KNOWLEDGE BASE

KEY CORPORATE FEATURES

GENERAL INFORMATION

Iceland is situated in the North Atlantic Ocean and is the westernmost outpost of Europe. The island covers an area of about 103,000 sq. km. (40,000 square miles) - a similar area to Ireland.

Population

The population of Iceland is approximately 280,000, 170,000 of whom live in the capital Reykjavik and surrounding areas.

Political Structure

Parliamentary democracy. The present Government is a centre-right coalition of the independence Party (P) and the Progressive Party (PP), formed in 1994 and re-elected in 1999. The head of state is the President of Iceland, who has limited powers and is elected in a non-political national election.

Infrastructure and Economy

Iceland is a developed democracy that enjoys political and economic stability. High level of education, developed and competitive service sectors, first rate telecommunications and a developed bank industry are all factors contributing to a solid infrastructure. Iceland's GDP per capita is one of the highest within the OECD. Iceland is a part of the EEA and EFTA and has close ties with the Scandinavian countries.

Language

The official and spoken language is Icelandic. Good command of English is general and knowledge of other European languages common.

Currency

Icelandic Kronur (ISK).

Exchange Control

No exchange controls are imposed in Iceland although formal reporting requirements are required by the Central Bank these are mainly for statistical purposes. Only Icelanders must give their social security number when exchanging foreign currency.

Type of Law

Civil Law.

Principal Corporate Legislation

Acts on Private and Public Limited Companies. Act on International Trading Companies. ITC's are Ehf or Hf companies with special benefits and restrictions specified in a separate act, but are governed by the same Corporate Law.

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ICELAND COMPANY INFORMATION

Types of Company

Private and Public Limited Company

Procedure to Incorporate

A registration form is submitted to the Registry of Companies accompanied by the Minutes of the Assembly of Foundation, Certificate of Incorporation and the Articles of Association. The applicant must pay a registration fee and confirm that share capital has been paid.

ITC's must go through an application process prior to registration.

Restrictions on Trading

Yes, specified groups, which include for example, banking, insurance, financial services and ITC's.

Powers of Company

A Company incorporated in Iceland has the same powers as a natural person.

Language of Legislation and Corporate Documents

Icelandic.

Shelf Companies Available

No.

Time to Incorporate

One or two days for Hf and Ehf, two to three weeks for ITC.

Name Restrictions

A name that is similar to or identical to an existing company. A well-known name that is known to exist elsewhere.

Language of Name

The name of the company can be expressed in any language using the Latin alphabet. The Registrar may request an Icelandic translation to ensure that the proposed name does not contravene name restrictions.

Names Requiring Consent or a Licence

Bank, savings, loans, insurance, assurance, reinsurance, fund management, investment fund, trust, trustees, Chamber of Commerce, municipal or their foreign language equivalents or any name in English or a foreign language that may suggest association with the banking or Insurance industries.

Registered Office Required

Yes, must be maintained in Iceland.

Suffixes to Denote Limited Liability

Einkahlutafelag (Ehf), private limited company. Hlutafelag (Hf) public limited company, Alþjóðlegt viðskiptafélag or ITC (av.).

Disclosure of Beneficial Ownership to Authorities

Hf requires that shares be registered to a person or entity. Ehf does not have to issue shares but needs to keep its own register of shares.

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ICELAND COMPLIANCE

Authorised and Issued Share Capital

Private Company - The minimum share capital is ISK 500,000 and must be fully paid.

Public Company - The minimum share capital for a is ISK 4,000,000 and must be paid up. If the capital of a Public Company exceeds this amount, the minimum paid in is 4 million, or half of the total.

Classes of Shares Permitted

Ordinary shares, preference shares, deferred shares, redeemable shares and shares with or without voting rights.

Taxation

Taxation is paid by companies based on annual accounts, which are submitted to the tax authorities at the end of the company's fiscal year. A company is free to choose its own year-end but must apply for an exception if it is not the calendar year. The current tax rate is 20% for limited liability companies and limited partnerships. The tax rate for other corporations (e.g. partherships is 36%.

Double Taxation Agreements

Iceland has 15 ratified double taxation agreements and several pending ratification.

Licence Fee

None except for ITC companies, ISK 100,000.

Financial Statements Required

All Icelandic companies are required to file accounts. Public Companies require an audit by a State Authorised Public Accountant, but Private Companies require an inspector.

Directors

Companies with less than 3 shareholders require a minimum of one director; otherwise the minimum number of directors is three. A Public Company requires at least three Directors and a Managing Director. Majority of Directors must have permanent residence in Iceland or an OECD country.

Company Secretary

Not required.

Shareholders

The minimum number of shareholders is one for a private company and two for a public company.

Company Secretary

Not required.

Shareholders

The minimum number of shareholders is one for a private company and two for a public company.

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HOW TO PROCEED

A bespoke 'offshore' solution can be complex and requires careful planning and execution. We therefore encourage our clients to contact us directly, without obligation, for a Free Initial Consultation.

Our experienced consultants will gladly assist with advice on how to approach your particular challenge.

To make contact with a consultant at one of our offices who speaks your language, click here for a full list of our office contact details.


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