Annex

Council    of   Ministers’    Decree
(No.H15891T/5125     Date:Aug.6,1996)

Ministry   of  Economic   Affairs   and   Finance

The  Council of Ministers in its meeting  held  on  23.03.1375  (12 June, 1996) acting   upon   recommendation   No.66080021/31215  dated  24.08.1374  ( 14  November  1995 ) of  the   Ministry  of  Economic   Affairs  and  Finance , in  relation  to  investments   covered  by  the  Law  for  the  Attraction  and  Protection  of  Foreign  Investments- enacted  in  1334 (1955) – approved  the  following :

1. The  import  of   machinery, equipments  and  raw   materials  as  part  of  the  investment    contribution    of    foreign    investors ,  whether  in  the  form  of  equity  capital  or  shareholder’s  loan ,  is not  subject   to  the  Council   of  Ministers’   decrees  relating  to  the  import  and   banking   regulations ,  and  shall be  merely   governed  by  the  Law   for   the   Attraction  and  Protection  of  Foreign  Investments  of  1334  ( 1955 )  and  its  implementing   regulations  of  1335 (1956)  and   the  subsequent   amendments  thereto.

   The  Ministry  of  Commerce  , subject  to  the  approval    of   the Organization  for  Investment ,  Economic  and  Technical  Assistance  of  Iran ( O.I.E.T.A.I.)  based  on the  agreement  of  the  Supervisory  Board  for  the  Attraction  and  Protection  of  Foreign  Investments ,  shall  take  measures   for   registration  of  orders  and   issuance  of  license  for   delivery  of  the  said   machinery  ,  equipments   and  raw  materials   from  the  Customs.

2. The export  of  the  products   produced  by  joint   venture  companies   in  the  manner prescribed  in   the   permits   related   to  the  admission  of  foreign  investments  (  the   relevant   decrees ) , to  the  extent that the foreign currency earned    from   the  aforementioned    exports  covers   the   foreign  currency   requirements    of    these  companies  with   respect  to :

–    the import of raw  materials and  semi- fabricated  parts  related  to  their  own  products ,

–   other   current   foreign    currency    requirements  including  repayment  of  the   principal   as   well   as   payment    of   the  profit (interest)  on  the  loans  extended  by  foreign  investors ,

–  foreign  currency   expenses   related  to ( transfer of )  technology, management and  technical  services   agreements  ( according   to  the  relevant   decrees ) , as  well  as

–   the  required   foreign   currency  for  the  transfer  of  annual   transferable   dividends  of  foreign  investors ,   is permitted ,  and  shall be  exempt  from  the  present   governmental  regulations   and / or  any   regulations   in  future ,  restricting  the  exports  by  way  of   quantity   and   deposition   of  a  foreign  exchange  undertaking   for  the  return  of  the  foreign  exchange  derived  from  exports.  The  exporters   are    required  ,  prior to  the  export of  goods , to  define  the  sum   withdraw able   from   the  foreign  currency  revenues  for  each  of  the  purposes  provided   for   in  this   clause  ,  and  seek  the  approval   of  the  Supervisory   Board  for the  Attraction  and   Protection of  Foreign   Investments .  The  Ministry   of   Commerce  is  under   obligation  to   issue   the  export    license   only   upon   confirmation  of  the  O.I.E.T.A.I.

3. The import  of  machinery  ,  equipments  and  raw  materials,  and  in return  ,  the  export  of  the  products  , up  to  the  approved  figures  in projects where the foreign investment  is  admitted  with  no equity   participation  but  through  project  financing  mechanisms   shall  also  be  subjected   to  the  facilities   stipulated   in  clauses   1 and  2  above  .  Repayment   of    the  principal   as   well  as  payment  of  the  profit (interest) on  the   financial   facilities   related  to  projects  under  this  clause, shall exclusively be permitted out  of   the   export  (proceeds)  of   products  of  the  same  project .

4. The  foreign   currency   revenues    derived   from   services  and  tourism  activities  of   foreign  investments   may  be  utilized   for  the  purposes   stipulated  in clause  2  above   pursuant   to  the  approval  of  the   Supervisory   Board   for  the   Attraction  and   Protection   of   Foreign   Investments .

5.    The export (of products) in  excess of the specified quantity and utilization  of  the  foreign  currency  revenues   in  excess  of   the purposes defined in the Decree, within the framework of the laws and regulations of the country , is permitted.

6.    All companies and entities falling under this Decree, may keep the foreign  currency   revenues  derived    from   their   activities   up  to  the ceiling approved by the O.I.E.T.A.I.  in  an escrow account with a

   local or foreign bank ,  and  directly  withdraw  therefrom  for defined purposes.

       Note : with regard to those companies which are established with the participation of governmental companies, the opening of account with foreign banks is dependent upon the approval of the Central Bank of the Islamic Republic of Iran .

