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The International Journal
of Not-for-Profit Law

Volume 7, Issue 4, September 2005

A publication of the International Center for Not-for-Profit Law

Table of Contents

Letter from the Editor

The Middle East

NGO Laws in Selected Arab States
Kareem Elbayar

NGO Regulations in Iran
Negar Katirai

Arab Media: Tools of the Governments, Tools for the People?
United States Institute of Peace

Articles

A Comparative Analysis of European Policies and Practices of NGO-Government Cooperation
Nilda Bullain and Radost Toftisova

Assessing the Effects of Church and State on Organized Civil Society
Robert C. Lowry

Imagining Philanthropy: A Personal Commentary from a Part-Time Philanthropoid
Wilton S. Dillon

Reviews

Generations of Giving: Leadership and Continuity in Family Foundation
By Kelin E. Gersick
Reviewed by Al Lyons

Democracy and Civil Society in Asia
Edited by Jayant Lele and Fahimul Quadir
Reviewed by Yuko Kawato

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NGO Regulations in Iran

By Negar Katirai1 

I. Introduction

With respect to the development of civil society, Iran’s political landscape has provided cause for optimism in recent years. The initial harbinger of this optimism was the election of President Mohammad Khatami in 1997 on a platform of greater freedoms, respect for human rights, political pluralism and citizen participation.2 The subsequent elections of reformists to parliament in 2000 provided further cause to rejoice. Although the balance of power has since shifted back into the hands of conservatives, the reformist movement remains active in advocating for social and political change.3

Current laws within the Islamic Republic of Iran have enabled NGOs to form and pursue a variety of non-profit and non-political objectives. Charity and relief aid organizations have been especially successful in achieving their humanitarian goals.

In several respects, however, the laws governing the registration and operation of NGOs in Iran have been criticized as over-complicated and cumbersome. First, the legal structure involves multiple and uncoordinated decision-making centers. Second, the process of registering and regulating NGOs often differs in practice from what is provided in the law, adding unnecessary burdens to the administration of permits and financial grants as well as the annual and periodic regulation of NGOs. Third, judicial review of administrative decisions pertaining to NGOs has been inadequate. In addition, NGOs could benefit from greater government programs and subsidies to build capacity, provide resources, and generally facilitate their endeavors. These shortcomings have led NGOs to concentrate in Tehran, where proximity to the locus of power makes abiding by the bureaucracy of NGO registration and supervision less complicated.

Recognizing the need for law reform, the Ministry of Interior and the NGO community in Iran gathered in November 2003 to draft a new law on the establishment and activities of NGOs. A group of NGO, civil society groups, and governmental delegates met at the Ministry of Interior’s civil society office and drafted a comprehensive law to provide greater clarity and support to NGOs.4

The proposed law suggested several important reforms. First, it envisioned the establishment of a supervisory committee to oversee the activities of local NGOs operating in the provinces. Second, the draft opened the way for NGOs to gain access to additional resources, including financial aid and assistance from government organizations and a subsidy service with the Islamic Republic’s broadcasting organization. Third, the law improved upon current procedures for appealing decisions regarding NGOs permits and other administrative matters.

After two attempts at passage, the Iranian Parliament has approved numerous aspects of the draft law, improving the legal framework governing NGOs in several ways.5 The new regulations create a more streamlined and representative body to oversee the activities of NGOs, and improve procedures for appealing decisions regarding permit applications. Most remarkable, the new law grants standing to NGOs to pursue legal remedies on behalf of the public interest. Thus, not only do the new regulations address long-standing problems in NGO oversight and supervision, but they also empower NGOs to take on a new role in advancing public causes.

II. Provisions of the General Laws

A. Consistency and Clarity of the Laws

Iranian laws governing NGOs are complex and difficult to understand and follow. The laws and regulations that affect the NGO sector are numerous, unclear, and contradictory. In addition, current practice often diverges from the law. As this article will explain, the new regulations address many but not all of the current legal structure’s shortcomings in regard to NGO law.

Iran does not have a federal system, so NGOs must abide only by national laws and regulations. Then again, the Iranian government is organized as a hierarchy. The central government has the power of legislation, administrative oversight, and theoretical power over how laws are to be enforced. In practice, however, local authorities often diverge from the central government’s advisements and enforce laws in a different manner. This disconnect can prove confusing and wearisome for NGOs trying to abide by the law.

