The role of ‘Justice’ shares
Some 5% of shares of companies to be privatized are set aside for their workers and, to some extent, the lower echelons of the society, to help with equitable distribution of wealth.
These are referred to as ‘Justice’ shares, where society is divided into 10 tiers that are eligible to participate in the share transfer for a maximum of IR20 million ($2,200) per capita or IR100 million per family, depending on the size of each family, with a repayment plan spread over 10 years.
This programme, introduced by president Mahmoud Ahmadinejad, envisions a wide distribution and participation of the masses in the capital markets, as currently only 5% of the populace own shares on the Tehran Stock Exchange.
The initiative has already begun in under-privileged provinces and will eventually encompass the whole country. A bottom-up distribution scheme starts with those living below the poverty line who receive monthly stipends, families of the martyrs and war veterans. The next class up includes retirees eligible to receive government pensions and retired teachers. The third tier includes government workers, but eligibility for membership and distribution to other classes is currently under development.
There are some ownership restrictions, with a government committee acting as the trustee until title is fully vested with the individual. In the interim, sale of shares after payment of 20% of the total allotment is permissible at the discretion of the trustee, subject to a strict set of rules to ensure against a sudden fall in the price of shares.