7.     Activities other than those which fall under the priority first of the Decree No. H11463T/1361 dated 11.02.1374 ( 30 April, 1995) as well as future substituting decrees, other industrial and mining activities with  foreign  participation  shall  fall  under the priority second  and  shall  enjoy a  six- year  tax   exemption . The  yearly   increase   of   tax   exemption    as    a    result    of    locating   the aforementioned  units  in  deprived  areas   shall  continue to be in force.

                                                                                                                                Hassan Habibi
                                                                                                                         First   Vice   President

Decree : No. H15891T/5125

               Date : Aug.6,1996

Council    of   Ministers’    Decree
(No. 22021T/45271       Date: 13, Nov. 1999)

Ministry   of  Economic   Affairs   and   Finance

The Council of Ministers in its meeting  held  on  28.07.1378  (20.10.1999) , by  virtue  of principle   138  of  the  Constitution of  the  Islamic  Republic  of  Iran , approved  the  criteria   for  admission  of  foreign  investments under   the  Law  for the  Attraction  and  Protection  of  Foreign  Investments (LAPFI)- enacted  in  1334  ( 1955) – as  follows:

Criteria   for Admission  of  Foreign   Investments

 under    the  Law   for  the  Attraction  and 

 Protection  of  Foreign  Investments 

Article(1) :

Applications  for  foreign  investment which have  been  approved, through  the  Organization   for  Investment, Economic  and  Technical   Assistance   of  Iran ( OIETAI ) within  the  framework  of  this   Decree,  by  the  Supervisory  Board*  referred to  Article (2)  of  LAPFI, shall  be   covered  by  LAPFI  after   ratification  by the  High  Council   for   Investment   stated   in  Article (7)  of  OIETAI’s   Charter.

Note – Such  approval  requires a positive   vote  of  majority   of  member   ministers  of  the   High  Council and shall   become  effective after  being  re-affirmed   by the  President,  and  subsequently promulgated  with  due   observance  of   Article  (19)  of  the  Cabinet Bill.

Article (2) :

Foreign  investment projects, in  addition  to  creating   employment opportunities,   are   required   to  serve,  at  least  , one  of  the  following  purposes:

(1)  Promotion of  the  Iran’s  non-oil  exports;

(2)  Completion   of   links  of  the  country’s  production  chain;

(3)  Exploration and exploitation of  underground   resources   as  well  as 

      processing  ( industrial  – mining   complexes);

(4)  Increasing   market   competition    and   upgrading    the    quality    of 

       products  and   services   as   well   as   reducing   prices   in    Iranian 

       territory.

Article (3):

Remittance of profit and other  foreign   exchange   transfers  related  to  foreign  investment  approved  by  the  Supervisory   Board  is   solely permissible out  of   the  foreign  exchange  earnings  or  annulment of foreign  exchange  commitments  related  to  the  export   of  goods   and  services  of  the  recipient  investee  firm  in  which   the  foreign  capital  is  employed. 
In  the event   that   the  export  of  goods   and   services   by  the recipient investee  firm  is  prohibited  by  the  Government,  the   foreign  exchange required  for   transfer  purposes  shall  be  provided out  of  a  special  credit   made   available  to  the  OIETAI   for  such  purposes.  

Article (4):

Foreign  investment  shareholding  in  companies   to  be  registered   in  Iran  for  the  implementation  of  a  foreign  investment  project ,and/or  in existing registered  companies in  which  foreign  investment  is made  to enhance   capacity  and production, is  permissible  in  the   following  manner. The  proportion of  foreign   shareholding   shall  be  determined  in  each  of  the  following categories upon mutual agreement between   the  parties   involved:

a) In projects   aiming   at, inter alia, promoting non-oil   exports,  completing  the links of  production  chain,  mining- industrial   complexes, increasing market  competition,  upgrading  the  quality  of  goods   and  services,   and  reducing   prices, up  to   80%   of   the shares of  joint  venture   companies   may  be  presented  to foreign  investors.

b)  In projects   aiming   at   exploration   and  exploitation  of mines  and underground   resources, a  maximum  of  49%   of   the  shares  of joint  venture  companies  may  be  presented  to foreign  investors. 

Note  1-  Further   increase   in  the  foreign   permissible   shareholding  in  special  projects is  possible   upon   recommendation made  by the Supervisory  Board   and   approval  of   the  Council  of  Ministers.

Note 2-  Projects, under  LAPFI,  financed by  foreign  investors through buy-back   arrangements  , B.O.T., and  B.O.O.T.   schemes,  and/or  any  other   project  financing  mechancisms  are not   subject  to  restrictions   related  to  foreign  permissible  shareholding .

Article(5) :

Part   of   foreign   investors’   imported  capital   may be   covered   under  LAPFI   in the  form  of financial   facilities. The   related   installments  of  principal   and  profit   ( financial  charges  and  costs )  thereto shall  be  transferable  in  accordance  with  Article  (3)  of  this  Decree.

                                                                        Hassan Habibi
                                                                    First   Vice   President

 Decree : No. 22021T/45271

               Date : Nov.13,1999