Hlutafé

Hlutafé, or share capital, is the primary form of equity in Icelandic companies. It represents the funds contributed by shareholders and is evidenced by the company's issued shares with a stated nominal value. As a component of a company's capital, hlutafé finances operations and affects ownership, control, and creditor protection.

In Icelandic company law, the total nominal value of issued shares equals the company's subscribed share capital. The law distinguishes between authorized capital and issued capital; shares may be issued to new or existing investors to raise funds. Shares can be paid in full or in part, and capital can be increased through a resolution at a general meeting and subsequent registration with the official registry.

For limited liability companies (hlutafélag) and other incorporated entities, liability of shareholders is generally limited to the amount they have contributed to the share capital. Changes to hlutafé affect ownership rights and voting power and must be reflected in the company's articles of association, financial statements, and public records.

Statutory requirements around hlutafé, including minimum capital and procedures for increases or decreases, vary by entity type and are established by Icelandic law. In practice, companies may issue new shares, repurchase shares, or reduce capital subject to regulatory approval and shareholder consent.

On the balance sheet, hlutafé is recorded within equity and serves as a cushion for creditors; it can be complemented by reserves and retained earnings. The management of share capital, including issuance and changes, is monitored by corporate registries and annual reporting requirements.