- What are the steps involved in establishing investment funds?
- What are the necessary documents for setting up an investment fund?
- How is subscription of investment funds done?
Procedures for registering and establishing an investment fund in Iran
1- Obtaining necessary permits for registering and establishing an investment fund
A bank or credit financial institution needs to obtain the necessary licenses from the central bank to start working. In order to register an investment fund, each fund must obtain the necessary permits from the Securities and Exchange Organization. Also, some funds that intend to be established with the participation of banks or financial and credit institutions or legal entities related to the bank, in addition to the license of the Securities and Exchange Organization, must also receive the license of the Central Bank. Also, the investment fund must be registered in the company registration authority.
2- Submitting draft articles of association and other documents to the company registration authority
The way to register and establish an investment fund in Iran, in addition to obtaining a license, includes submitting the draft of the company’s articles of association and the necessary documents to the company registration office. In this case, the company can receive the underwriting license. The applicant for the establishment of the fund must submit the following documents in the form of the designated forms to the exchange:
Necessary documents for setting up an investment fund in Iran
- The memorandum and articles of association of the fund are in accordance with the memorandum and articles of association approved by the organization, all pages of which have been signed and stamped by the members of the fund.
- Accepting the positions of the members and the investment manager of the fund according to the relevant form.
- Introducing the manager/group of investment managers of the fund, mentioning how to compensate them for their services.
- Announcing the date and location of the founding assembly of the fund for the purpose of the organization’s representative’s presence (in this assembly, the expected supervisory and executive elements of the fund are selected.).
- The completed form of the details of the fund’s investment managers along with a copy of their preliminary principles or analyst certificate.
- The latest copy of the official newspaper advertisement of each of the members and founders regarding the conditions for signing binding documents.
- Announcing the number of fund accounts, if any, separated into current and backup, which has been approved by the fund manager and trustee.
- Bank approval for depositing the base value of premium investment units (equivalent to at least 20% of the fund’s minimum capital).
- Fund subscription plan according to the sample attached to the statute.
- Letters related to non-governmentality of the founders.
- A copy of the basket management license.
- Introducing the fund software by sending a copy of the access and rental agreement, along with a letter of commitment from the fund manager.
- Letters of introduction related to the real representatives of Arkan to carry out assigned tasks along with a copy of the birth certificate and national card of each one.
- Introduction letters related to the real representatives present in the assembly from the legal institutions along with the copy of birth certificate and national card of each one.
- Introducing the representative of the trustee in matters related to the investment fund.
- Announcing the launch of the fund’s website according to the sample approved by the organization.
- Presenting a certificate of passing at least 15 hours of the training course on using the fund software.
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3- Founders’ investment
Each investment fund has a number of premium investment units that were purchased by the founders of the fund. In fact, these units are the same fee that the founders pay to establish the fund in order to obtain the license of the stock exchange organization. This number of units must have been purchased at the base value of the investment units (100 thousand Tomans) and the amount must have been deposited into the fund account in cash. The number of premium units is mentioned in the fund’s statutes and these units are irrevocable and transferable. Other investment units of the fund, which are normal, are purchased by investors after the start of the subscription period, which are revocable and non-transferable.
4- Holding the founding general assembly
After the founders have purchased the premium units, the first general meeting of the fund is held with the presence of all of them, in which they approve the fund’s statute and letter of intent and choose the first members of the fund’s administration. Therefore, before the initial subscription and after holding the meeting, the following items must be submitted to the Securities and Exchange Organization:
- The statute and letter of intent approved by the fund assembly
- Acceptance of the position by the director, registrar, trustee and auditor selected by the fund assembly
- A list of the identity and residence of the founders and the number of premium investment units subscribed by them
- Bank’s confirmation of depositing the base value of premium investment units to the fund’s bank account
- Other cases at the discretion of the Securities and Exchange Organization
5- The initial underwriting of the investment fund
In the continuation of the description of how to register and establish an investment fund in Iran, after the approval of the above by the stock exchange organization, the initial subscription period begins. Underwriters must pay all the cost of purchasing investment units at the base value in cash to the fund’s bank account.
Subscription is done in a specific period and if during this period, the number of subscribed units does not reach the minimum number of units mentioned in the fund’s prospectus, the subscription will be extended for another period.
At most two working days after the end of the initial subscription period, the registrar must check the subscription results and inform the manager and the trustee that the following two situations occur:
– If the minimum investment units specified in the prospectus have been subscribed, the manager will send the result of the review along with the approval of the bank and the registration manager to the stock exchange organization to get the fund’s activity license.
– If the minimum investment units specified in the prospectus are not subscribed, the manager must immediately inform the stock exchange organization of the results and return the funds deposited to the fund account to the underwriters within 5 working days.
6- Completing the underwriting process and obtaining an activity license from the Securities and Exchange Organization
As mentioned in the previous section, if the minimum investment units specified in the prospectus are subscribed, the fund can submit the necessary documents to the stock exchange organization and receive its activity license.
7- Registering and announcing the establishment of an investment fund
When all the previous steps have been completed, the method of registering and establishing an investment fund in Iran reaches the final stage. In the Companies Registration Office, the registration and establishment of the investment fund is announced in the official newspaper to inform the public. From the date of registration, the fund is considered a legal entity and must win the trust of investors to take their capital to the fund.
After registering and establishing an investment fund in Iran, you will be able to manage all types of investment funds, including equity, mixed, and fixed income funds, using Ekan software. It is safe to say that Yekan is the most advanced software designed to manage investment funds.
How to register and establish an investment fund in Iran consists of 7 steps that we reviewed in this article. One of the most common questions about investment funds is: “Are investment funds safe?” By examining the way of registering and establishing an investment fund in Iran, it can be said that one of the reasons for the reliability of investment funds is the existence of strict laws for the registration and establishment of these funds, and not everyone is able to establish a fund.