Let’s imagine a completely real and perhaps frightening scenario:
You are a professional manager in the private sector. A large private holding company appoints you as its representative on the board of directors of "Private Company A." The company's shares are 95% privately owned, and you begin your work with peace of mind. Sometime later, you are offered a seat on the board of "Private Company B." There, too, 95% of the shares belong to the private sector.
You calculate to yourself: "I am not a government employee, and these companies are not state-owned (since the government does not hold a majority stake in them), so Iran's law banning dual-office holding does not apply to me."
The interesting point is exactly here!
Recently, when I received an inquiry about this very issue, I was re-reading the legal sources, and to answer this question, I decided to take a deeper look at Note 2, Article 241 of the Amendment to Iran's Commercial Code, which was appended in 2016.
Iranian law states that no individual can simultaneously serve on the board of directors of more than one company in which "all or a part" of its capital belongs to the government or public institutions.
The main question is, in this note, how much is "a part" of the shares? For the answer, I turned to the "Detailed Parliamentary Debates" of the Iranian Majlis at the time this law was passed to see what was on the legislator's mind. What I found was fascinating.
In the session passing this law, the government representative (Mr. Alireza Saleh, Legal Deputy of the State Management and Planning Organization) points to this exact issue and says:
"I only want to discuss this Note (2). Look, friends! Here we said 'all or a part.' Usually, a state-owned company is one where at least 50 percent plus one share belongs to the government. But here where we said 'a part,' if the government holds even 5 percent or 1 percent of the shares, it falls under this clause. We implemented the privatization policies of Article 44 [of Iran's Constitution] so that private sector rules would apply. Now suppose in Group (2) that we divested, where we still hold up to 20 percent, even if there is no government board member in it, the private sector portion of it will also be subject to this."
And what was the Iranian Parliament's response? The Majlis, fully aware that this law entangles companies with even 1% state ownership, passed it, and the Guardian Council approved it.
With this in mind, it does not matter whether you represent the private or government sector. It does not matter whether the Iranian government has a seat on the board of that company or not. If you are in a company where even one share belongs to public or government entities, you have burned your "one management coupon" and have no right to become a board member in any other company (which also has even a slight amount of state or public shares).
But where is the dangerous and lesser-heard part of the story?
Under Iranian law, this prohibition is not merely a minor violation; it has been criminalized and has now become a "pressure tool" and leverage to harass company managers. A plaintiff only needs to prove that a tiny amount of state or non-governmental public shares exists in your companies' ownership structure; the result will not only be the restitution of all salaries received for the board or CEO position, but also a criminal fine and a criminal record.
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