TEHRAN, April 24 (Reuters) - Foreigners will be able to buy directly up to 10 percent of companies listed on the Tehran stock exchange, waiving complex case-by-case permits required in the past, a senior bourse official said on Sunday.

Tehran's fast-growing bourse lists 422 companies valued at $46 billion, meaning the new directive has opened up $4.6 billion worth of assets to foreign investors.
 

"Foreign entities can buy up to 10 percent of shares of the listed companies in the bourse," Ali Sanginian, a senior official at Tehran Stock Exchange who has been designing the reform, told Reuters.

Sanginian said the new directive, which permits sales to both private foreign citizens and firms, would come into effect upon approval by the reformist government.

A directive which allowed only foreign companies, not individuals, to buy up to 49 percent of Iranian firms after painstakingly winning approval for a permit still stands, but the new system is hoped to whet international appetite for Iranian shares.

The new regulation allows individual foreigners to buy up to 10 percent of companies' shares on the stock market after receiving a permit from Iran's Foreign Investment Organisation.

"Dividends can be repatriated every year," Sanginian said, contradicting an earlier remark from the bourse.

But he added that foreign investors would still only be allowed to repatriate their capital gains and profits after three years, in line with Iran's foreign investment law.

BOOST THE BOURSE

Analysts believe the decision by Iranian bourse officials could boost foreign participation in the country's stock market and in its privatisation drive.

"It's a positive sign, because foreign investors who would so far invest indirectly, are now officially recognised," said Albrecht Frischenschlager, a director of Tehran-based Atieh Bahar Consulting.

Iran's bourse more than doubled in value last year and is a prime money haven for local investors looking to beat the Islamic Republic's 15.6 percent annual inflation rate.

Starting this year, Iran plans to privatise up to 65 percent of its state assets in major sectors such as banking, mines, heavy industries, shipping and airlines.

Some of these state assets will be sold in the stock market and some by tender.

"It can potentially attract investors to buy shares of Iranian banks and insurance companies," Frischenschlager said.

Iran's drive to sell more than $2.5 billion of state assets in the year to March 2005 ran into trouble as it failed to attract enough buyers.

"Only 30 percent of budgeted revenues were realised," head of Iran's Privatisation Organisation, Abdollah Pouri-Hosseini was quoted as saying by Economic Hayat-e No daily on Sunday.

Iran this month offered shares of 12 major industrial companies with an initial value of $630 million in the stock market.