In tandem with the progressive craving for emerging financial instruments in the Iranian capital market, the enactment of Iran's Securities Market Act in 2005, laid the groundwork for the introduction and trade of a growing number of market instruments in Iran.
Previously, tradeable instruments in the Iranian capital market were limited to equities and the Musharakah Sukuk.
However, the issuance of new securities and instruments, especially considering the fact that they must comply with the Islamic Sharia Law, mandated the Iranian capital market regulatory bodies to establish diverse entities, including a market trustee to preserve the rights of both holders and issuers of the new instruments.
Trustee is an individual or a legal entity that safeguards the interests of holders of Islamic securities while ensuring full compliance with laws and regulations in different stages of issuance, allocation of funds, good practice in account-keeping, devising financial statements, and other executive operations.
In the Iranian capital market, the Capital Market Central Asset Management Company (CMCAMC) plays the roles of a trustee and bears its above-mentioned responsibilities.
As the main entity involving the issuance of Islamic securities (Sukuk), CMCAMC is responsible for establishing and managing intermediary entities (Special Purpose Vehicles) in the Iranian capital market.
The company also deals with all bureaucratic, financial, and legal affairs relating to the SPVs, as well as keeping their accounts and financial records and returning the documents to the issuer companies at the maturity of sukuk certificates.
Capital Market CMCAMC was established in August 2010 as stipulated in a decree issued by the Securities and Exchange High Council.
The main business objective of this company is to establish and manage the needed intermediary entities to facilitate the implementation of the Article 44 of the Iranian Constitution, which supports the involvement of the private sector in the Iranian economy.
The main shareholders of the company are Central Securities Depository of Iran (49%), Iran FaraBourse (29%), Tehran Stock Exchange (20%), and Cooperative Company of the Securities and Exchange Organization Staff (2%).
SPVs Role in Sukuk Issuance
Special Purpose Vehicles (SPV), as Intermediary financial entities, are in fact companies with limited liabilities established by CMCAMC to issue a certain type of Islamic security or Sukuk. SPVs are the only institutions permitted to issue sukuk securities in the Iranian capital market and they are barred to accept other financial responsibilities.
The SPVs, are generally established with a 100 million Rial capital, of which 99 percent is owned by CMCAMC and one percent by Central Securities Depository of Iran.
The main task of SPVs is to execute the finance of projects according to trades subject to Islamic Contracts, manage funds raised from issuing securities, and make contracts required to issue securities and suchlike activities. They are also proved instrumental, to a large extent, in preventing possible defaults in Sukuk trading. They have been proven effective in such a way that thus far, not even a single case of default in payment of installments is reported.
SPVs just like CMCAMC are regulated by the SEO, and are not allowed to perform any other activity other than the above-mentioned ones and those stipulated in their Articles of Association.
Source of Income
Capital Market Central Asset Management Company at a glance
|Type||Private Joint Stock Company|
|Founders||Central Securities Depository of Iran, Cooperative Company of the Securities and Exchange Organization Staff, Iran Fara Bourse and Tehran Stock Exchange|
|Founding Date||2 August 2010|
|Chief Executive Officer||Mr. Gholamreza Aboutorabi|
|Telephone Number||+98 (21) 42431000|
|Address||No. 6, 6th Alley, Kouhe Nour St., Motahari Ave., Tehran-Iran|