hlutafélög

Hlutafélög, the Icelandic term for joint-stock or public limited companies, are a common form of business organization in Icelandic corporate law. A hlutafélag is a legal entity whose capital is divided into shares, and whose shareholders have limited liability for the company’s debts to the amount they have contributed.

Ownership is represented by shares that can be bought and sold. Hlutafélög may be privately held or publicly listed, and they have the ability to raise capital by issuing new shares and distributing profits to shareholders, subject to profits and board decisions. The structure also enables transfer of shares, which can facilitate ownership changes and investment.

Governance typically includes a general meeting of shareholders, a board of directors responsible for oversight, and executive management led by a CEO. The board approves major decisions and oversees management. Hlutafélög are required to prepare financial statements and, in many cases, undergo auditing and adhere to disclosure and governance requirements set by Icelandic law.

Formation and regulation: a hlutafélag is formed under Icelandic company law (the Companies Act) and must be registered with the national business register. It requires articles of association, issued share capital, at least one shareholder, and a constituted board of directors.

Difference from einkahlutafélög: while both provide limited liability, hlutafélög generally have greater potential to raise capital and to have shares offered to the public or traded, whereas einkahlutafélög are typically privately held with more restrictions on share transfer.