Einkahlutafélaga

Einkahlutafélaga is the genitive plural form of einkahlutafélag, the Icelandic term for a private limited liability company (abbr. ehf.). This is a common legal form for small and medium-sized businesses in Iceland, where the owners’ liability is limited to the capital they have contributed and shares are not offered to the public. An einkahlutafélag can be owned by a single person or several investors, making it suitable for family businesses or startups seeking liability protection without public fundraising.

Formation and governance

An einkahlutafélag is created by Articles of Association and must be registered with the Icelandic Register of Companies. The company’s name typically ends with ehf. or einkahlutafélag and must be distinct from existing entities. Management is usually provided by a board of directors, and a general manager or CEO may be appointed. The company is required to hold an annual general meeting and to prepare financial statements in accordance with Icelandic accounting standards. Depending on size and other criteria, audits may be required.

Liability, transfers, and reporting

Shareholders in an einkahlutafélag have limited liability, limited to their contributed capital. Shares can be transferred, but the transfer may be subject to agreement among shareholders or regulatory requirements, reflecting its privately held nature. The company must maintain proper accounting records and file annual accounts with the authorities. Taxation follows Icelandic corporate tax rules, with profits taxed at the corporate level and distributions potentially subject to personal tax considerations.

Comparison with hlutafélag

In contrast to hlutafélag (hf), a public limited company, einkahlutafélaga are not generally offered on public markets and typically involve tighter ownership and transfer controls, making them more suitable for private enterprises seeking limited liability without public fundraising.