B. Constitution

The Constitution of the Islamic Republic of Iran, which was approved by the Assembly of Experts in November 1979 and ratified by a referendum in early December 1979 (the “Constitution”), recognizes the rights of NGOs to assemble and associate. Article 26 of the Constitution specifically allows parties, conventions, trade associations, Islamic associations, and associations of recognized religious minorities. This Article provides:

Political parties, groups and associations, as well as guilds and Islamic associations or associations of recognized religious minorities , are permissible, provided that they do not violate the principles of independence, freedom, national unity, Islamic standards and the basis of the Islamic Republic. No one can be forbidden to participate in them, or be forced to participate in one of them.

Thus, Article 26 qualifies the rights of NGOs and other organizations by stating that these groups may operate only as long as “they do not violate the principles of independence, freedom, national unity, Islamic standards and the basis of the Islamic Republic.” There are no restrictions on who may join such organizations or associations, except that only Zorastrians, Jews, and Christians are recognized as religious minorities under Article 13 of the Constitution.6

C. Types of Organizations

In Iran, NGOs fall under the general definition of non-commercial organizations.7 The Iranian legislature has recognized non-commercial organizations as including, but not limited to, NGOs as of the date they are registered with the appropriate authorities.8 Such entities may choose to be called associations, clubs, institutions, or similar terms, but not titles that are allocated to government or state organizations.9 Non-commercial organizations are in turn divided into profit-making organizations and non-profit-making organizations.10 Thus, Iran has non-commercial, non-profit organizations such as charities, as well as non-commercial organizations formed to engage in non-commercial activities in order to earn and distribute profits among their members.

Generally, NGOs fall into two broad categories: public interest organizations and professional organizations. Public interest NGOs are those whose members conduct activities in pursuit of the public interest, such as non-profit and charity organizations. Professional organizations are those formed in order to pursue activities for the mutual benefit of the organization’s members. This category includes guild organizations, such as the teacher’s guild, and specialists’ associations, such as the sociologist’s association. Both public interest NGOs and professional organizations are subject to the Executive Regulations Concerning the Formation and Activities of Non-Governmental Organizations, enacted June 19, 2005 (“Executive Regulations”.)

More specifically, the Law Concerning the Activities of Parties, Associations, Political Associations and Guild Associations, Islamic Associations or the Associations of Recognized Religious Minorities, enacted on August 29, 1981 (7 Sharivar, 1360) (“Law Concerning the Activities of Political Parties”), defines several types of non-governmental organizations:

D. Purposes

Iranian law allows an NGO to define its purpose in its articles of association and to take any action necessary to pursue that stated purpose. (See Executive Regulations Concerning the Formation and Activities of Non-Governmental Organizations, enactedJune 19, 2005, (“Executive Regulations”), Article 1.) NGOs can provide assistance, consultation, or advice to other NGOs or governmental organizations, and publish papers. (Id., Article 4.) Furthermore, an NGO can arrange gatherings and demonstrations in order to advance the organization’s stated purposes. (Id., Article 4. )

B y definition though, NGOs are not permitted to engage in profit-making or political activities, and guild organizations are specifically prohibited from engaging in political activities or from being affiliated with political parties or groups. (See Executive Regulations, Article 111 ; see also Guild Regulations, Article 5.) The newly passed Executive Regulations clarify that NGOs are permitted to engage only in the political activities identified in Political Party Act.12 (See Executive Regulations, Article1, Note 3.) In addition, as mentioned above, the Constitution prohibits NGOs from engaging in any activity that violates “ the principles of independence, freedom, national unity, Islamic standards or the basis of the Islamic Republic.” (Constitution, Article 26.) Furthermore, the legislature has reiterated the Constitution’s prohibition of these activities and added that NGOs may not engage in any activity that breaches the freedom of others or creates or increases divisions among various members of society. (See Law Concerning the Activities of Political Parties , Article 16.13) An NGO’s articles of association and activities may not be inconsistent with the Constitution. (See Executive Regulations, Article 8.) Thus NGO activities generally have been limited to charitable works, with the support of reformist candidates marking the boundaries of what is considered acceptable political activity.

