establishment
Act of the Tehran Stock Exchange ratified in 17 May, 1966 and all
other rules and regulation in conflict with this Law shall be
considered null and void.
The above Law, consisting of 60 Articles and 29 Notes, was ratified
by the Islamic Consultative Assembly in its open session dated
01/09/1384 (22 November 2005) and confirmed by the Guardian
Council on 02/09/1384 (23 November 2005).

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