Board of Directors

The Board of Directors (“BoD”) is usually part of an organizational structure which includes 2 governing bodies in the Company, the other governing body being the Executive Board (“EB”). This is a Nordic version of the one-tier- and two-tier-setup since members of the BoD may be members of the EB and vice versa.

Division of Duties: The BoD is responsible for main control over the Company and is superior to other bodies of the Company. It handles the affairs of the Company and makes sure it is functioning right. [...] The BoD appoints the EB members, one or more, establishes Company strategy, makes material decisions and supervises the EB. The EB is responsible for “day-to-day” business. A more specific division between the BoD and the EB can be decided in the Company´s Articles of Association (“AoA”) or in the working rules of the BoD.

Composition: In Public Limited Liability Companies (“Public LLCs”), the BoD consists of minimum 3 BoD members but there is no limitation on how many BoD members there can be at most. EB members can also be members of the BoD although they cannot form a majority. Usually the BoD elects its own Chairman. In Public LLCs, the Chairman cannot be an EB member. If a LLC has more than 50 employees generally on an annual basis, each sex shall be represented on the BoD when the BoD consists of 3 BoD member. When BoD members are more than 3, the sex ratio shall be not lower than 40%. Although this does not apply to smaller companies they still need to clarify the sex ratio on the BoD. If the new BoD member is not Icelandic, he needs to apply for a social security number (in Icelandic: “Kennitala” or “kt.”) and supply a copy of his passport. A social security number can be applied for at http://skra.is/eydublod, form number A-263.

Appointment/Dismissal Competence: BoD members are appointed by the General Meeting (“GM”). An exception from this allows other parties to nominate one or more BoD members, i.e. the government or other parties mentioned in the Company´s AoA. Despite this, the majority of BoD members shall be appointed by the GM. The Company decides in its AoA how to cast a vote and how the election shall proceed. If nothing has been decided on the matter, 3 different methods are eligible: Majority election, proportional election or multiplication election. Usually BoD members are appointed as individuals or from an election list, although when using multiplication election, individual election is only eligible. BoD members are appointed for one 4-year term at a time although reappointment is possible. BoD members are dismissed by the party which nominated them. The GM can also dismiss the BoD at any time and appoint a new BoD. If a BoD member has been appointed by a simple majority, a simple majority is also sufficient to dismiss him. If a BoD member has been appointed by a proportional election or by a multiplication election, a larger majority is needed for dismissal. If company regulations require stricter methods of voting, it shall prevail. A BoD member may give notice of the termination of his office at any time. A notification thereof shall be sent to the BoD (and to the person who nominated him if other than the GM).

Alternates: Alternates may be appointed but it is not an obligation unless it is required in the Company´s AoA. All the same rules apply to alternates as to regular BoD members.

For a description of how to change the respective board members, please see the individual steps in the "Step-by-Step"-schedules below. As all information on how to change board members in Iceland on the CBM Site by nature is generic (i.e. does not include specific requirements for listed companies, special requirements in statutory documents or as otherwise stipulated in any type of special law), we strongly recommend seeking legal advice with LEX Law Offices before actually changing any board members in Iceland.

Appointment
Step Action Documentation Signatures? Timing Originals? Notarization/
Certification?
Waiver of
Step?
Miscellaneous
1

Convening of GM.

Convening notice (with agenda).

No.

Maximum 4 weeks (unless the AoA requires a longer notice period) and minimum 1 week prior to the GM (2 weeks if it is an annual GM but 1 week if Shareholders who own at least 90% of the Shares agree in writing).

No.

No.

No, in Public LLCs there is no legal provision that allows Shareholders to waive this step. However, in practice, if all Shareholders concur, this is sometimes done.

In larger Public LLCs notice for candidature for the BoD shall be given in writing at the latest 5 calendar days prior to the GM.

2

GM.

Minutes of the GM (this is only for the Company’s records and does not need to be filed).

Yes, to be signed by the Chairman of the GM and the Minutes-Keeper. In practice, in smaller companies, usually all of the attending Shareholders sign the Minutes.

At the date stipulated in the convening notice (unless waived, cf. Step 1).

No.

No.

No, however, electronic meetings are allowed (either partly electronic or wholly).

Appointment of the BoD member will have come to effect from the date of appointment for those aware of the appointment but at the date of registration for an unenlightened third party.

3

Filing with the Icelandic Register of Limited Companies.

Online form.

Yes, to be signed by The majority of the BoD members or the holders of Powers of Procuration. New BoD members are also required to sign the document. If all BoD members are new, the majority of the departing BoD also needs to sign.

Within 1 month from the GM (the time limit is very strict).

No.

No.

No.

If the new BoD member is not Icelandic, he needs to apply for a social security number (in Icelandic: “Kennitala” or “kt.”) and supply a copy of his passport.

1
Step 1
0-4 weeks*
2
Step 2
0 weeks
3
Step 3
0-1 month

0-8 weeks**

*Less than 1 week (or 2 weeks) only possible if Step 1 is waived.

**Application for a social security number (if required) may take addtional time.

Dismissal
Step Action Documentation Signatures? Timing Originals? Notarization/
Certification?
Waiver of
Step?
Miscellaneous
1

Convening of GM.

Convening notice (with agenda).

No.

Maximum 4 weeks (unless the AoA requires a longer notice period) and minimum 1 week prior to the GM (2 weeks if it is an annual GM but 1 week if Shareholders who own at least 90% of the Shares agree in writing).

No.

No.

No, in Public LLCs there is no legal provision that allows Shareholders to waive this step. However, in practice, if all Shareholders concur, this is sometimes done.

2

GM.

Minutes of the GM (this is only for the Company’s records and does not need to be filed).

Yes, to be signed by The Chairman of the GM and the Minutes-Keeper. In practice, in smaller companies, usually all of the attending Shareholders sign the Minutes.

At the date stipulated in the convening notice (unless waived, cf. Step 1).

No.

No.

No, however, electronic meetings are allowed (either partly electronic or wholly).

Dismissal/resignation of a BoD member will come to effect immediately for those aware of the dismissal/resignation but at the date of registration for an unenlightened third party.

3

Filing with the Icelandic Register of Limited Companies.

Online form.

Yes, to be signed by the majority of the BoD members or the holders of Powers of Procuration. New BoD members are also required to sign. If all BoD members are new, the majority of the departing BoD also needs to sign.

If a BoD member resigns (ctr. dismissal) only his signature is required.

Within 1 month from the GM (the time limit is very strict).

No.

No.

No.

1
Step 1
0-4 weeks*
2
Step 2
0 weeks
3
Step 3
0-1 month

0-8 weeks

*Less than 1 week (or 2 weeks) only possible if Step 1 is waived.

Fee quote

LEX Law Offices has provided all input about changing board members in Iceland. LEX is one of Iceland´s [...] leading law firms, providing clients with comprehensive services over a wide range of financial, corporate and commercial issues, as well as most other aspects of Icelandic law. LEX aims to be the Icelandic legal firm of choice for our clients and address their needs in the ever-changing local and international markets. LEX enjoys 1 tier ranking by major ranking agencies such as Chamber and Partners, Legal 500 and IFLR 1000.

For more information about LEX Law Offices and changing board members in Iceland, please use the below contacts:

TEL: +354 590 2600
EMAIL: orn@lex.is
WEB: www.lex.is