
06 February 2018 / Ministry of Industries TRANSLATION OF RECENT AMENDMENTS OF ICELANDIC PUBLIC AND PRIVATE LIMITED COMPANIES' LEGISLATION (2008-2010) including Acts 13/2010 (sex ratios) and 68/2010 (minority protection, remuneration) r/jonogm/translation.screening.etc Rev. 15 July 2011 COMPANY LAW SCREENING ICELAND Recent Icelandic acts in chronological order Relevant EU acts underlined DRAFT TRANSLATION Act no. 88/2008 39. The words “official Case” in the 2nd sentence, Art. 131 of Act respecting Private Limited Companies No. 138 28 December 1994 shall be replaced by:- criminal Case. … 41. The words “official Case” in the 2nd sentence, Art. 157 of Act respecting Public Limited Companies No. 2 30 January 1995 shall be replaced by:- criminal Case. DRAFT TRANSLATION Act no. 81/2009 (Directive 2007/63/EC (report, merger and division) ) No. 81/2009 4 August 2009 A C T respecting Amendment of Acts on Public Limited Companies and Private Limited Companies (Simplification of Rules on Merger and Division) THE PRESIDENT OF ICELAND makes known:- The Althingi (Legislative Assembly) has passed the present Act and I have ratified it by means of my approval:- SECTION I Act respecting Public Limited Companies, No. 2/1995, with Subsequent Amendments Art. 1 The following amendments will be made to Art. 122 of the Act:- 1. There is added a new paragraph, para. 4, worded as follows:- In case all shareholders in merger Companies approve it is not required that independent, specialized assessors prepare a report on the merger schedule, i.a. regarding price of shares, cf. para. 1 – 3. 2. The word “furthermore” in para. 4 is replaced by:- always. Art. 2 The words “para. 4, Art. 122” in para. 1 and 2, Art. 123, the 1st sentence, para. 4, Art. 124, para. 1, Art. 126, para. 3, Art. 129 and the 1st sentence, para. 1, Art. 151 of the Act are replaced by:- para. 5, Art. 122. Art. 3 The words “para. 1 – 3, Art. 122” in Art. 130 of the Act are replaced by:- Art. 122. Art. 4 The words “Art. 133 a – Art. 133 f” in para. 2, Art. 133 a and para. 4, Art. 133 g of the Act are replaced by:- Art. 133 a – Art. 133 c and Art. 133 e – Art. 133 f. Art. 5 Art. 133 d of the Act is deleted. SECTION II Act respecting Private Limited Companies, No. 138/1994, with Subsequent Amendments Art. 6 Para. 4, Art. 97 of the Act shall be worded as follows:- In case all shareholders in merger Companies approve it is not required that a report be prepared on the merger schedule, i.a. regarding price of shares, cf. para. 1 – 3. Nevertheless, a declaration shall always be given as to what extent the merger may diminish the possibilities of the creditors for satisfaction in the individual Companies. Art. 7 The following amendments will be made to Art. 98 of the Act:- a. The 2nd sentence of para. 1 is worded as follows:- Simultaneously there shall also be sent to the Register of Limited Companies a declaration in accordance with para. 4, Art. 97, cf. Art. 99. b. The 2nd sentence of para. 2 shall be worded as follows:- In case the one giving a declaration in accordance with para. 4, Art. 97 considers in his declaration that the merger may diminish the possibilities of creditors for satisfaction notification shall contain information pertaining thereto and the attention of creditors shall be directed to their rights under Art. 97 and Art. 101. Art. 8 The following amendments will be made to Art. 99 of the Act:- a. The words “the Auditor's or Inspector's declaration as per para. 4, Art. 97” in the 1st sentence of para. 4 are replaced by:- declaration in accordance with para 4, Art. 97. b. Clause 5, para. 5 shall be worded as follows:- report and declaration in accordance with Art. 97. Art. 9 The words “In case an Auditor or an Inspector does consider in his declaration under para. 4, Art. 97” in para. 1, Art. 101 of the Act are replaced by:- In case the one giving a declaration in accordance with para. 4, Art. 97 considers in his declaration. Art. 10 Para. 3, Art. 104 of the Act shall be worded as follows:- A declaration shall be prepared in accordance with para. 4, Art. 97. Art. 11 The reference “para. 1 – 3, Art. 97” in Art. 105 of the Act shall be replaced by:- Art. 97. Art. 12 The reference “Art. 107 b – Art. 107 g” in para. 2, Art. 107 b and para 4, Art. 107 h of the Act shall be replaced by:- Art. 107 b – 107 d and Art. 107 f – Art. 107 g. Art. 13 Art. 107 e of the Act is deleted. Art. 14 With the present Act the Directive of the European Parliament and of the Council 2007/63/EC of 13 November 2007 on Amendment of Directives of the Council 78/855/EEC and 82/891/EEC regarding a requirement of a report prepared by an independent specialist in connection with merger and division of Limited Companies is incorporated. The Government is authorized to ratify on behalf of Iceland the Decision of the EEA Joint Committee No. 58/2008 of 25 April 2008 regarding an amendment to Annex XXII (Company Law) of the EEA Agreement of 2 May 1992. Art. 15 The present Act enters into force forthwith. Given at Reykjavik on 4 August 2009 Olafur Ragnar Grimsson (L.S.) Gylfi Magnusson DRAFT TRANSLATION Act no. 86/2009 (Regulation 2157/2001, European companies) Art. 24 Entry into Force The present Act enters into force forthwith. Art. 25 Amendments to Other Acts 1. To para 2, Art. 133 f of Act No. 2/1995 respecting Public Limited Companies with subsequent amendments there is added a new sentence worded as follows:- As applicable upon registration attention shall though be paid to Art. 12 of Council Regulation (EC) No 2157/2001 of 8 October 2001 on the Statute for European Company which has legal force here in this Country in accordance with Art. 1 of Act No. 26/2004 respecting European Companies. 2. To para. 2, Art. 107 g of Act No. 138/1994 respecting Private Limited Companies with subsequent amendments there is added a new sentence worded as follows:- As applicable upon registration attention shall though be paid to Art. 12 of Regulation (EC) No 2157/2001 of 8 October 2001 on the Statute for a European Company (SE) which has legal force here in this Country in accordance with Art. 1 of Act No. 26/2004 respecting European Companies. Given at Reykjavik on 4 August 2009 DRAFT TRANSLATION Act no. 87/2009 (Recommendation of the Commission 2009/385/EB, remuneration) SECTION IX Amendment to Act respecting Public Limited Companies No. 2/1995 with Subsequent Amendments Art. 11 The 1st sentence, para. 1, Art. 79 a of the Act shall be worded as follows:- A Board of Directors of a Company which is in duty bound to elect an Auditor in accordance with para. 1 – 3, Art. 98 of Act No. 3/2006 respecting Annual Accounts shall approve the Company's remuneration policy concerning wages and other payments to the Chief Executive Officer and other supreme Officers of the Company as well as its Directors, but not wages and other payments to a Chief Executive Officer of a Limited Company the majority of shares of which is owned by the Treasury and a Chief Executive Officer of a Limited Company owned by it. DRAFT TRANSLATION Act no. 98/2009 Amendment to Act respecting Private Limited Companies No. 138/1994 with Subsequent Amendments SECTION XIX Art. 19 The words “Minister of Commerce” in the 2nd and 3rd sentence, para. 1, Art. 1, para. 1, Art. 107 b and para. 1, Art. 107 h of the Act are replaced by:- Minister of Economic Affairs. Amendment to Act respecting Public Limited Companies No. 2/1995 with Subsequent Amendments SECTION XX Art. 20 The words “Minister of Commerce” in the 2nd and 3rd sentence, para. 1, Art. 1, para. 1, Art. 133 a and para. 1, Art. 133 g of the Act are replaced by:- Minister of Economic Affairs. DRAFT TRANSLATION Act no. 126/2009 (Directive 2007/36/EC (shareholders´ rights, listed companies)) No. 126/2009 23 December 2009 A C T respecting Amendment of Acts on Public Limited Companies and Private Limited Companies (Rights of Shareholders) THE PRESIDENT OF ICELAND makes known:- The Althingi (Legislative Assembly) has passed the present Act and I have ratified it by means of my approval:- SECTION I Act respecting Public Limited Companies, No. 2/1995, with Subsequent Amendments Art. 1 The words “a dated Power of Attorney in writing” in para. 2, Art. 81 of the Act are replaced by:- a written or electronic Power of Attorney and this shall be dated. Art. 2 The words “submits a requirement in writing” in Art. 86 of the Act are replaced by:- submits a requirement in writing or electronically. Art. 3 Following upon Art. 88 of the Act there come five new articles, Art. 88 a – Art. 88 e, worded as follows:- a. (Art. 88 a) In Companies whose shares are admitted to trading on a regulated securities market a shareholders´ meeting shall be called at least three weeks before a meeting. In case a Company whose shares are admitted to trading on a regulated securities market has decided that all shareholders can vote electronically at shareholders´ meetings, cf. Art. 80 a, the shareholders´ meeting can decide that a shareholders´ meeting be called, though not Annual General Meeting, at least two weeks before a meeting, as this be called in general on the European Economic Area or notifications thereof sent to registered shareholders based on the register of shares. A decision shall be made with the majority which is needed to amend the Articles of Association and this shall not be valid longer than until the next Annual General Meeting. It is not required to comply with the provisions regarding minimum respite in para. 1 and 2 if one or more extended shareholders´ meetings are called in Companies mentioned therein on account of lack of quorum at the meeting which was called first. However, that depends upon the first meeting having been called in accordance with Laws and no new matter has been introduced to the agenda. At least ten days must pass between the latest call to a meeting and the date of a shareholders´ meeting. b. (Art. 88 b) In addition to possible further requirements by a state where a Company is registered, whose shares are admitted to trading on a regulated securities market, regarding notification of a call to a meeting or its publication a Company shall call a meeting in accordance with Art. 88 a in a manner that fast access be ensured thereto on an equal ground. It is compulsory to use reliable media which ensure active circulation of information to the general public in the European Economic Area. It may not be provided for that media operated in one state can only be used. It is not compulsory to apply para. 1 regarding the use of medium concerning a Company mentioned therein which has names and addresses of shareholders registered in a register of shares, but it be in duty bound to send each registered shareholder a call to a meeting. Whether complying with para. 1 or 2, there shall not be collected cost specifically for issuing of a call to a meeting. c. (Art. 88 c) In a call to a meeting according to Art. 88 a in a Company whose shares are admitted to trading on a regulated securities market a mention shall at least be made of:- 1. Place of meeting, cf. Art. 83, time of meeting, cf. para 1, Art. 84 and Art. 85 and a draft of an agenda, cf. Art. 84 and para. 3, Art. 88. 