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The executive regulations of the Seventh Development Plan have been issued to ease financing for the digital economy. These changes could pave the way for startups to enter Iran’s stock market.
The executive regulation of Clause 'Ch' of Article 66 of the Seventh Development Plan Law introduces legal frameworks aimed at facilitating participation of companies in the digital economy and knowledge-based sectors in the capital market. This new framework is expected to simplify the process for startups to enter the stock market.
Government Approval and Next Steps
On July 16, the Cabinet approved the 'Executive Regulation of Clause Ch of Article 66 of the Seventh Five-Year Development Plan of the Islamic Republic of Iran.' This regulation focuses on financing sources for the digital and knowledge-based economy. It was officially communicated on July 22 by the First Vice President.
Under this regulation, the Ministry of Communications and Information Technology will collaborate with the Ministry of Economic Affairs and Finance, the Vice Presidency for Science, Technology, and Knowledge-Based Economy, and the Iran Chamber of Commerce. Within a month, they are tasked with preparing criteria to identify companies active in the digital economy sector and presenting them to the Supreme Council of the Stock Exchange.
Following this, the Supreme Council of the Stock Exchange is required to review and update policies for accepting and financing these companies within two months. Specific indicators for their presence in the capital market will be established. Additionally, the Stock Exchange Organization, along with the Audit Organization, will propose frameworks to facilitate the creation of specialized financial institutions in this sector.
Addressing Challenges Faced by Startups
Previous policies on admitting startups and knowledge-based companies into the stock market were introduced in autumn 2023. While these regulations differed from earlier approaches, industry experts believe they failed to address key challenges faced by startups entering the stock market.
This new regulation seeks to address these gaps by focusing on recognizing intangible assets. These include intellectual property rights, brand value, financial entitlements, and other non-material assets that have historically been difficult to incorporate into formal financing processes.
Focus on Intangible Assets
The regulation highlights that intangible assets of digital and knowledge-based companies must be acknowledged by the capital market if they comply with accounting standards. It also emphasizes enabling collateralization and credit assessment of digital and intellectual assets.
Key provisions include creating innovative financial tools and preparing specialized credit reports for digital companies. These measures aim to strengthen public participation in developing the digital and knowledge-based economy through recognition of these assets in securities markets.