However, the new regulations may significantly change the role of NGOs in Iranian society by providing NGOs with the standing to pursue legal action on behalf of the public interest. The new law provides that an NGO may pursue legal action to advance the NGO’s stated purpose and protect the public interest. (See Executive Regulations, Article16 .) This provision not only provides NGOs with a new venue through which to pursue their goals, but it also stands to transform the role of NGOs in Iran.

E. Registration or Incorporation Requirements

In submitting an application, an NGO must in clude its policy letter (maramnameh) as well as the articles of association. (See Executive Regulations, Art. 20 .)

NGOs can be formed by either natural persons or legal entities. Legal entities are defined as those included in a special register established by the Ministry of Justice. (See the Commercial Act of Iran, enacted on April 2, 2000 (13 Farvardin 1368) (“Commercial Act”), Articles 584 & 585 .) Government employees are qualified to join NGOs as long as the NGO’s activities are not related to the employee’s official duties. (See Executive Regulations, Article 1.) There is no minimum of base capital required to form an NGO, but the NGO’s declared capital determines the organization’s registration fee.

Two founders of each NGO must be specialists in the field in which the NGO is to engage. (See id., Article 18.) NGOs may organize into networks, including international organizations, subject to some regulations. (See Executive Regulations, Article 19.) First, the NGOs that form the network must have been registered for at least two years. Second, there must be five founding NGOs to form a network. And third, the network of NGOs must obtain a permit from the appropriate supervisory board.

F. Registration or Incorporation Procedures

The old regulation process has been criticized as disorderly and unclear. The new regulations simplify and improve upon it in two ways: creating a streamlined supervisory board to oversee the activities of NGOs, and improving procedures for appealing the rejection of permit applications.

Previous laws required that those desiring to form an NGO apply for a permit with either the Ministry of the Interior or the governor’s office within their province. (See Executive Regulations Concerning the Formation and Activities of Non-Governmental Organizations, enactedJanuary 15, 2003, (“Previous Executive Regulations”) Article 12 .) In contrast, individuals working with NGOs in Iran have reported that in practice, both the Ministry of Labor and the Chamber of Commerce also issued permits to NGOs, though nowhere in the old laws were these ministries given this authority.

The new regulations do away with the previous confusion and create a three-tiered supervisory board, made up of government officials and NGO representatives, to review applications for permits. (See Executive Regulations, Article 5, Para. d.) At the province level, the supervisory board consists of the governor ofthe province, a representative of the Islamic Council, and a representative from the NGOs in that province. At the state level, the supervisory board consists of the state governor, a member of the Islamic Council, and a representative from the NGOs in that state. At the national level, the supervisory board consists of a deputy from the ministry of interior affairs, a representative of the high council of states, and a representative from the NGO community. Which supervisory board an NGO must apply to is determined by the proposed region and scope of the NGO’s activities. Local NGOs apply with the province or state supervisory board, whereas NGOs that wish to operate on a national basis must apply with the national supervisory board.

The procedures for appealing the rejection of permit applications also rely on this three-tiered system. If an application is denied by the supervisory board of the province, the NGO can appeal first to the state and then to the national supervisory board. (See Executive Regulations, Article 22, Note 4.) If the state supervisory board first denies the application, the NGO can appeal to the national supervisory board. (Id.) And finally, if the national supervisory board is the first to deny the application, the NGO may appeal to the administrative justice tribunal. (Id.) In all cases, the NGO has one month to file an appeal. (Id.)

This hierarchical structure is an improvement upon the old system, in which NGOs were permitted to apply to the governor general or to the Ministry of Interior Affairs. (See Previous Executive Regulations, Article 16.) By instituting regional supervisory boards that include an NGO representative from that region, the new law makes it more likely that NGOs will receive prompt and fair review of their applications for permits.

Though the improvements outlined above are commendable, the new regulations do not solve all the problems of the current system. Despite attempts to expedite the overall process of applying for a permit, the law fails to address the unnecessary and time-consuming involvement of multiple agencies in reviewing permit applications. The new regulations provide that the supervisory board must approve or reject an application within two weeks after receipt. (See Executive Regulations 2005, Article 22.) If the application is rejected, the issuing body has two weeks to state its reasons. (See id., Article 22, Para. 1.) This is a shorter time period than that provided by the previous Executive Regulations, which allowed the issuing body one month to review applications for permits. (See Previous Executive Regulations, Article 6.)