2. Explicit and accurate rules regarding participation and casting of votes at a shareholders' meeting. Information shall i.a. be provided on:- Shareholders´ right to have matters introduced to an agenda of a shareholders´ meeting, cf. Art. 86 and 89, and present resolution proposals if this be possible after the issuing of a call to a meeting, cf. Art. 88, as well as asking questions, cf. para. 5, Art. 80 a, in addition to a respite in order to exercise this right. In a call to a meeting it is sufficient to only mention a respite if it refers to further information regarding the right on a Company's website. Rules regarding the casting of votes with the assistance of a representative, where applicable forms on account of such a casting of votes and how a Company be prepared to approve electronic notifications regarding an appointment of a representative. Rules regarding written or electronic casting of votes as applicable, cf. Art. 80 a and Art. 82. 3. Where and when an unabbreviated text according to clauses 3 and 4, para. 1, Art. 88 d can be obtained. 4. Website address where information according to Art. 88 d can be found. d. (Art. 88 d) A Company whose shares are admitted to trading on a regulated securities market shall continuously for 21 days prior to a shareholders´ meeting and also on the date of the meeting grant its shareholders on the Company's website at least information regarding the following:- A call to a meeting in accordance with Art. 88 a. The total number of shares and votes on the date of the calling of a meeting, itemized by classes if applicable. Documents which will be presented to a shareholders´ meeting. A resolution proposal or where applicable remarks from a competent lawful body in the Company for statutes regarding each matter in the draft of a shareholders´ meeting agenda. Shareholders´ resolution proposals shall also be added to the Company's website as soon as possible after receipt thereof. Where applicable forms which the representative shall use upon the casting of votes or shall be used upon casting of votes in writing, unless these be sent to each shareholder. Where it is technically impossible to put forms in accordance with clause 5, para. 1 on the Company's website in accordance with para. 1 it shall mention on its website how the forms can be obtained in paper. In those instances the Company shall send the forms by mail to each shareholder that so wishes, free of charge for the party concerned. In case a call to a shareholders´ meeting in a Company according to para. 1 be issued later than three weeks prior to a meeting, cf. Art. 88 a, respite shall be shortened by the same amount of time. Within fifteen days from a shareholders´ meeting in a Company according to para. 1 the result of elections at the meeting shall be published on the Company's website, unless it has decided to grant more detailed information regarding casting of votes. e. (Art. 88 e) The Financial Supervisory Authority can exempt management companies of securities funds and investment funds from provisions of Art. 88 a – Art. 88 d. SECTION II Act respecting Private Limited Companies, No. 138/1994, with Subsequent Amendments Art. 4 The words “a dated Power of Attorney in writing” in para. 2, Art. 56 of the Act are replaced by:- a written or electronic Power of Attorney and this shall be dated. Art. 5 The words “submits a requirement in writing” in Art. 61 of the Act are replaced by:- submits a requirement in writing or electronically. SECTION III Entry into Force et al. Art. 6 With the present Act Directive 2007/36/EC of the European Parliament and of the Council of 11 July 2007 on the exercise of certain rights of shareholders in listed Companies is incorporated. Art. 7 The present Act enters into force forthwith. Given at Reykjavik on 23 December 2009 Olafur Ragnar Grimsson (L.S.) Gylfi Magnusson DRAFT TRANSLATION No. 13/2010 8 March 2010 A C T respecting Amendment to Act on Public Limited Companies and Act on Private Limited Companies (Ownership, Sex Ratios and acting Chairmen of Boards of Directors) SECTON 1 Amendment to Act on Public Limited Companies, No. 2/1995, with Subsequent Amendments Art. 1 The following amendments will be made to Art. 30 of the Act:- To para. 1 there is added a new sentence worded as follows:- The Board of Directors shall see to it that the register of shares includes correct information at each given time. Following para. 6 there comes a new sentence worded as follows:- In the register of shares information shall be entered regarding the voting right of shareholders and therein mention shall also be made of all group connection which the Public Limited Company is a party to. Art. 2 Para. 1, Art. 63 of the Act shall be worded as follows:- A Public Limited Company's Board of Directors shall consist of a minimum of three persons. On Boards of Directors of Official Public Limited Companies and Public Limited Companies with more than 50 employees generally on an annual basis each sex shall be represented on the Board when the Board consists of three persons and when members of the Board of Directors are more than three in such Companies it shall be ensured that sex ratio be not lower than 40%. The same applies to sex ratios among Reserve Directors in such Companies, but ratios on the Board and the Reserve Board shall though in total be as equal as possible. In case a satisfactory result will not be reached a necessary amendment can be approved with a new decision of the shareholders' meeting, but a provision regarding this matter shall be entered into the Articles of Association of a Company. In notifications regarding Boards to the Register of Companies information regarding sex ratios on a Board shall be detailed. In Public Limited Companies with more than twenty five employees generally on an annual basis information regarding sex ratios among employees and the management of the Company shall also be detailed. Art. 3 To para. 1, Art. 65 of the Act there is added a new sentence worded as follows:- Attention shall be paid to sex ratios upon the hiring of Managers and information shall be given in notifications to the Register of Companies regarding sex ratios among Managers. Art. 4 To para. 1, Art. 70 of the Act there is added a new sentence worded as follows:- The Chairman of the Board of Directors shall not undertake other duties for the Company than those which form a normal part of his duties as a Chairman of the Board of Directors, excluding special assignments which the Board of Directors charges him with. Art. 5 Following para. 3, Art. 84 of the Act there comes a new sentence worded as follows:- The Board of Directors shall prepare a short summary and submit to an Annual General Meeting regarding ownership of shares of individual shareholders and their right to cast votes as well as regarding changes which have taken place during the year. Equivalent information shall be at hand regarding the group connection which the Public Limited Company is a party to. Art. 6 To the 2nd sentence, para. 1, Art. 91 of the Act there is added:- and ownership of shares of individual shareholders and their voting right. Art. 7 The following amendments will be made to clause 2, Art. 153 of the Act:- Following the words “(para. 2, Art. 70)” comes:- summary regarding group connection et. al (para. 4, Art. 84). The words “para. 4, Art. 84” are replaced by:- para. 5, Art. 84. SECTON 2 Amendment to Act on Private Limited Companies, No. 138/1994, with Subsequent Amendments Art. 8 Para. 1, Art. 39 of the Act shall be worded as follows:- The Board of Directors of a Private Limited Company shall consist of at least three persons, unless there be four or fewer shareholders, then it is sufficient that the Board consist of one or two persons. In case the Board of Directors of a Company consist of one person one Reserve Director at least shall be selected. When members of the Board are two or three in a Company with more than 50 employees generally on an annual basis each sex shall be represented on the Board and when members of the Board of Directors are more than three in such Companies the sex ratio shall not be lower than 40%. The same applies to sex ratios among Reserve Directors in such Companies, but the ratios on the Board and the Reserve Board shall though in total be as equal as possible. In case a satisfactory result will not be reached a necessary amendment can be