The stock exchange market represents an organized and official capital market in which purchase and sale of stocks or governmental bonds or reliable private institutes are carried out under special regulations and legalized arrangements. An important attribute of the Securities market is the protection that law provides for owners of deposits and stagnant capitals, as well as legal requirements for applicants of capital. According to Article 4 of Tehran Stock Exchange Listing Rules, the Stock Exchange is divided into three different markets:

  1. Primary Market-Main Board
  2. Primary Market-Secondary Board
  3. Secondary Market

General Listing Requirements in Each of the Stock Exchange Markets:

According to chapter 2 of Tehran Stock Exchange Listing Rules, eligibility requirements for companies to be listed in the stock exchange include general requirements as well as special requirements for each of its sections: General requirements for listing of a company in the Securities and Exchange Organization (SEO) are as follows:

  1. The company should be registered at SEO
  2. There should be no effective legal restrictions for transfer of the stocks or application of voting rights by its holders,
  3. Stocks should be nominated with voting rights,
  4. Total face value of stocks should have been paid.

Special Listing Requirements for the Main Board of the First Market:

  1. The company should have at least 20% floating shares,
  2. The company’s last registered capital should be at least 1,000 billion IRR,
  3. The company should have at least three years of operational experience prior to listing,
  4. The company should not have any retained loss declared in the balance sheet,
  5. The company should apply an ideal accounting system regarding financial accounting and cost of goods sold,
  6. The company should have been profitable for at least three consecutive financial periods ending at the listing date, as well as have a bright prospect regarding profitability,
  7. The ratio of shareholders equity to total assets should be at least 30%,
  8. Financial statements of the company should have been approved by an auditor selected among those trusted by the SEO,
  9. Non-existence of any criminal conviction against members of the board of directors and its managing director,
  10. The auditors report on the company’s financial statements for two consecutive periods ending at the listing date should not demonstrate any rejection of comments or absence of comments by auditors,
  11. There should be no legal claims against the company with substantial effects on its financial statements.

Special Listing Requirements for the Secondary Board of the First Market:

  1. Floating shares should constitute at least 15%,
  2. The company’s last registered capital should be at least 500 Billion IRR
  3. The company should have at least three years of operational experience prior to the listing date,
  4. There should be no retained loss on the company’s balance sheet,
  5. The company should apply an ideal accounting system (regarding financial accounting and final costs),
  6. The company should show profitability for at least two consecutive financial periods ending at the listing date, as well as a bright prospect regarding profitability,
  7. The ratio of shareholders equity to total assets should be at least 20%,
  8. Financial statements of the company should have been approved by an auditor selected among those trusted by the SEO,
  9. Non-existence of any criminal conviction against members of the board of directors and its managing director,
  10. The auditors report on the company’s financial statements for two consecutive periods ending at the listing date should not demonstrate any rejection comments or absence of comments by auditors,
  11. There should be no legal claims against the company with substantial effects on the company’s financial statements.

Special Listing Requirements in the Second market:

  1. Floating shares should constitute at least 10%,
  2. The company’s last registered capital should have been at least 200 Billion IRR,
  3. The company should have at least two years of operational experience prior to the listing date,
  4. There should be no retained loss on the company’s balance sheet,
  5. The company should apply an ideal accounting system (regarding financial accounting and final costs),
  6. The company should show profitability for the fiscal year ending at the listing date, as well as a bright prospect regarding profitability,
  7. The ratio of shareholders equity to total assets should be at least 15%,
  8. Financial statements of the company should have been approved by an auditor selected among those trusted by the SEO,
  9. Non-existence of any criminal conviction against members of the board of directors and its managing director,
  10. There should be no legal claims against the company with substantial effects on its financial statements.

Note: After the company’s shares have been listed in any of the three markets of Tehran Stock Exchange Market, It is necessary for these companies to be examined annually regarding the observance of the above-mentioned requirements. In case of any discrepancy concerning these conditions, with the discretion of the SEO, the company will be granted an opportunity to provide clear and transparent information, eliminate the inconsistencies, and achieve the required conditions in order to remain in the market.