By reducing the time limit, the new Executive Regulations seem designed to accelerate the process of applying for NGO permits. Still, if the NGO’s purpose coincides with the activities of any government agencies or ministries, the approval of those agencies must also be obtained. (See Executive Regulations, Article 22, Note 3.) The issuing body must seek the approval of pertinent government agencies within one week of receipt of an application, and the government agency must issue an opinion within one month. (Id.) This process of external review exists currently and has resulted in complications and delays in the review of NGO applications for permits; the new regulations do not improve on the old law in this regard. More troublesome is the provision that special authority may be provided to authorities other than the supervisory board to review applications by certain NGOs, thus creating an additional loophole in the otherwise straightforward new structure. (See id., Article 17.)

In conclusion, despite the improvements made by the introduction of a tiered supervisory board, procedural inefficiencies may still hamper the process of registration. First, there still exists the problem of redundancy and uncertainty, due to the ability of multiple agencies to involve themselves in the process of reviewing NGO applications for permits. Second, provisions detailing the specific reasons on which an application may be rejected or the standard of review for appealing rejections remain lacking.

G. NGOs Register

All NGOs, after obtaining the necessary permit from the appropriate supervisory board, must register with the Registration Office of Companies and Industrial Units, Bureau of Non-Commercial Organizations (See id., Article 25.) This bureau is a department of the Ministry of Justice and maintains the NGO registry, which provides the name, purpose, founders, and addresses of all registered NGOs. Defunct organizations are purged from the registry, but the registry does not list organizations which have been denied the right to register or which have been sanctioned or disciplined. This, in part, is due to the fact that the bureau that maintains the registry differs from the authorities responsible for issuing permits (previously the Ministry of Interior Affairs and provincial governor’s offices and now the three-tiered supervisory board.)

Although the registry is considered accurate and up to date, it is difficult if not impossible for the public to access it. The law requires records of private and public corporations to be available to the public(see Regulations Concerning the Enforcement of the Companies Registration Act, Article 26); it should follow that NGO records are made available as well. However, the government in practice does not make the records of either private and public corporations or NGOs accessible.14

H. General Powers

NGOs can exercise the general rights and powers of juridical entities, such as owning real property and entering into contracts.15 Iran ’s Commercial Act defines the rights of juridical entities as follows:

A juridical person may have all the rights and assume all the obligations granted by law to natural persons, except rights and obligations peculiar to man by his very nature, such as rights and obligations resulting from paternity, affiliation and other similar rights or obligations.16

Any interested party may raise issues about the failure of NGOs to comply with the legal requirements. Such issues may be raised by filing legal action with the public courts. A possible or intended beneficiary of an NGO, for example, has the right to go to court and seek action against an NGO if the beneficiary is considered to have a direct interest in the outcome of the case.

I. Membership Organizations

There must be at least five founders to form a membership organization, and at least two of the founders must be specialists in the field of the activities of the NGO. (See Executive Regulations, Article 18.) In addition, the founders must be of Iranian nationality, at least 18 years old, and without criminal records (including violations against the strict social code enforced by the morality police). Furthermore, founders may not belong to an organization that has been recognized as a hostile group by court.17 (See id., Article 18, Para. D.) Beyond these restrictions, the law is silent as to whether membership organizations may exclude or remove members. Thus, the procedures for a member to resign from an organization are established by the NGO itself.

III. Governance

The law does not provide detailed guidance regarding the governance of NGOs. Article 589 of the Commercial Act provides that “[j]uridical persons take decisions by means of such authorities as are competent, in conformity with the law or their articles of association, to do so.”18 Similarly, Article 23 of the Executive Regulations provides that the board of directors or the board of trustees, as the case may be, is the highest organ of the organization, and must meet the qualifications set forth in Article 18.19 Thus, NGOs are normally managed according to their articles of association by a board of directors or a board of trustees elected by the general assembly of the members.

The governance rules for NGOs do not differ. The rules allow assembly of members in the form of a board of directors or board of trustees, as well as executive committees and officers such as president, vice chairman, etc. The powers of these assemblies and officers, as well as the rules for voting, are determined by the NGO’s charter, articles of association and bylaws . The law is silent as to the duties and responsibilities of governing bodies in terms of budget review and signatory powers. Practically speaking, however, major decisions, such as approving the budgets or financial statements of the NGO, are left to the assembly of members. The board of directors, subject to the articles of association or bylaws, may delegate signing powers to a manager or management committee. Foundations are normally managed according to the deed of endowment by a board of directors or trustees elected by the donors or their appointees.

