In 2001 the Islamic Parliament approved the foreign investment promotion and protection act (FIPPA). According to this act, foreign investors would benefit from the protection of their investment in Iran after obtaining the license from the Organization for Investment, Economic, and Technical Assistance of Iran. According to this act, foreign investment can be done by two methods: 1. Direct foreign investment in areas in which the private sector’s activities are allowed. 2. Foreign investment in all sections in the form of “ partnership”, “buyback” and “build, operate, transfer” contracts in which investment return and related interests would solely result from economic performance of the project and not dependent on a guarantee by the government, banks or public companies.

The Iranian capital market experienced a major transformation after the approval of the Islamic republic stock market act in 2005 and establishing the securities market supervisor institute similar to SEC in the United States. On average the TSE index has grown more than any other market in Iran since 2005.

One of the most important challenges to start a business in Iran is to be familiar with these procedures:
– Obtaining the comprehensive code
– Company registration rules and regulations
– Opening a bank account
– Organizing a tax file
– Obtaining the social security code for workers

Since most companies in Iran are managed by a traditional organizational structure, their financial reports usually lack the IFRS required transparency. Also, it is very difficult to analyze businesses due to numerous complicated regulations in different industries and businesses. The auditing firms and investment banks in Iran lack enough experience in performing the due diligence of companies according to international frameworks.

In 2001 the Islamic Parliament approved the foreign investment promotion and protection act to protect foreign investment in Iran. Considering the extraordinary potential in producing different export products, the investment in exporting companies could reduce the exchange rate fluctuations risk. Securities and Exchange Organization is a public nongovernmental organization and is managed by five board members. This organization is supervising the implementation of rules and regulations and performs other specified duties of law Under the supervision of the Supreme Council of the Stock Exchange headed by the minister of economic affairs.