Iran Farabourse Market (IFB)

According to the Rules and Regulations regarding the listing, supply, and transfer of securities in the IFB, five distinct markets with diverse performances have been established for the listing of a variety of securities and financial instruments in the IFB.
Primary Market: In this market, public joint stock companies that have acquired the necessary prerequisites indicated in Regulations for listing, supply, and transfer of securities in the IFB, will be eligible to perform trading of their shares. The company’s listing in the primary and secondary markets of the IFB depends upon the procurement of prospectus and sending adequate documents and supporting evidence in order to provide a better recognition of the company’s situation. After the complete documents have been prepared, the Listing Board will study the financial and performance situation of the company and upon the existence of all requirements, the Board will approve the listing of the company.
Secondary Market: In this market, similar to the primary market of the IFB, public companies carry out trading of their stocks. However, listing requirements in this market are more flexible than those of the primary market.
Third Market (supply market): Stocks of public joint stock companies will be traded in forms of block offerings, rights, subscription, and other types of securities.
Modern Financial Instruments Market: All types of financial instruments (with the exception of stocks and rights) including different types of Mosharekat Sukuk, investment certificates and various kinds of Sukuk with at least three months to maturity date can be listed in this market, provided that after being listed, their secondary trading will be exclusively performed through the OTC market.
Base Market: This market was established in compliance with clause b of article 99 of the law of the Fifth Development Plan, and only carries out the transfer of shares of other public joint stock companies that are registered at the SEO but cannot be listed in any other exchange markets or the OTC market.
Listing and transferring Conditions for Shares in the IFB:
A. Listing Requirements for Public Joint Stock Companies (Issuer) and their Shares in the Primary Market of IFB:

  1. The company and its shares should have been registered at SEO,
  2. Shares should be nominative,
  3. Shares should be common (not preferred),
  4. There should be no effective limitations (i.e. a major part of shares being held as collateral at other banks or legal authorities) over transferring of stocks,
  5. Total nominal value of shares should have been paid,
  6. At least 10% of the company’s shares should be floating and the number of shareholders should at least be 200 people,
  7. The company should have at least 2 years record of operational activity or service providing provision before listing,
  8. The company’s last registered capital of the company should be 10 billion IRR,
  9. The company should have no retained loss,
  10. Financial statements of the last fiscal year ending at the listing date should not demonstrate any rejection comments or absence of comments by auditors,
  11. The company should apply an ideal accounting system (regarding financial accounting and final costs),
  12. The company should show profitability during the last fiscal year ending at the listing date, as well as a bright prospect regarding profitability and solvency,
  13. The minimum ratio of shareholders equity to total assets should be at least 15%.
  14. There should be no legal claims for or against the company with substantial effects on its financial statements,
  15. The company’s last financial statements should have been prepared in accordance with the rules of law, accounting and financial reporting standards as well as executive bylaws and regulations notified by SEO. The auditor should be selected from among those trusted by SEO.
  16. Non-existence of any criminal convictions and offences against the company’s board of directors or managing director according to rules and regulations governing the securities market or their bad reputation.

Note: In some cases the Listing Board is entitled to perform the listing of shares subject to the conclusion of market-making contracts, in accordance with the Market-making Regulations approved by the board of directors of SEO.
B.Listing Requirements for Public Joint Stock Companies (Issuer) and their Shares in the Secondary Market of Iran Farabourse Co.:

  1. Registration of the Company and it shares with the Organization,
  2. Shares should be nominative,
  3. Shares should be common (not preferred),
  4. There should be no effective limitations (i.e. a major part of shares being held as collateral at other banks or legal authorities) over transferring of stocks,
  5. Total nominal value of shares should have been paid,
  6. At least 5% of company’s shares should be floating,
  7. The company should have at least 1 year record of operational activity or service providing provision before listing,
  8. The company should have a minimum of 1 billion IRR as the last registered capital of the company,
  9. The company should have no retained loss,
  10. Financial statements of the last fiscal year ending at the listing date should not demonstrate any rejection comments or absence of comments by auditors,
  11. The company should apply an ideal accounting system (regarding financial accounting and final costs) appropriate to its operations according to auditors,
  12. The company should show profitability during the last fiscal year ending at the listing date, as well as a bright prospect regarding profitability and solvency,
  13. The company should have a suitable operational plan to be exempted from article 141 of the legal bill to rectify (correct) a part of the trade law (identified by the Listing assembly),
  14. There should be no legal claims for or against the company with substantial effects on its financial statements,
  15. The company’s last financial statements should have been prepared in accordance with the rules of law, accounting and financial reporting standards as well as executive bylaws and regulations notified by SEO. The auditor should be selected from among those trusted by SEO.
  16. Non-existence of any criminal convictions and offences against the company’s board of directors or its managing director or their bad reputation according to laws and regulations governing the securities market.