approved with a new decision of the shareholders' meeting, but a provision regarding this matter shall be entered into the Articles of Association of a Company. In notifications regarding Boards to the Register of Companies information regarding sex ratios on a Board shall be detailed. In Private Limited Companies with more than twenty five employees generally on an annual basis information regarding sex ratios among employees and the management of the Company shall also be detailed. Art. 9 To para. 1, Art. 41 of the Act there is added a new sentence worded as follows:- Attention shall be paid to sex ratios upon the hiring of Managers and information shall be given in notifications to the Register of Companies regarding sex ratios among Managers. Art. 10 The present Act enters into force forthwith. The provisions of the 2nd – 4th sentences, Art. 2 respecting other Public Limited Companies than Official Public Limited Companies and the 3rd – 5th sencences, Art. 8 enter into force on 1 September 2013. DRAFT TRANSLATION Act no. 68/2010 (Recommendation of the Commission 2009/385/EB, remuneration: See articles 7 and 21 of the act. Cf. Act no. 87/2009 above) No. 68/2010 22 June 2010 A C T respecting Amendment of Act respecting Public Limited Companies, Act respecting Private Limited Companies and Act respecting Annual Accounts (Minority Protection et al.) SECTON 1 Act respecting Public Limited Companies, No. 2/1995, with Subsequent Amendments Art. 1 The following amendments will be made to Art. 3 of the Act:- The word “Minister” in the 2nd sentence, para. 2 will be followed by:- or he to whom he conveys his power. The word “Minister” in the 2nd sentence, para. 3 will be followed by:- or he to whom he conveys his power. Art. 2 Following upon Art. 26 of the Act there comes a new Article, Art. 26 a, reading as follows:- A shareholder may, however, despite para. 3, require a Judgement to the effect that the Company redeem his share in the Company provided that strong arguments remain for him being enabled to free himself from the Company because:- the Company's Board of Directors, Managing Director or others representing a Company, as well as shareholders, have violated the provisions of Art. 76 and Art. 95 concerning the acquisition of improper interests, another shareholder of the Company has abused his influence in the Company, there is a serious and long-term dispute between the shareholder and other shareholders concerning the operation of the Company. In case redemption in accordance with para. 1 leads to a considerable loss for the Company or does in another manner lead to an unfair conclusion for it the request of the shareholder shall not be taken account of. The same applies if the Company finds someone who is prepared to purchase the shares against payment corresponding to the redemption amount. The provisions of para. 4, Art. 22 apply as applicable. The present provision does not apply to financial undertakings, insurance companies and companies whose shares are admitted to trading on a regulated securities market or at the Multilateral Trading Facility (MTF). Art. 3 The following amendments will be made to Art. 53:- The word “Minister” in para. 2 will be followed by:- or he to whom he conveys his power. The words “the Company's Board of Directors and Auditors” in para. 3 shall be replaced by: all principal members of a Company's Board of Directors and, where applicable, individual reserve members to replace them, as well as an auditor. Art. 4 To para. 3, Art. 55 of the Act there are added two new sentences, reading as follows:- In a Company whose shares are admitted to trading on a regulated securities market or at the Multilateral Trading Facility (MTF), however, the last spot market rate at the end of the day be used as reference prior to an agreement being concluded. In other Public Limited Companies shareholders controlling a minimum of 5% of shares can require the Company's Board of Directors, within a month after the Board gives notice of an agreement, that an auditor will be charged with assessing to which extent the price be reasonable and substantially argued. Art. 5 The word “Minister” in the 1st sentence, para. 2, Art. 66 of the Act will be followed by:- or he to whom he conveys his power. Art. 6 The word “obviously” in para. 1, Art. 76 of the Act is deleted. Art. 7 The following amendments will be made to Art. 79 a of the Act:- To clause 3, para. 1 there is added:- (does not apply to Directors, cf. clause 5, para. 2). New paragraph, para. 2, is added, reading as follows:- Upon the preparation of remuneration policy the following fundamental features shall be taken into account:- There shall be limitations on variable components of remuneration which shall be connected to previously decided upon and measurable performance criteria where long-term interests of the Company are kept in mind. Payment on account of variable components of remuneration shall be postponed for a suitable period of time and repayment shall be assumed if payments have been rendered on the basis of obviously inaccurate data. Payments at termination of employment shall not exceed a previously decided amount and shall not be based on more than two years salary. The payments at termination of employment shall not be rendered if termination of employment occur on account of unsatisfactory performance. Shares shall not be delivered until at least three years after the party concerned acquires right thereto. Purchase right may not be used for shares until after a three year waiting period. A specific proportion of shares shall be kept until at termination of employment. Directors shall not enjoy shares, option to buy or sell, stock option and other types of payments linked to shares in the Company or price trends of shares in the Company. Art. 8 The following amendments will be made to Art. 81 of the Act:- The words “the right to speak” in the 3rd sentence, para. 1 is deleted. A new sentence is added to para.1, reading as follows:- A shareholder is authorized to let his advisor speak on his behalf. The word “five” in the 2nd sentence, para 2, is replaced by:- one. Art. 9 A “tenth” in the 2nd sentence, Art. 85 of the Act is replaced by:- twentieth. Art. 10 The following amendments will be made to Art. 88 of the Act:- The words “a week before a meeting” in the 1st sentence, para. 1 are replaced by:- a week before a meeting (two weeks before a General Meeting). Following upon the 1st sentence, para. 1 there comes a new sentence, reading as follows:- Yet there may be held a shareholders´ meeting which is called with at least one weeks´ notice if shareholders, controlling at least 90% of capital, agree in advance thereto in writing. The words “At the least a week in advance of a shareholders´ meeting” in para. 4 are replaced by:- At the least a week in advance of a shareholders´ meeting (two weeks in advance of a General Meeting unless calling respite be less). Art. 11 The words “When a shareholder so requires and that may be done without” in the 1st sentence, para 1, Art. 91 of the Act are followed by:- considerable. Art. 12 The word “obviously” in Art. 95 of the Act is deleted. Art. 13 Following upon Art. 95 of the Act there comes a new article, Art. 95, reading as follows:- An agreement between the Company and shareholders, the shareholders´ parent company, Director or Managing Director of the Company, amounting to in real terms at least a tenth of the shares at the time of signing of the agreement, will not bind the Company unless having obtained the approval of a shareholders meeting. This does not, however, apply to:- Agreements which have been concluded in conformity with rules of Art. 5 – 6, Art. 6 a – Art. 6 c, Art. 7 – 8 and Art. 37 regarding the procurement of a specialist report upon the establishment of a company and raising of capital. Agreements and decisions regarding salaries and remuneration of senior management in accordance with Art. 79 and Art. 79 a. Agreements on transfer of financial instruments in accordance with their recorded value at an regulated securities market. Agreements concluded in connection with standard operation of a company containing prices and other terms naturally included in such agreements. Agreements below general minimum of share capital in public limited companies. Agreements of financial undertakings, insurance companies and companies whose shares are admitted to trading on a regulated market or at the Multilateral Trading Facility (MTF). In case an agreement comes under this article a Company's Board of Directors is in duty bound to procure a specialist report in conformity with Art. 6, cf. Art. 6 a – Art. 6 c and Arts. 7 – 8. The report shall include a declaration to the effect that there be co-ordination between the Company's payment and the compensation obtained by the Company, cf. clause 4, para. 1, Art. 6. The specialist report shall be attached to the call to a shareholders´ meeting and shall be sent to the Register of Limited Companies. In case an agreement is not binding for the Company payments shall be returned to the effect that these have been rendered. The provisions of Art. 102 apply as applicable. Provisions of para. 1 – 3 also apply to agreements which a company has concluded with a party who is closely connected with a shareholder or the parent company of a shareholder or someone represented as per an agreement or in another manner with authority from any of those mentioned in para. 1. Closely connected in the present article means:- Married couple and those in a common law marriage, parties in a registered partnership or parties in a registered cohabitation. Those with direct relation or first link aside, but relationship in this connection relates also to relations formed by adoption or fostering. Those