Because an NGO has juridical personality, the members of its governing bodies may not be held personally liable for harm caused by third parties unless they have committed fraud or wanton action. But NGO members can be held liable to NGOs in cases of contractual liability, for example by breaching an agreement to pay membership fees, and to third parties in case of fraud. The law is silent as to conflicts of interest and self-dealing; such issues may be resolved by referring to provisions in the Commercial Act and its 1969 Amendment concerning joint stock companies, though it is not clear how the provisions would be enforced in the context of NGOs.

IV. Dissolution, Winding Up, and Liquidation of Assets

The law is silent as to who is permitted to initiate the voluntary or involuntary dissolution of an NGO. Thus, dissolution is subject to the provisions of the articles of association or bylaws. The general assembly of members may vote to dissolve the NGO, either on their own initiative or at the request of the board of directors or board of trustees. Based on principles of Iranian commercial law, involuntary dissolution may occur in the following instances:

(1) when the NGO’s term of existence has expired;

(2) when the NGO has achieved its purposes;

(3) when it becomes impossible for the NGO to pursue the purposes it was formed to pursue, or when the purposes of the NGO become illegal;

(4) when a court judgment has been entered for the dissolution of the NGO; or

(5) when the NGO becomes bankrupt .20

The procedures for dissolution are determined by the articles of association or bylaws of the NGO. Ordinarily, the board of trustees or the board of directors proposes the dissolution to the general assembly of members, who approve the proposal and appoint a liquidator or a board of liquidators. The law specifies that upon dissolution, assets may not be divided among the founders, members, board of directors, board of trustees, or employees. (See Executive Regulations, Article 7.) Beyond that prohibition, the NGO’s articles of association and bylaws determine how assets are disassembled. Creditors of an NGO have the same claims as the creditors of a commercial company, such that the NGO must pay creditor claims before its assets are allocated to others. (See Commercial Act, Article 584.) Any interested party may file action with the courts seeking the reversal of either the voluntary or involuntary dissolution of an NGO.

V. Regulations

Every NGO is required to file an annual report of its activities and financial operations to the appropriate supervising board.21 (See Executive Regulations 2005 , Article 5 .) If the supervising board requires, the NGO may be required to submit periodic reports as well. (Id., Article 26 .) NGOs are also required to make their records available at the supervisory board's request for inspection at the NGO’s office. (See id., Article 9.) The law requires that submitted reports must include information on operations as well as financial statements, but does not provide further detail. The law is also silent as to whether these reports become a matter of public record, but it does provide that NGOs are entitled to access the records of public organizations as long as they are not classified. (See id., Article 12.)

If an NGO fails to file its annual or periodic reports, it can suffer severe penalties. The supervising board can revoke the NGO’s permit or seek the NGO’s dissolution from the judicial authorities. (See Executive Regulations, Article 28.) These penalties are regularly enforced.22

VI. Foreign Organizations

A. Registration, etc.

The new regulations establish a special board for granting permits to international NGOs that wish to work in Iran. (See Executive Regulations, Article 29.) The board is to consist of representatives from the Ministry of Foreign Affairs, Ministry of Internal Affairs, the Ministry of Intelligence, and when relevant, representatives of pertinent government agencies. This is an improvement over the old system, where international NGOs wishing to formally register within Iran were to sign a Memorandum of Understanding (MOU) with the Ministry of Foreign Affairs, without which they had to sign a Letter of Agreement for each project they planned to implement. The time and energy required to obtain the MOUs and Letters of Agreement has been criticized for discouraging international NGOs from beginning projects in Iran and impeded international NGOs currently operating in Iran from expanding their projects.23 Other problems reported by international NGOs include difficulties funding their projects, as they are not provided a clear set of rules for setting up bank accounts.24

B. Foreign Grants

If an NGO wishes to receive funds from a foreign organization, the NGO must notify the appropriate tier of the supervisory board. T he supervising board must in turn report that information to relevant government ministries for their opinion. The new regulations shorten the time limits. (See Executive Regulations, Article 6, Note 1.) The supervisory board has one week to approve the funding and one week to seek information from relevant government ministries. But the relevant ministries have up to one month to declare their opinion, and the new regulations do not clarify what impact this would have on the grant application.

