Investment  Advisor

 

۱- Definition

An investment advisor is a firm that is in the business of giving advice about securities to

clients. For instance, firms that receive compensation for giving advice on investing in

stocks, bonds, mutual funds, or exchange traded funds are investment advisors.

According to Securities Market Act of Islamic Republic of Iran (2005) paragraph 16 of

article 1; investment advisor means legal entity which, based on a particular contract,

renders advisory services to the investors relating to the sale and purchase of securities.

The purpose of forming the investment advisor is to organize the business and deepen the

analysis and at the same time to protect investors rights against misuse and fraud. The

investment advisor’s area of business activity include recommendation for the buy, sell or

hold of securities; comment on the price trend or offer and bid of securities in the future

and comment on the securities value (price).

۲-  Purposes

According to the Regulations Governing the Establishment and Activity of the

Investment Advisor and the sample of article, The Investment Advisor shall be entitled to

engage in any of the following activities provided that it is granted a license/permit by the

Securities and Exchange Organization (the SEO) for any of its areas of activity:

        a) Upon receipt of the license for investment advisory services, the company shall, as per rules, be entitled to:

a-1- recommend to buy, sell and hold securities;

a-2- express an opinion on the price trends or securities offer and bid in

future;

a-3- express an opinion about the value (valuation) of securities;

a-4- provide advisory services in the area of risk management;

a-5- provide advisory services in the area of mergers, acquisition as well as

organizational and financial restructuring of companies;

a-6- provide advisory services in the area of design and formation of

financial institutions;

a-7- assume a position (responsibility) in the mutual funds apart from

managerial posts;

        b) Upon receipt of the license for portfolio management, the company shall be

entitled to carry out the activities specified in the relevant rules.

        c) Upon receipt of the license for offering or listing advisory services, the

company shall be entitled to carry out the activities specified in the relevant rules;

        d) Upon receipt of the license for financial data processing, the company shall be

entitled to carry out the activities specified in the relevant rules;