connected by marriage, common law marriage, registered partnership or registered cohabitation in the same manner as stated in clause 2. A company which is controlled by the party concerned himself or any of those mentioned in clauses 1 – 3 as defined by Art. 2. Art. 14 The following amendments will be made to Art. 97 of the Act:- Three new sentences are added to para. 3, reading as follows:- The Minister is instead authorized to stipulate the condition that a party requesting an investigation shall place a collateral for the payment of costs. The Company will then ultimately bear the cost. In case the Company does not pay an invoice within three months as of the date thereof the applicant for the investigation does, however, forfeit his collateral, but does instead hold a claim on the Company. The word “week” in para. 4 is replaced by:- two weeks. Art. 15 Art. 136 of the Act is deleted. SECTION II Act respecting Private Limited Companies, No. 138/1994, with Subsequent Amendments Art. 16 The following amendments will be made to Art. 3 of the Act:- The word “Minister” in the 1st sentence, para. 2 is followed by:- or he to whom he conveys his power. The word “Minister” in the 2nd sentence, para. 3 is followed by:- or he to whom he conveys his power. Art. 17 Following upon Art. 18 of the Act there comes a new Article, Art. 18 a, reading as follows:- A shareholder may require a Judgement to the effect that the Company redeem his share in the Company provided that strong arguments remain for him being enabled to free himself from the Company because:- the Company's Board of Directors, Managing Director or others representing a Company, as well as shareholders, have violated the provisions of Art. 51 and Art. 70 concerning the acquisition of improper interests; another shareholder of the Company has abused his influence in the Company; there is a serious and long-term dispute between the shareholder and other shareholders concerning the operation of the Company. In case redemption in accordance with para. 1 leads to a considerable loss for the Company or does in another manner lead to an unfair conclusion for it the request of the shareholder shall not be taken account of. The same applies if the Company finds someone who is prepared to purchase the shares against payment corresponding to the redemption amount. Art. 18 The following amendments will be made to Art. 36:- The word “Minister” in para. 2 will be followed by:- or he to whom he conveys his power. The words “a Company's Board of Directors and Auditors” in para. 3 shall be replaced by:- all principal members of a Company's Board of Directors and, where applicable, individual reserve members to replace them, as well as an auditor. Art. 19 The word “Minister” in the 3rd sentence, para. 2, Art. 42 of the Act will be followed by:- or he to whom he conveys his power. Art. 20 The word “obviously” in para. 1, Art. 51 of the Act is deleted. Art. 21 The following amendments will be made to Art. 54 a of the Act:- To clause c, para. 1 there is added:- (does not apply to Directors, cf. clause 5, para. 2). New paragraph, para. 2, is added, reading as follows:- Upon the preparation of remuneration policy the following fundamental features shall be taken into account:- There shall be limitations on variable components of remuneration which shall be connected to previously decided upon and measurable performance criteria where long-term interests of the Company are kept in mind. Payment on account of variable components of remuneration shall be postponed for a suitable period of time and repayment shall be assumed if payments have been rendered on the basis of obviously inaccurate data. Payments at termination of employment shall not exceed a previously decided amount and shall not be based on more than two years salary. The payments at the termination of employment shall not be rendered if termination of employment occur on account of unsatisfactory performance. Shares shall not be delivered until at least three years after the party concerned acquires right thereto. Purchase right may not be used for shares until after a three year waiting period. A specific proportion of shares shall be kept until at termination of employment. Directors shall not enjoy shares, option to buy or sell, stock option and other types of payments linked to shares in the Company or price trends of shares in the Company. Art. 22 The following amendments will be made to Art. 56 of the Act:- The words “the right to speak” in the 3rd sentence, para. 1 is deleted. A new sentence is added to para.1, reading as follows:- A shareholder is authorized to let his advisor speak on his behalf. The word “five” in the 2nd sentence, para 2, is replaced by:- one. Art. 23 A “tenth” in the 2nd sentence, Art. 60 of the Act is replaced by:- twentieth. Art. 24 The words “When a shareholder so requires and that may be done without” in the 1st sentence, para 1, Art. 66 of the Act are followed by:- considerable. Art. 25 The word “obviously” in Art. 70 of the Act is deleted. Art. 26 Following upon Art. 70 of the Act there comes a new article, Art. 70 a, reading as follows:- An agreement between the Company and shareholders, the shareholders´ parent company, Director or Managing Director of the Company, amounting to in real terms at least a tenth of the shares at the time of signing of the agreement, will not bind the Company unless having obtained the approval of a shareholders´ meeting. This does not, however, apply to:- Agreements which have been concluded in conformity with rules of Arts. 5 – 6, Art. 6 a – Art. 6 b and Art. 26 regarding the procurement of a report upon the establishment of a company and increase of share capital. Agreements and decisions regarding salaries and remuneration of senior management in accordance with Art. 54 and Art. 54 a. Agreements on transfer of financial instruments in accordance with their recorded value at a regulated securities market. Agreements concluded in connection with standard operation of a company containing prices and other terms naturally included in such agreements. Agreements below general minimum of share capital in private limited companies. In case an agreement comes under this article a Company's Board of Directors are in duty bound to procure a report in conformity with Art. 5, cf. Art. 6 and Art. 6 a – Art. 6 b. The report shall include a declaration to the effect that there be co-ordination between the Company's payment and the compensation obtained by the Company, cf. clause 5, para. 2, Art. 5. The report shall be attached to the call to a shareholders´ meeting and shall be sent to the Register of Limited Companies. In case an agreement is not binding for the Company payments shall be returned to the effect that these have been rendered. The provisions of Art. 77 apply as applicable. Provisions of para. 1 – 3 also apply to agreements which a company has concluded with a party who is closely connected with a shareholder or the parent company of a shareholder or someone represented as per an agreement or in another manner with authority from any of those mentioned in para. 1. Closely connected in the present article means:- Married couple and those in a common law marriage, parties in a registered partnership or parties in a registered cohabitation. Those with direct relation or first link aside, but relationship in this connection relates also to relations formed by adoption or fostering. Those connected by marriage, common law marriage, registered partnership or registered cohabitation in the same manner as stated in clause 2. Art. 27 The following amendments will be made to Art. 72 of the Act:- Three new sentences are added to para. 3, reading as follows:- The Minister is instead authorized to stipulate the condition that a party requesting an investigation shall place a collateral for the payment of costs. The Company will then ultimately bear the cost. In case the Company does not pay an invoice within three months as of the date thereof the applicant for the investigation does, however, forfeit his collateral, but does instead hold a claim on the Company. The word “week” in para. 4 is replaced by:- two weeks. Art. 28 Art. 110 of the Act is deleted. SECTION III Act respecting Annual Accounts, No. 3/2006, with Subsequent Amendments Art 29 The words “one fifth” in the 1st sentence, para. 2, Art. 96 of the Act are replaced by:- one tenth. SECTION VI Entry into Force et al. Art 30 By means of the present Act Commission Recommendation 2009/385/EC of 30 April 2009 complementing Recommendations 2004/913/EC and 2005/162/EC as regards the regime for the remuneration of directors of listed companies is incorporated. Art. 31 The present Act enters into force forthwith. However, provision regarding prolongation of minimum respite for the calling of General Meetings in Public Limited Companies enters into force on 1 January 2011. Provisions regarding deletion (Art. 136 of Act respecting Public Limited Companies and Art. 110 of Act respecting Private Limited Companies) apply to incidents and conduct which took place prior to the entry into force of the present Act notwithstanding the respite for taking legal action having passed when this Act entered into force. Given at Reykjavik on 22 June 2010 Johanna Sigurdardottir Asta R. Ingibjoerg Johannesdottir Benediktsdottir (L.S.) Gylfi Magnusson A-division – Issuing date:- 23 June 2010 Tags Ministry of Industries Business and Industry Acts of Parliament Go back Disclaimer: This section of the site details available translations on legislation relating to the Government Offices in Iceland. In case of any discrepancies between the translations and the original text in Icelandic, the original text as published in the Icelandic Legal Gazette prevails.