Even so, the new regulations do provide that grants from United Nations organizations as well as certain other international organizations will not require pre-approval. The Ministry of Finance is to publish a list of the other international organizations exempt from approval procedures. (Id., Note 2)

NGOs wishing to partake in international gatherings and trainings must notify the appropriate supervisory board in writing. (See id., Article 10.)

VII. Miscellaneous

VIII. Tax Laws

Registered public interest NGOs enjoy tax‑exemption with respect to the financial aids and gifts (cash or in kind), membership dues, and other contributions, provided that such sources are used for the various purposes set forth in the Direct Taxation Act. These purposes must be in accord with “Islamic standards”; they include culture, research, science, invention, exploration, training, and health. (See Direct Taxation Act of Iran (“Direct Taxation Act”), Article 139, para. G, as amended by Article 64 of the Law Concerning Certain Articles of the Direct Taxation Act, enacted on February 16, 2002 (27 Bahman 1380. )26 Contributions by estates or under a last will and testament are also deductible. (See Direct Taxation Act, Article 24, para. 3.) There are no special laws on endowments, and gifts in the form of endowments are treated as tax-deductible contributions. The Direct Taxation Act provides no limits on contributions by either businesses or individuals to NGOs. There are no special state or local tax laws. Any ambiguity in the Direct Taxation Act is resolved by the High Taxation Council or the Just Administrative Tribunal, which are the highest authorities on tax issues.

Iran has no consumption tax, so NGOs need not file for exemption from VAT. NGOs importing products must pay duties, custom exercises, and the like.

A. Commercial/Business/Economic Activities

NGOs are explicitly permitted to conduct business activities directly, though the law is silent as to the extent to which they may engage in commercial, business, and/or economic activities. Any such activities undertaken by an NGO are subject to taxes. The profits an NGO earns through establishing educational seminars, publication of books and periodicals, etc., are exempt from taxation, provided such activities are aimed at achieving the NGO’s purposes.27 Iranian tax law does not distinguish between “related" and "unrelated" commercial/business/economic activities.

B. Reporting

Annual tax returns must be filed with respect to profit-making activities of NGOs. There are no substantiation rules for contributions, but any donation must be supported by a receipt issued by the NGO.

C. Miscellaneous

The law places no limits on NGOs' administrative expenses or salaries, and there are no special accounting rules for NGOs.

IX. Compliance

A. General

In general, the rules applicable to NGOs are considered complex and difficult to understand. As a result, NGOs find it difficult to comply, though no studies have been done on compliance specifically. Enforcement of the rules is not considered knowledgeable, fair, or effective.

B. Specific

There is a perception that some of the NGOs in Iran are under the Government’s control and are used for improper economic as well as political purposes. In addition, the perception exists that government officials use NGOs to extract money and resources from private businesses, individuals, and international sources, either for their own purposes or for those of the government.

C. Sanctions

lf an NGO has violated the law, there are provisions for suspending its operations, freezing its bank accounts, and appointing officers or directors to act for it. In some instances, these sanctions are not self-executing and the supervising agency must apply to court for them to take effect.

X. Government Funding

NGOs are permitted to compete for government funds in free and open competitions for which there are set bidding rules, and they can gain access to government funds through unsolicited proposals for grants and contracts. The government permits NGOs to bid and become the recipients of certain assets it is seeking to privatize, but does not recognize the need to continue to support privatized services. There have been reports that government assets and funding disproportionately go to NGOs formed or controlled by the government or particular officials.

XI . Privatization

The legislature has declared its support for the privatization of government duties and services to the NGO sector. (See The Third Economic, Social, and Cultural Development Plan, enacted on 18 Farvardin 1379 (April 6, 2000.)) Special legal forms and procedures have been created to shift state assets or programs, such as cultural, educational, or health programs, to NGOs. But to date the government has not made a serious effort to privatize state activities by outsourcing to NGOs.

