The Rights of Third Parties in Light of Principles and Rules Governing Decision-Making Processes in Joint-Stock Companies under Iranian and English Law

Abstract

One of the key players in the economic sphere in both Iran and England is joint-stock companies. Upon their establishment, these companies acquire independent legal personality, and decisions made by their general assemblies and boards of directors affect the rights of third parties. In Iranian and English law, identifiable principles and rules govern the relationships between participants in the commercial legal framework and, more specifically, the regulation of relations between joint-stock companies and third parties. A portion of these principles and rules pertains to the decision-making processes carried out within joint-stock companies. In Iranian law, the decision-making processes in joint-stock companies are addressed by relying on codified principles outlined by the legislator in the amended sections of the Commercial Code and other related laws. These laws consider the rights of third parties affected by the decision-making processes of joint-stock companies. However, due to the antiquity of the amended Commercial Code, which serves as the foundational and primary source of regulation, and the scattered nature of other relevant requirements across various laws, third parties encounter significant challenges in practice. Conversely, in England, the principles and rules governing joint-stock companies, particularly decision-making processes, are more responsive to contemporary needs. Influenced by the judiciary's role as a primary source of law, these principles and rules provide more effective solutions for regulating the relationships between third parties and joint-stock companies and addressing the rights of such parties. Specifically, identifying these principles and rules offers third parties practical remedies in disputes arising from infringements of their rights due to the decisions made by joint-stock companies.