06 February 2018

Ministry of Industries

TRANSLATION OF RECENT AMENDMENTS OF ICELANDIC PUBLIC AND PRIVATE LIMITED COMPANIES' LEGISLATION (2008-2010) including Acts 13/2010 (sex ratios) and 68/2010 (minority protection, remuneration)

r/jonogm/translation.screening.etc
Rev. 15 July 2011

COMPANY LAW SCREENING
ICELAND
Recent Icelandic acts in chronological order
Relevant EU acts underlined

DRAFT TRANSLATION

Act no. 88/2008

39. The words “official Case” in the 2nd sentence, Art. 131 of Act respecting Private Limited Companies No. 138 28 December 1994 shall be replaced by:- criminal Case.

…

41. The words “official Case” in the 2nd sentence, Art. 157 of Act respecting Public Limited Companies No. 2 30 January 1995 shall be replaced by:- criminal Case.

DRAFT TRANSLATION

Act no. 81/2009 (Directive 2007/63/EC (report, merger and division) )

No. 81/2009 4 August 2009

A C T

respecting Amendment of Acts on Public Limited Companies and Private Limited Companies (Simplification of Rules on Merger and Division)

THE PRESIDENT OF ICELAND

makes known:- The Althingi (Legislative Assembly) has passed the present Act and I have ratified it by means of my approval:-

SECTION I
Act respecting Public Limited Companies, No. 2/1995, with Subsequent Amendments
Art. 1

The following amendments will be made to Art. 122 of the Act:-

1. There is added a new paragraph, para. 4, worded as follows:-

In case all shareholders in merger Companies approve it is not required that independent, specialized assessors prepare a report on the merger schedule, i.a. regarding price of shares, cf. para. 1 – 3.

2. The word “furthermore” in para. 4 is replaced by:- always.

Art. 2

The words “para. 4, Art. 122” in para. 1 and 2, Art. 123, the 1st sentence, para. 4, Art. 124, para. 1, Art. 126, para. 3, Art. 129 and the 1st sentence, para. 1, Art. 151 of the Act are replaced by:- para. 5, Art. 122.

Art. 3

The words “para. 1 – 3, Art. 122” in Art. 130 of the Act are replaced by:- Art. 122.

Art. 4

The words “Art. 133 a – Art. 133 f” in para. 2, Art. 133 a and para. 4, Art. 133 g of the Act are replaced by:- Art. 133 a – Art. 133 c and Art. 133 e – Art. 133 f.

Art. 5

Art. 133 d of the Act is deleted.

SECTION II
Act respecting Private Limited Companies, No. 138/1994, with Subsequent
Amendments
Art. 6

Para. 4, Art. 97 of the Act shall be worded as follows:-

In case all shareholders in merger Companies approve it is not required that a report be prepared on the merger schedule, i.a. regarding price of shares, cf. para. 1 – 3. Nevertheless, a declaration shall always be given as to what extent the merger may diminish the possibilities of the creditors for satisfaction in the individual Companies.

Art. 7

The following amendments will be made to Art. 98 of the Act:-

a. The 2nd sentence of para. 1 is worded as follows:- Simultaneously there shall also be sent to the Register of Limited Companies a declaration in accordance with para. 4, Art. 97, cf. Art. 99.

b. The 2nd sentence of para. 2 shall be worded as follows:- In case the one giving a declaration in accordance with para. 4, Art. 97 considers in his declaration that the merger may diminish the possibilities of creditors for satisfaction notification shall contain information pertaining thereto and the attention of creditors shall be directed to their rights under Art. 97 and Art. 101.

Art. 8

The following amendments will be made to Art. 99 of the Act:-

a. The words “the Auditor's or Inspector's declaration as per para. 4, Art. 97” in the 1st sentence of para. 4 are replaced by:- declaration in accordance with para 4, Art. 97.

b. Clause 5, para. 5 shall be worded as follows:- report and declaration in accordance with Art. 97.

Art. 9

The words “In case an Auditor or an Inspector does consider in his declaration under para. 4, Art. 97” in para. 1, Art. 101 of the Act are replaced by:- In case the one giving a declaration in accordance with para. 4, Art. 97 considers in his declaration.

Art. 10

Para. 3, Art. 104 of the Act shall be worded as follows:-

A declaration shall be prepared in accordance with para. 4, Art. 97.

Art. 11

The reference “para. 1 – 3, Art. 97” in Art. 105 of the Act shall be replaced by:- Art. 97.

Art. 12

The reference “Art. 107 b – Art. 107 g” in para. 2, Art. 107 b and para 4, Art. 107 h of the Act shall be replaced by:- Art. 107 b – 107 d and Art. 107 f – Art. 107 g.

Art. 13

Art. 107 e of the Act is deleted.

Art. 14

With the present Act the Directive of the European Parliament and of the Council 2007/63/EC of 13 November 2007 on Amendment of Directives of the Council 78/855/EEC and 82/891/EEC regarding a requirement of a report prepared by an independent specialist in connection with merger and division of Limited Companies is incorporated.

The Government is authorized to ratify on behalf of Iceland the Decision of the EEA Joint Committee No. 58/2008 of 25 April 2008 regarding an amendment to Annex XXII (Company Law) of the EEA Agreement of 2 May 1992.

Art. 15

The present Act enters into force forthwith.

Given at Reykjavik on 4 August 2009

Olafur Ragnar Grimsson

(L.S.)

Gylfi Magnusson

DRAFT TRANSLATION

Act no. 86/2009 (Regulation 2157/2001, European companies)

Art. 24

Entry into Force

The present Act enters into force forthwith.

Art. 25

Amendments to Other Acts

1. To para 2, Art. 133 f of Act No. 2/1995 respecting Public Limited Companies with subsequent amendments there is added a new sentence worded as follows:- As applicable upon registration attention shall though be paid to Art. 12 of Council Regulation (EC) No 2157/2001 of 8 October 2001 on the Statute for European Company which has legal force here in this Country in accordance with Art. 1 of Act No. 26/2004 respecting European Companies.

2. To para. 2, Art. 107 g of Act No. 138/1994 respecting Private Limited Companies with subsequent amendments there is added a new sentence worded as follows:- As applicable upon registration attention shall though be paid to Art. 12 of Regulation (EC) No 2157/2001 of 8 October 2001 on the Statute for a European Company (SE) which has legal force here in this Country in accordance with Art. 1 of Act No. 26/2004 respecting European Companies.

Given at Reykjavik on 4 August 2009

DRAFT TRANSLATION

Act no. 87/2009 (Recommendation of the Commission 2009/385/EB, remuneration)
SECTION IX
Amendment to Act respecting Public Limited Companies No. 2/1995 with
Subsequent Amendments
Art. 11

The 1st sentence, para. 1, Art. 79 a of the Act shall be worded as follows:- A Board of Directors of a Company which is in duty bound to elect an Auditor in accordance with para. 1 – 3, Art. 98 of Act No. 3/2006 respecting Annual Accounts shall approve the Company's remuneration policy concerning wages and other payments to the Chief Executive Officer and other supreme Officers of the Company as well as its Directors, but not wages and other payments to a Chief Executive Officer of a Limited Company the majority of shares of which is owned by the Treasury and a Chief Executive Officer of a Limited Company owned by it.

DRAFT TRANSLATION

Act no. 98/2009

Amendment to Act respecting Private Limited Companies No. 138/1994 with Subsequent Amendments
SECTION XIX
Art. 19

The words “Minister of Commerce” in the 2nd and 3rd sentence, para. 1, Art. 1, para. 1, Art. 107 b and para. 1, Art. 107 h of the Act are replaced by:- Minister of Economic Affairs.

Amendment to Act respecting Public Limited Companies No. 2/1995 with
Subsequent Amendments
SECTION XX
Art. 20

The words “Minister of Commerce” in the 2nd and 3rd sentence, para. 1, Art. 1, para. 1, Art. 133 a and para. 1, Art. 133 g of the Act are replaced by:- Minister of Economic Affairs.

DRAFT TRANSLATION

Act no. 126/2009 (Directive 2007/36/EC (shareholders´ rights, listed companies))

No. 126/2009 23 December 2009

A C T respecting Amendment of Acts on Public Limited Companies and Private Limited Companies (Rights of Shareholders)
THE PRESIDENT OF ICELAND

makes known:- The Althingi (Legislative Assembly) has passed the present Act and I have ratified it by means of my approval:-

SECTION I
Act respecting Public Limited Companies, No. 2/1995, with Subsequent
Amendments
Art. 1

The words “a dated Power of Attorney in writing” in para. 2, Art. 81 of the Act are replaced by:- a written or electronic Power of Attorney and this shall be dated.

