Issuer's Responsibility in Initial Offer of Shares of Public Limited Company (Under Iranian and English Law)

According to the current Iranian company law, promoters of a public limited company may be legal or natural persons. They provide all conditions in the way of formation, e.g. providing a prospectus, public offer and subscription and registration of company. In this stage, the company necessarily does not have legal personality, but according to the article 1(12) of the Iranian Securities Market Act 1384: 2005 “Issuer is legal entity that issues securities under it’s name”. Thus the concept of issuer in the Securities Market Act is not in harmony with the current company law. Responsibility of the issuer according to the article 43 of the recent act is based upon negligence criterion and occurs when he publishes advertisement or prospectus for public offering of securities without observing the provisions of the acts. If the issuer is responsible accompanied with the investment bank, auditor, assessors and legal advisors of the issuer, for effective protection of the investor who incurred a loss due to their negligence, it is necessary to hold responsibility jointly and severally. The competent bodies, which are eligible to deal with compensation claims in the exchange market are “Board of Directors of the Exchange” and the “Arbitration Board”. These two bodies to appear to have parallel judicial competence, which is not acceptable based on the procedural regulation. In English law, the issuer is a legal entity and the competent authorities are: Treasury, FSA, tribunal and court.