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