Art. 2

The words “submits a requirement in writing” in Art. 86 of the Act are replaced by:- submits a requirement in writing or electronically.

Art. 3

Following upon Art. 88 of the Act there come five new articles, Art. 88 a – Art. 88 e, worded as follows:-

a. (Art. 88 a)

In Companies whose shares are admitted to trading on a regulated securities market a shareholders´ meeting shall be called at least three weeks before a meeting.

In case a Company whose shares are admitted to trading on a regulated securities market has decided that all shareholders can vote electronically at shareholders´ meetings, cf. Art. 80 a, the shareholders´ meeting can decide that a shareholders´ meeting be called, though not Annual General Meeting, at least two weeks before a meeting, as this be called in general on the European Economic Area or notifications thereof sent to registered shareholders based on the register of shares. A decision shall be made with the majority which is needed to amend the Articles of Association and this shall not be valid longer than until the next Annual General Meeting.

It is not required to comply with the provisions regarding minimum respite in para. 1 and 2 if one or more extended shareholders´ meetings are called in Companies mentioned therein on account of lack of quorum at the meeting which was called first. However, that depends upon the first meeting having been called in accordance with Laws and no new matter has been introduced to the agenda. At least ten days must pass between the latest call to a meeting and the date of a shareholders´ meeting.

b. (Art. 88 b)

In addition to possible further requirements by a state where a Company is registered, whose shares are admitted to trading on a regulated securities market, regarding notification of a call to a meeting or its publication a Company shall call a meeting in accordance with Art. 88 a in a manner that fast access be ensured thereto on an equal ground. It is compulsory to use reliable media which ensure active circulation of information to the general public in the European Economic Area. It may not be provided for that media operated in one state can only be used.

It is not compulsory to apply para. 1 regarding the use of medium concerning a Company mentioned therein which has names and addresses of shareholders registered in a register of shares, but it be in duty bound to send each registered shareholder a call to a meeting.

Whether complying with para. 1 or 2, there shall not be collected cost specifically for issuing of a call to a meeting.

c. (Art. 88 c)

In a call to a meeting according to Art. 88 a in a Company whose shares are admitted to trading on a regulated securities market a mention shall at least be made of:-

1. Place of meeting, cf. Art. 83, time of meeting, cf. para 1, Art. 84 and Art. 85 and a draft of an agenda, cf. Art. 84 and para. 3, Art. 88.

2. Explicit and accurate rules regarding participation and casting of votes at a shareholders' meeting. Information shall i.a. be provided on:-

Shareholders´ right to have matters introduced to an agenda of a shareholders´ meeting, cf. Art. 86 and 89, and present resolution proposals if this be possible after the issuing of a call to a meeting, cf. Art. 88, as well as asking questions, cf. para. 5, Art. 80 a, in addition to a respite in order to exercise this right. In a call to a meeting it is sufficient to only mention a respite if it refers to further information regarding the right on a Company's website.
Rules regarding the casting of votes with the assistance of a representative, where applicable forms on account of such a casting of votes and how a Company be prepared to approve electronic notifications regarding an appointment of a representative.
Rules regarding written or electronic casting of votes as applicable, cf. Art. 80 a and Art. 82.

3. Where and when an unabbreviated text according to clauses 3 and 4, para. 1, Art. 88 d can be obtained.
4. Website address where information according to Art. 88 d can be found.

d. (Art. 88 d)

A Company whose shares are admitted to trading on a regulated securities market shall continuously for 21 days prior to a shareholders´ meeting and also on the date of the meeting grant its shareholders on the Company's website at least information regarding the following:-

A call to a meeting in accordance with Art. 88 a.
The total number of shares and votes on the date of the calling of a meeting, itemized by classes if applicable.
Documents which will be presented to a shareholders´ meeting.
A resolution proposal or where applicable remarks from a competent lawful body in the Company for statutes regarding each matter in the draft of a shareholders´ meeting agenda. Shareholders´ resolution proposals shall also be added to the Company's website as soon as possible after receipt thereof.
Where applicable forms which the representative shall use upon the casting of votes or shall be used upon casting of votes in writing, unless these be sent to each shareholder.

Where it is technically impossible to put forms in accordance with clause 5, para. 1 on the Company's website in accordance with para. 1 it shall mention on its website how the forms can be obtained in paper. In those instances the Company shall send the forms by mail to each shareholder that so wishes, free of charge for the party concerned.

In case a call to a shareholders´ meeting in a Company according to para. 1 be issued later than three weeks prior to a meeting, cf. Art. 88 a, respite shall be shortened by the same amount of time.

Within fifteen days from a shareholders´ meeting in a Company according to para. 1 the result of elections at the meeting shall be published on the Company's website, unless it has decided to grant more detailed information regarding casting of votes.

e. (Art. 88 e)

The Financial Supervisory Authority can exempt management companies of securities funds and investment funds from provisions of Art. 88 a – Art. 88 d.

SECTION II
Act respecting Private Limited Companies, No. 138/1994, with Subsequent
Amendments
Art. 4

The words “a dated Power of Attorney in writing” in para. 2, Art. 56 of the Act are replaced by:- a written or electronic Power of Attorney and this shall be dated.

Art. 5

The words “submits a requirement in writing” in Art. 61 of the Act are replaced by:- submits a requirement in writing or electronically.

SECTION III
Entry into Force et al.
Art. 6

With the present Act Directive 2007/36/EC of the European Parliament and of the Council of 11 July 2007 on the exercise of certain rights of shareholders in listed Companies is incorporated.

Art. 7

The present Act enters into force forthwith.

Given at Reykjavik on 23 December 2009

Olafur Ragnar Grimsson

(L.S.)

Gylfi Magnusson

DRAFT TRANSLATION
No. 13/2010 8 March 2010

A C T respecting Amendment to Act on Public Limited Companies and Act on Private Limited Companies (Ownership, Sex Ratios and acting Chairmen of Boards of Directors)
SECTON 1
Amendment to Act on Public Limited Companies, No. 2/1995, with Subsequent Amendments
Art. 1

The following amendments will be made to Art. 30 of the Act:-

To para. 1 there is added a new sentence worded as follows:- The Board of Directors shall see to it that the register of shares includes correct information at each given time.
Following para. 6 there comes a new sentence worded as follows:-

In the register of shares information shall be entered regarding the voting right of shareholders and therein mention shall also be made of all group connection which the Public Limited Company is a party to.

Art. 2

Para. 1, Art. 63 of the Act shall be worded as follows:-

A Public Limited Company's Board of Directors shall consist of a minimum of three persons. On Boards of Directors of Official Public Limited Companies and Public Limited Companies with more than 50 employees generally on an annual basis each sex shall be represented on the Board when the Board consists of three persons and when members of the Board of Directors are more than three in such Companies it shall be ensured that sex ratio be not lower than 40%. The same applies to sex ratios among Reserve Directors in such Companies, but ratios on the Board and the Reserve Board shall though in total be as equal as possible. In case a satisfactory result will not be reached a necessary amendment can be approved with a new decision of the shareholders' meeting, but a provision regarding this matter shall be entered into the Articles of Association of a Company. In notifications regarding Boards to the Register of Companies information regarding sex ratios on a Board shall be detailed. In Public Limited Companies with more than twenty five employees generally on an annual basis information regarding sex ratios among employees and the management of the Company shall also be detailed.

Art. 3

To para. 1, Art. 65 of the Act there is added a new sentence worded as follows:- Attention shall be paid to sex ratios upon the hiring of Managers and information shall be given in notifications to the Register of Companies regarding sex ratios among Managers.

Art. 4

To para. 1, Art. 70 of the Act there is added a new sentence worded as follows:- The Chairman of the Board of Directors shall not undertake other duties for the Company than those which form a normal part of his duties as a Chairman of the Board of Directors, excluding special assignments which the Board of Directors charges him with.

Art. 5

Following para. 3, Art. 84 of the Act there comes a new sentence worded as follows:-

The Board of Directors shall prepare a short summary and submit to an Annual General Meeting regarding ownership of shares of individual shareholders and their right to cast votes as well as regarding changes which have taken place during the year. Equivalent information shall be at hand regarding the group connection which the Public Limited Company is a party to.

Art. 6

To the 2nd sentence, para. 1, Art. 91 of the Act there is added:- and ownership of shares of individual shareholders and their voting right.

