Analysis of the Nature and Legal Framework of Foreign Sovereign Wealth Funds in Iran's Capital Market with a Look at International Instruments

Document Type : Scientific research

Authors

Jafar Nezamolmolki ¹

Mohammad Nezamolmolki ²

¹ PhD of Private Law, Faculty of Law, University of Qom, Qom, Iran

² MA. in in Intellectual Property Rights, Faculty of Law, University of Qom, Qom, Iran

https://doi.org/10.22067/economlaw.2026.95718.1492

Abstract

The reliance of Sovereign Wealth Funds (SWFs) on national revenues and government oversight, on the one hand, and their non-sovereign (commercial) investment methods and models, on the other hand, have led to ambiguity and complexity regarding their legal nature and framework. Amidst this, given the indirect nature of investment in the capital market, the related ambiguities in this domain are greater than in other economic sectors, especially in countries like Iran, which lack specific regulations in this regard. The aim of the present research is to resolve these ambiguities, which is considered a necessary prerequisite for the investment of these funds in the Iranian capital market. Based on the research findings, the provision of capital by the government, management in line with its interests, and playing a role in macro-economic goals place SWFs among Captive Financial Institutions and Private Asset Management Arrangements. Since foreign SWFs are considered professional investors, flexibility should be applied in practice regarding their presence in the capital market and their eligibility for protective regulations, within limits appropriate to the country's economic preferences. This means they should neither face complex procedures like a financial institution nor benefit from special privileges like a retail investor. Furthermore, in Article 4 of the Foreign Investment Promotion and Protection Act (FIPPA), the general term "government-affiliated investment entities" should be used alongside the concept of "state-owned company", and the stipulation "provided that they are not considered sovereign acts" should be added as a condition for the investment of these funds to be deemed private.

Keywords

Nature

Legal Framework

Sovereign Wealth Funds

Iran’s Capital Market

International Instruments

Subjects

• Economic law

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