The new regulations, however, provide several further specifics on how the government can involve, cooperate with, and outsource duties and services to NGOs. community, providing encouragement that some privatization may in fact take place. First, the new regulations require government and public organizations to take relevant NGO reports into consideration in their decision making, as well as to invite NGOs to meetings when necessary. (See Executive Regulations, Article 13.) Second, the government is required to identify functions and activities that could be assigned to NGOs and take the necessary action to assign them. (See id., Article 14.) And third, NGOs are entitled to report to the appropriate government and public organizations regarding what activities and functions they have the capacity to accomplish.

XII . Conclusions

The most important legal problems that have faced NGOs in Iran have been, first, the absence of comprehensive, accurate, and effective laws on NGOs, and, second, the lack of support for NGO activities on the part of the government. Present laws have been criticized as both inconsistent and outdated in terms of diverging from current practice. Consider the present process for obtaining a permit to operate an NGO. Whereas the Law Concerning the Activities of Political Parties stipulates that only natural persons can obtain a permit to form a political organization, the previous Executive Regulations allowed natural persons and legal entities to form an NGO. And whereas the previous Executive Regulations required that the application be submitted to either the Ministry of Interior or the governor’s office of the province, applicants were able to obtain permits from the Ministry of Labor and the Chamber of Commerce as well.

The Executive Regulations recently passed by parliament make numerous improvements on the current legal structure. First, they create a three-tiered supervisory board featuring representatives of the NGO community, with the capacity to facilitate and oversee the activities of local NGOs operating in the provinces and larger states, thereby demystifying and to some extent democratizing the permit application process. The supervisory board system also provides a meaningful structure for appealing the judgments of the supervisory boards. Second, the new law makes it easier for NGOs to take advantage of international resources. Third, the regulations provide for greater cooperation between the government and NGOs. Finally and most notably, the new law grants NGOs the standing to pursue legal remedies on behalf of the public interest.

Conversely, certain problems with the legal framework governing NGOs remain unaddressed. Most unfortunately, the new structure, despite probable intent to the contrary, perpetuates the problem of multiple supervisory bodies. The three-tiered supervisory board was conceivably created to streamline procedures. But other government institutions will continue to possess overlapping authority when an NGO’s work coincides with that of a government agency, or when special authority is provided to authorities other than the supervisory board. In addition, the Bureau of Non-Commercial Organizations will continue to have responsibility for maintaining the NGO register, and nothing in the new law suggests that coordination between the supervisory board and this body will improve on the status quo. Also troubling is the fact that the new law does not provide the criteria upon which NGO applications will be approved and disapproved, and thus the threat that NGO applications will be decided in an arbitrary manner remains.

Nevertheless, the new law is an improvement upon existing practice, and the NGO community in Iran remains active in its efforts to improve the legal atmosphere governing NGOs. Those at the forefront of the NGO movement in Iran have called for independent action from the NGO community in the form of an “NGO Code of Ethics” that embodies the principles of accountability, transparency, and good faith necessary for the execution of their mandate.28 Groups such as the Iranian NGO Initiative and Hamyaran are working to analyze and build the capacity of NGOs active in Iran. Furthermore, organizations such as the Peyvand Institute are developing ways to connect to the Iranian Diaspora community, which is one of the most educated and financially successful in the world.29 The new regulations will undoubtedly contribute to the development of a vibrant civil society within Iran. But the future success of Iran’s growing civil society will most likely continue to rest on the shoulders of Iranians who work within the boundaries of an ever-changing and less-than-perfect legal structure.

Notes

1 Associate, Steptoe & Johnson LLP; B.A. Wesleyan University, 1999; J.D. University of Pennsylvania Law School, 2005.

2 Baquer Namazi, Iran NGO Situation Analysis, January 2000, available at www.iranngos.org.

3 Since 2003, the Guardian’s Council , a twelve-member body capable of vetoing parliament’s enactments, has taken advantage of the sweeping powers granted to it by Iranian election laws and disqualified most reformist and moderate candidates for both Parliamentary and Presidential elections . Due to these disqualifications as well resulting public dissatisfaction with the political process, conservatives won control of parliament in February 2004. More recently, ultra-conservative Tehran mayor Mahmoud Ahmadinejad was elected President on June 25, 2005. The consolidation of conservative power in all three branches of government could spell the downfall of Iran’s fragile social reforms, though many Iran-watchers believe that even the most hardline conservatives would not dare take such an unpopular step. Human Rights Watch, Access Denied: Iran’s Exclusionary Elections, available at www.hrw.org.