Art. 7

The following amendments will be made to clause 2, Art. 153 of the Act:-

Following the words “(para. 2, Art. 70)” comes:- summary regarding group connection et. al (para. 4, Art. 84).
The words “para. 4, Art. 84” are replaced by:- para. 5, Art. 84.

SECTON 2
Amendment to Act on Private Limited Companies, No. 138/1994, with Subsequent Amendments
Art. 8

Para. 1, Art. 39 of the Act shall be worded as follows:-

The Board of Directors of a Private Limited Company shall consist of at least three persons, unless there be four or fewer shareholders, then it is sufficient that the Board consist of one or two persons. In case the Board of Directors of a Company consist of one person one Reserve Director at least shall be selected. When members of the Board are two or three in a Company with more than 50 employees generally on an annual basis each sex shall be represented on the Board and when members of the Board of Directors are more than three in such Companies the sex ratio shall not be lower than 40%. The same applies to sex ratios among Reserve Directors in such Companies, but the ratios on the Board and the Reserve Board shall though in total be as equal as possible. In case a satisfactory result will not be reached a necessary amendment can be approved with a new decision of the shareholders' meeting, but a provision regarding this matter shall be entered into the Articles of Association of a Company. In notifications regarding Boards to the Register of Companies information regarding sex ratios on a Board shall be detailed. In Private Limited Companies with more than twenty five employees generally on an annual basis information regarding sex ratios among employees and the management of the Company shall also be detailed.

Art. 9

To para. 1, Art. 41 of the Act there is added a new sentence worded as follows:- Attention shall be paid to sex ratios upon the hiring of Managers and information shall be given in notifications to the Register of Companies regarding sex ratios among Managers.

Art. 10

The present Act enters into force forthwith. The provisions of the 2nd – 4th sentences, Art. 2 respecting other Public Limited Companies than Official Public Limited Companies and the 3rd – 5th sencences, Art. 8 enter into force on 1 September 2013.

DRAFT TRANSLATION

Act no. 68/2010 (Recommendation of the Commission 2009/385/EB, remuneration: See articles 7 and 21 of the act. Cf. Act no. 87/2009 above)

No. 68/2010 22 June 2010

A C T respecting Amendment of Act respecting Public Limited Companies, Act respecting Private Limited Companies and Act respecting Annual Accounts (Minority Protection et al.)

SECTON 1
Act respecting Public Limited Companies, No. 2/1995, with Subsequent
Amendments
Art. 1

The following amendments will be made to Art. 3 of the Act:-

The word “Minister” in the 2nd sentence, para. 2 will be followed by:- or he to whom he conveys his power.
The word “Minister” in the 2nd sentence, para. 3 will be followed by:- or he to whom he conveys his power.

Art. 2

Following upon Art. 26 of the Act there comes a new Article, Art. 26 a, reading as follows:-

A shareholder may, however, despite para. 3, require a Judgement to the effect that the Company redeem his share in the Company provided that strong arguments remain for him being enabled to free himself from the Company because:-

the Company's Board of Directors, Managing Director or others representing a Company, as well as shareholders, have violated the provisions of Art. 76 and Art. 95 concerning the acquisition of improper interests,
another shareholder of the Company has abused his influence in the Company,
there is a serious and long-term dispute between the shareholder and other shareholders concerning the operation of the Company.

In case redemption in accordance with para. 1 leads to a considerable loss for the Company or does in another manner lead to an unfair conclusion for it the request of the shareholder shall not be taken account of. The same applies if the Company finds someone who is prepared to purchase the shares against payment corresponding to the redemption amount. The provisions of para. 4, Art. 22 apply as applicable.

The present provision does not apply to financial undertakings, insurance companies and companies whose shares are admitted to trading on a regulated securities market or at the Multilateral Trading Facility (MTF).

Art. 3

The following amendments will be made to Art. 53:-

The word “Minister” in para. 2 will be followed by:- or he to whom he conveys his power.
The words “the Company's Board of Directors and Auditors” in para. 3 shall be replaced by: all principal members of a Company's Board of Directors and, where applicable, individual reserve members to replace them, as well as an auditor.

Art. 4

To para. 3, Art. 55 of the Act there are added two new sentences, reading as follows:- In a Company whose shares are admitted to trading on a regulated securities market or at the Multilateral Trading Facility (MTF), however, the last spot market rate at the end of the day be used as reference prior to an agreement being concluded. In other Public Limited Companies shareholders controlling a minimum of 5% of shares can require the Company's Board of Directors, within a month after the Board gives notice of an agreement, that an auditor will be charged with assessing to which extent the price be reasonable and substantially argued.

Art. 5

The word “Minister” in the 1st sentence, para. 2, Art. 66 of the Act will be followed by:- or he to whom he conveys his power.

Art. 6

The word “obviously” in para. 1, Art. 76 of the Act is deleted.

Art. 7

The following amendments will be made to Art. 79 a of the Act:-

To clause 3, para. 1 there is added:- (does not apply to Directors, cf. clause 5, para. 2).
New paragraph, para. 2, is added, reading as follows:-

Upon the preparation of remuneration policy the following fundamental features shall be taken into account:-

There shall be limitations on variable components of remuneration which shall be connected to previously decided upon and measurable performance criteria where long-term interests of the Company are kept in mind.
Payment on account of variable components of remuneration shall be postponed for a suitable period of time and repayment shall be assumed if payments have been rendered on the basis of obviously inaccurate data.
Payments at termination of employment shall not exceed a previously decided amount and shall not be based on more than two years salary. The payments at termination of employment shall not be rendered if termination of employment occur on account of unsatisfactory performance.
Shares shall not be delivered until at least three years after the party concerned acquires right thereto. Purchase right may not be used for shares until after a three year waiting period. A specific proportion of shares shall be kept until at termination of employment.
Directors shall not enjoy shares, option to buy or sell, stock option and other types of payments linked to shares in the Company or price trends of shares in the Company.

Art. 8

The following amendments will be made to Art. 81 of the Act:-

The words “the right to speak” in the 3rd sentence, para. 1 is deleted.
A new sentence is added to para.1, reading as follows:- A shareholder is authorized to let his advisor speak on his behalf.
The word “five” in the 2nd sentence, para 2, is replaced by:- one.

Art. 9

A “tenth” in the 2nd sentence, Art. 85 of the Act is replaced by:- twentieth.

Art. 10

The following amendments will be made to Art. 88 of the Act:-

The words “a week before a meeting” in the 1st sentence, para. 1 are replaced by:- a week before a meeting (two weeks before a General Meeting).
Following upon the 1st sentence, para. 1 there comes a new sentence, reading as follows:- Yet there may be held a shareholders´ meeting which is called with at least one weeks´ notice if shareholders, controlling at least 90% of capital, agree in advance thereto in writing.
The words “At the least a week in advance of a shareholders´ meeting” in para. 4 are replaced by:- At the least a week in advance of a shareholders´ meeting (two weeks in advance of a General Meeting unless calling respite be less).

Art. 11

The words “When a shareholder so requires and that may be done without” in the 1st sentence, para 1, Art. 91 of the Act are followed by:- considerable.

Art. 12

The word “obviously” in Art. 95 of the Act is deleted.

Art. 13

Following upon Art. 95 of the Act there comes a new article, Art. 95, reading as follows:-

An agreement between the Company and shareholders, the shareholders´ parent company, Director or Managing Director of the Company, amounting to in real terms at least a tenth of the shares at the time of signing of the agreement, will not bind the Company unless having obtained the approval of a shareholders meeting. This does not, however, apply to:-

Agreements which have been concluded in conformity with rules of Art. 5 – 6, Art. 6 a – Art. 6 c, Art. 7 – 8 and Art. 37 regarding the procurement of a specialist report upon the establishment of a company and raising of capital.
Agreements and decisions regarding salaries and remuneration of senior management in accordance with Art. 79 and Art. 79 a.
Agreements on transfer of financial instruments in accordance with their recorded value at an regulated securities market.
Agreements concluded in connection with standard operation of a company containing prices and other terms naturally included in such agreements.
Agreements below general minimum of share capital in public limited companies.
Agreements of financial undertakings, insurance companies and companies whose shares are admitted to trading on a regulated market or at the Multilateral Trading Facility (MTF).