According to article 7 of the Regulation of Listing, offering and transfer of securities in Iran Farabourse Co. (public joint stock company), the Listing Board is entitled in some cases to make the listing of shares subject to the existence of at least one market-maker.

According to article 9 of the above mentioned regulation, rights will take place in the same market where the company’s shares have been listed.
C. Listing Requirements for Public Joint Stock Companies (Issuer) and their Shares in the Third Market of IFB (Supply Market):

According to article 10 of the Regulation of Listing, offering and transfer of securities in IFB (ratified on April 14th 2009 by the board of directors of the SEO), securities should have the following prerequisites in order to be offered in the third market of IFB:

  1. Securities should have been declared tradable by the Securities and Exchange High Council (Council),
  2. Where the rules apply, they should be registered at SEO,
  3. There should be no limitations for transfer of securities,
  4. Securities should not have been listed on the Exchange or any other authorized markets (OTC).

Securities that are permitted to be offered in the Third Market are as follows:

  1. Stocks of joint stock companies,
  2. Rights of public joint stock companies,
  3. Bearer stocks of public joint stock companies,
  4. Stocks from capital increase in public joint stock companies,
  5. Banking certificates of deposits,
  6. Mosharekat Sukuk,
  7. Mortgaged securities,
  8. Sukuk,
  9. The investment units of the exchange traded funds (ETFs) and real estate funds (land and construction) which are not listed on other markets of IFB.

In addition to these 9 items, Public Join Stock companies that are under formation can also perform their subscription in the third market of IFB.
D. Listing Requirements for Public Joint Stock Companies (Issuer) and their Shares in the Market for Modern Financial Instruments:

According to article 13 of the Regulation of Listing, offering and transfer of securities in IFB (Public Joint Stock Company), all financial instruments, with the exception of stocks and rights, which with the approval of the Council and upon its announcement would be subject to or exempted from registration at SEO, can be listed at the market for modern financial instruments. These include:

  • Issued Mosharekat Sukuk licensed by SEO (that are nominated or can be traded in the trading system, the minimum amount of its issuance is equal to 100 billion IRR with a maturity date of more than one year and having at least one market-maker).
  • Mosharekat Sukuk issued by the government, public companies and municipalities provided that they are nominated or can be traded in the trading system, have at least six months to their maturity and their secondary trading is only carried out in the IFB markets.
  • Investment units of ETF can be listed in the first market of IFB provided that they are nominated and registered at SEO and the minimum capital of the fund is equal to 50 billion IRR.
  • Investment units of real estate funds (land and construction) can be listed in the first market of IFB, provided that they are nominated and registered at SEO and the minimum capital of the fund is equal to 100 billion IRR.

Investment certificates depository can be listed in the New Financial Instrument market with the following conditions:

  • They are nominated or can be traded in the trading system.
  • The minimum amount of issued securities is equal to 100 billion IRR.
  • At least six months has remained until the maturity date of the certificates.
  • Commitment and guarantee of payment of principal and on account interest of certificates by the correspondent bank.
  • Secondary transactions of certificates are only carried out in IFB market.
  • Certificates are issued by the correspondent bank, complying with executive rules and regulations on issuance of investment certificates depository.
    • Various types of Sukuk that are issued with the license of SEO (provided that they are nominated, or can be traded in the trading system, have at least six months remaining until their maturity date, the minimum amount of issued securities are 100 billion IRR and have at least one market maker) are eligible to be listed in the market for modern financial instruments.
    • Other financial instruments that are as tradable by discretion of the Council are eligible to be listed in the market for modern financial instruments, with conditions determined by the Listing Board.

 

E.Listing Requirements for Public Joint Stock Companies (Issuer) and their Shares in the Base Market:
Transfer of shares of Public joint stock companies that have not been listed in the Stock Exchange or IFB, can be listed in the base market under the following conditions:

  1. The Company and its stocks have been registered at SEO,
  2. Stocks should be nominative (In case there are bearer stocks, they should be transferable in the trading system),
  3. It should be Possible to transfer stocks in various symbols within the trading system (in case of non-payment of the total nominal value of stocks),
  4. It should be possible to transfer preferred stocks (in case of existence) in the trading system,
  5. Selection of the company’sĀ auditor from auditors trusted by the SEO.

According to article 21, other financial instruments that have been identified by the Council as transferrable, can be also transferred in the base market provided they have not been listed at the Exchange or IFB.