4 The (Draft) Law on Establishment and Activities of Non-Government Organizations (NGOs). This draft law was rejected by parliament in 2004, but numerous aspects of the draft have been been incorporated into recent executive regulations.

5 Although the draft law was rejected by parliament in 2004, many of its provisions have been passed into law by the Executive Regulations Concerning the Formation and Activities of Non-Governmental Organizations, enacted June 19, 2005. (“Executive Regulations 2005”.)

6 See also the Constitution, Articles 6, 7, 56, 58, 59, 62, 100, 107, 114.

7 Commercial organizations are in turn defined as organizations that have been formed in order to engage in commercial activities, such as trade, industrial activities, and distributing profit among members. See Commercial Act of Iran, Article 2.

8 The Commercial Act of Iran, Article 584 provides: “Concerns and establishments which have been or shall be created for non-commercial purposes acquire juridical personality from the day they are registered in a special register established by the Ministry of Justice.”

9 The Regulations Concerning the Registration of Non-Commercial Organizations and Concerns, enacted on May 3, 1958, provide further definition of non-commercial organizations. Article 1 of these regulations provides: “Non-commercial organizations and concerns set forth in Article 584 of the Commercial Act refer to all organizations and concerns that are formed for non- commercial purposes such as scientific or literature matters or charity affairs and the like, whether or not their founders intend to make profits.”

10 Amended Regulations for Registration of Non-Commercial Organizations and Entities, enacted in the year 1337 [March 21, 1958- March 20, 1959], Article 2.

11 Article 1 of the Executive Regulations defines NGOs as those organizations formed on a voluntary basis for “non-profit and non-political purposes.”

12 Article 1 of the Law Concerning the Activities of Political Parties requires that the purpose, plans, and activities of the political parties must be related to the rules of administration and general policy of the Islamic Republic of Iran

13 This law restates the prohibitions of the Constitution by prohibiting any actions that violate Iran’s independence; jeopardize the freedom, independence, national unity, or interests of Iran; or violate Islamic standards or the basis of the Islamic Republic of Iran.

14 Information gathered through Iranians active with NGOs in Iran.

15 See Commercial Act, Article 588.

16 Id. See Sabi, Commercial Code of Iran, English translation, at 89-90.

17 The law does not specify which courts have this authority.

18 Sabi, Commercial Code of Iran, English translation, at 90.

19 Article 18 of the Executive Regulations provides that the founders must be of Iranian nationality, at least 18 years old, agree to be bound by the Constitution, have no criminal records, and not belong to a group declared hostile to the government.

20 This list is based on principles of Iranian law codified in the Commercial Act and reflected in current practice regarding commercial organizations in Iran.

21 As mentioned above, NGOs that operate on a national level should report to the national supervisory board, whereas local NGOs should report to the supervisory board for their state or province, depending on the regional scope of their activities.

22 Those familiar with NGOs in Iran have indicated that government officials are diligent about enforcing regulations. In the words of one attorney consulted, officials are quite zealous about enforcing laws, even when there is no law to enforce.

23 Baquer Namazi, Iran NGO Situation Analysis, January 2000, available at www.iranngos.org.

24 Id.

25 Article 1 of the Executive Regulations defines NGOs as those organizations formed on a voluntary basis for “non-profit and non-political purposes.”

26 Before the 2001 amendment to the Direct Taxation Act, professional NGOs formed under certain designated laws, such as the bar association, were also granted tax exemption with the approval of the Council of Ministers. See Direct Taxation Act, enacted on April 27, 1992 (Ordibehesht 7, 1371), published in the Collection of the Laws of the Year 1380 (March 21, 2001- March 20, 2002), vol. 2, at 1719.

27 See the Direct Taxation Act, Article 139, Note 1, as amended by Article 64 of the Law Concerning Certain Articles of the Direct Taxation Act, enacted on February 16, 2002 (27 Bahman 1380).

28 Golzar Kheiltash, The Rule and Role of Law in Iranian Civil Society, December 2003, available at www.hamyaran.org.

29 The Iranian-American community in the United States ranks second highest among 67 ancestry groups in educational attainment. Per capita income among Iranian-Americans is 45 percent above the national average in America. Ali Mostashari, Fact Sheet on the Iranian-American Community, Iranian Studies Group Research Series, updated February 2004.

 

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