In case an agreement comes under this article a Company's Board of Directors is in duty bound to procure a specialist report in conformity with Art. 6, cf. Art. 6 a – Art. 6 c and Arts. 7 – 8. The report shall include a declaration to the effect that there be co-ordination between the Company's payment and the compensation obtained by the Company, cf. clause 4, para. 1, Art. 6. The specialist report shall be attached to the call to a shareholders´ meeting and shall be sent to the Register of Limited Companies.

In case an agreement is not binding for the Company payments shall be returned to the effect that these have been rendered. The provisions of Art. 102 apply as applicable.

Provisions of para. 1 – 3 also apply to agreements which a company has concluded with a party who is closely connected with a shareholder or the parent company of a shareholder or someone represented as per an agreement or in another manner with authority from any of those mentioned in para. 1. Closely connected in the present article means:-

Married couple and those in a common law marriage, parties in a registered partnership or parties in a registered cohabitation.
Those with direct relation or first link aside, but relationship in this connection relates also to relations formed by adoption or fostering.
Those connected by marriage, common law marriage, registered partnership or registered cohabitation in the same manner as stated in clause 2.
A company which is controlled by the party concerned himself or any of those mentioned in clauses 1 – 3 as defined by Art. 2.

Art. 14

The following amendments will be made to Art. 97 of the Act:-

Three new sentences are added to para. 3, reading as follows:- The Minister is instead authorized to stipulate the condition that a party requesting an investigation shall place a collateral for the payment of costs. The Company will then ultimately bear the cost. In case the Company does not pay an invoice within three months as of the date thereof the applicant for the investigation does, however, forfeit his collateral, but does instead hold a claim on the Company.
The word “week” in para. 4 is replaced by:- two weeks.

Art. 15

Art. 136 of the Act is deleted.

SECTION II
Act respecting Private Limited Companies, No. 138/1994, with Subsequent Amendments
Art. 16

The following amendments will be made to Art. 3 of the Act:-

The word “Minister” in the 1st sentence, para. 2 is followed by:- or he to whom he conveys his power.
The word “Minister” in the 2nd sentence, para. 3 is followed by:- or he to whom he conveys his power.

Art. 17

Following upon Art. 18 of the Act there comes a new Article, Art. 18 a, reading as follows:-

A shareholder may require a Judgement to the effect that the Company redeem his share in the Company provided that strong arguments remain for him being enabled to free himself from the Company because:-

the Company's Board of Directors, Managing Director or others representing a Company, as well as shareholders, have violated the provisions of Art. 51 and Art. 70 concerning the acquisition of improper interests;
another shareholder of the Company has abused his influence in the Company;
there is a serious and long-term dispute between the shareholder and other shareholders concerning the operation of the Company.

Art. 18

The following amendments will be made to Art. 36:-

The word “Minister” in para. 2 will be followed by:- or he to whom he conveys his power.
The words “a Company's Board of Directors and Auditors” in para. 3 shall be replaced by:- all principal members of a Company's Board of Directors and, where applicable, individual reserve members to replace them, as well as an auditor.

Art. 19

The word “Minister” in the 3rd sentence, para. 2, Art. 42 of the Act will be followed by:- or he to whom he conveys his power.

Art. 20

The word “obviously” in para. 1, Art. 51 of the Act is deleted.

Art. 21

The following amendments will be made to Art. 54 a of the Act:-

To clause c, para. 1 there is added:- (does not apply to Directors, cf. clause 5, para. 2).
New paragraph, para. 2, is added, reading as follows:-

Upon the preparation of remuneration policy the following fundamental features shall be taken into account:-

There shall be limitations on variable components of remuneration which shall be connected to previously decided upon and measurable performance criteria where long-term interests of the Company are kept in mind.
Payment on account of variable components of remuneration shall be postponed for a suitable period of time and repayment shall be assumed if payments have been rendered on the basis of obviously inaccurate data.
Payments at termination of employment shall not exceed a previously decided amount and shall not be based on more than two years salary. The payments at the termination of employment shall not be rendered if termination of employment occur on account of unsatisfactory performance.
Shares shall not be delivered until at least three years after the party concerned acquires right thereto. Purchase right may not be used for shares until after a three year waiting period. A specific proportion of shares shall be kept until at termination of employment.
Directors shall not enjoy shares, option to buy or sell, stock option and other types of payments linked to shares in the Company or price trends of shares in the Company.

Art. 22

The following amendments will be made to Art. 56 of the Act:-

The words “the right to speak” in the 3rd sentence, para. 1 is deleted.
A new sentence is added to para.1, reading as follows:- A shareholder is authorized to let his advisor speak on his behalf.
The word “five” in the 2nd sentence, para 2, is replaced by:- one.

Art. 23

A “tenth” in the 2nd sentence, Art. 60 of the Act is replaced by:- twentieth.

Art. 24

The words “When a shareholder so requires and that may be done without” in the 1st sentence, para 1, Art. 66 of the Act are followed by:- considerable.

Art. 25

The word “obviously” in Art. 70 of the Act is deleted.

Art. 26

Following upon Art. 70 of the Act there comes a new article, Art. 70 a, reading as follows:-

Agreements which have been concluded in conformity with rules of Arts. 5 – 6, Art. 6 a – Art. 6 b and Art. 26 regarding the procurement of a report upon the establishment of a company and increase of share capital.
Agreements and decisions regarding salaries and remuneration of senior management in accordance with Art. 54 and Art. 54 a.
Agreements on transfer of financial instruments in accordance with their recorded value at a regulated securities market.
Agreements concluded in connection with standard operation of a company containing prices and other terms naturally included in such agreements.
Agreements below general minimum of share capital in private limited companies.

In case an agreement comes under this article a Company's Board of Directors are in duty bound to procure a report in conformity with Art. 5, cf. Art. 6 and Art. 6 a – Art. 6 b. The report shall include a declaration to the effect that there be co-ordination between the Company's payment and the compensation obtained by the Company, cf. clause 5, para. 2, Art. 5. The report shall be attached to the call to a shareholders´ meeting and shall be sent to the Register of Limited Companies.

In case an agreement is not binding for the Company payments shall be returned to the effect that these have been rendered. The provisions of Art. 77 apply as applicable.

Married couple and those in a common law marriage, parties in a registered partnership or parties in a registered cohabitation.
Those with direct relation or first link aside, but relationship in this connection relates also to relations formed by adoption or fostering.
Those connected by marriage, common law marriage, registered partnership or registered cohabitation in the same manner as stated in clause 2.

Art. 27

The following amendments will be made to Art. 72 of the Act:-

Three new sentences are added to para. 3, reading as follows:- The Minister is instead authorized to stipulate the condition that a party requesting an investigation shall place a collateral for the payment of costs. The Company will then ultimately bear the cost. In case the Company does not pay an invoice within three months as of the date thereof the applicant for the investigation does, however, forfeit his collateral, but does instead hold a claim on the Company.
The word “week” in para. 4 is replaced by:- two weeks.

Art. 28

Art. 110 of the Act is deleted.

SECTION III
Act respecting Annual Accounts, No. 3/2006, with Subsequent Amendments
Art 29

The words “one fifth” in the 1st sentence, para. 2, Art. 96 of the Act are replaced by:- one tenth.

SECTION VI
Entry into Force et al.
Art 30

By means of the present Act Commission Recommendation 2009/385/EC of 30 April 2009 complementing Recommendations 2004/913/EC and 2005/162/EC as regards the regime for the remuneration of directors of listed companies is incorporated.

Art. 31

The present Act enters into force forthwith. However, provision regarding prolongation of minimum respite for the calling of General Meetings in Public Limited Companies enters into force on 1 January 2011.

Provisions regarding deletion (Art. 136 of Act respecting Public Limited Companies and Art. 110 of Act respecting Private Limited Companies) apply to incidents and conduct which took place prior to the entry into force of the present Act notwithstanding the respite for taking legal action having passed when this Act entered into force.

Given at Reykjavik on 22 June 2010

Johanna Sigurdardottir Asta R. Ingibjoerg

Johannesdottir Benediktsdottir

(L.S.)

Gylfi Magnusson

A-division – Issuing date:- 23 June 2010

TRANSLATION OF RECENT AMENDMENTS OF ICELANDIC PUBLIC AND PRIVATE LIMITED COMPANIES' LEGISLATION (2008-2010) including Acts 13/2010 (sex ratios) and 68/2010 (minority protection, remuneration)

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Disclaimer: This section of the site details available translations on legislation relating to the Government Offices in Iceland. In case of any discrepancies between the translations and the original text in Icelandic, the original text as published in the Icelandic Legal Gazette prevails.

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