Reforming the legal status and duties of company directors in Iran : a comparative perspective

Abstract

Company directors play a vital role in shaping the governance and direction of corporations. In Iran, however, the legal framework that defines their position is outdated and insufficient. The current Iranian Commercial Code, enacted in 1932, lacks clarity on essential aspects such as the classification of directors, their fiduciary obligations, the duty of care and skill, and the limits of their authority. These legal gaps create uncertainty and undermine effective corporate management. This research explores the current legal standing of directors under Iranian law and proposes specific reforms aimed at modernizing and clarifying their roles, qualifications, and responsibilities. The study adopts a qualitative, doctrinal approach, analysing statutory texts, judicial decisions, and academic literature. To strengthen its recommendations, the research draws on legal models from four selected jurisdictions: namely, the United Kingdom, Australia, Malaysia, and Singapore without engaging in a comparative analysis; as the study does not aim to contrast legal systems but rather to draw practical legislative insights from selected jurisdictions due to the structural differences between Iran’s civil law system and common-law frameworks. These models serve as references to formulate contextsensitive proposals for corporate law reforms Iran. The study identifies significant deficiencies in the existing legal framework, including the absence of codified fiduciary duties, ambiguous definitions of director types, and unclear disqualification standards. In response, a set of model legal provisions is proposed to improve director accountability, promote legal clarity, and support the evolution of corporate governance in Iran. By offering these focused legislative recommendations, the thesis contributes to both legal scholarship and practical reform efforts aimed at enhancing transparency and sustainability in the Iranian corporate sector. The study also faced a significant limitation in collecting empirical data as approaching board members of Iranian joint stock companies many of which are under strong governmental control raised legal sensitivities that restricted direct communication. Consequently, the research proceeded with a doctrinal and analytical methodology instead of the initially intended qualitative approach.