Commercial Law and Business Entities
This domain tests the Commercial Code (قانون تجارت), company formation and registration, governance, reporting and the tax consequences of separate legal personality.
Core rules
- The Commercial Code recognizes joint stock companies (سهامی عام and سهامی خاص), limited liability companies (با مسئولیت محدود), general partnerships (تضامنی), limited partnerships (مختلط), proportional companies (نسبی) and cooperatives.
- A company acquires legal personality on registration with the Corporate Registration Office (سازمان ثبت شرکتها). Changes to capital, directors, address and purpose must also be registered and published.
- Joint stock companies have a board of directors, managing director, auditor and general assembly. They must prepare annual financial statements and a board report and convene the annual general assembly.
- Tax law treats a registered company as a separate taxpayer. Dividends are paid from after-tax profit and are not a deductible expense. Owners’ personal expenses are not company expenses.
- Liquidation follows statutory procedures; the company remains a taxpayer until liquidation is completed and recorded.
Worked example
Two founders register a limited liability company with 1,000 million rials of capital. The company obtains a tax file and VAT registration, earns 400 million rials of profit and pays 25% corporate tax of 100 million. If it distributes 200 million to its owners, that distribution is not deductible; it is paid from the remaining after-tax profit. A shareholder’s personal car lease cannot be deducted unless the contract and use are genuinely for the company.
Traps
Assuming an unregistered business has limited liability; failing to register changes; confusing shareholder and company income; and deducting owner withdrawals as business expenses.