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Iceland

Typical legal form for start-ups

Einkahlutafélag (EHF)

Typical legal form for start-ups

Einkahlutafélag (EHF)

Brief information

Start-ups usually choose the legal form of the israeli ltd. It is the only legal form that enables limited shareholder liability as a private company.

Brief information

Start-ups in Iceland mostly choose the EHF, the equivalent of the German GmbH, due to the low minimum share capital, the limited liability and the lower tax compared to partnerships.

A PE/VC Fund can in principle accept an observer seat, whereby the contractual structure is decisive in the individual case. The observer may not exercise any influence on the management decisions.
A direct participation in the Board of Directors is not permitted.

Brief information

Start-ups in Iceland mostly choose the EHF, the equivalent of the German GmbH, due to the low minimum share capital, the limited liability and the lower tax compared to partnerships.

A PE/VC Fund can in principle accept an observer seat, whereby the contractual structure is decisive in the individual case. The observer may not exercise any influence on the management decisions.
A direct participation in the Board of Directors is not permitted.

The bodies of the ltd. are the Shareholders' Meeting, the Board of Directors and the Officers/General Manager. The Shareholders' Meeting elects the Board of Directors. The Board of Directors is responsible and approves the material company actions. The Officers/General Manager carry out the day-to-day management but the Board of Directors can reserve the right of approval and may carry out an order in their place if required.
There is no separate supervisory body. However, investors can be granted an observer seat status by contract. The observer may attend meetings of the Board of Directors but has no voting rights.

The bodies of the EHF are the Shareholders' Meeting, the Board of Directors and the General Manager(s). The Shareholders' Meeting elects the Board of Directors. The latter may manage the company itself or appoint (a) General Manager(s) and transfer the management task. There is no separate supervisory body. However, investors can be granted observer seat status by contract. The observer may attend meetings of the board but is not entitled to vote.

The bodies of the EHF are the Shareholders' Meeting, the Board of Directors and the General Manager(s). The Shareholders' Meeting elects the Board of Directors. The latter may manage the company itself or appoint (a) General Manager(s) and transfer the management task. There is no separate supervisory body. However, investors can be granted observer seat status by contract. The observer may attend meetings of the board but is not entitled to vote.

A PE/VC Fund may in principle accept an observer seat, whereby the contractual structure is decisive in the individual case. The observer may not exercise any influence on the management decisions.
PE/VC Funds may not participate in the Board of Directors.

A PE/VC Fund can in principle accept an observer seat, whereby the contractual structure is decisive in the individual case. The observer may not exercise any influence on the management decisions.
A direct participation in the Board of Directors is not permitted.

A PE/VC Fund can in principle accept an observer seat, whereby the contractual structure is decisive in the individual case. The observer may not exercise any influence on the management decisions.
A direct participation in the Board of Directors is not permitted.

Other legal form

hlutafélag

Brief information

The hlutafélag is comparable to the German AG. A conversion usually only takes place in preparation for an IPO.

If a Supervisory Board has been established, a PE/VC Fund may participate in it. Otherwise, the investment may be monitored by an observer seat under certain conditions.

In contrast to the EHF, a Supervisory Board can be established when provided for in the articles of association. In practice, however, the establishment of a Supervisory Board is unusual.

A participation in the Supervisory Board of a hlutafélag is possible. In the monistic system, a PE/VC Fund can only assume an observer seat status. In this respect, see EHF.

The information in our toolbox provides managers of private equity or venture capital funds with an initial overview of certain framework conditions in the respective country. It does not provide advice on the law of any country, neither does it substitute such advice. Before taking over a board seat in a portfolio company, it is at all times necessary to seek expert advice. Our team is happy to assist you with all questions at any time.

In collaboration with: Logos