Types of companies in Iceland

Foreign investment in Iceland is valuable and encouraged by the government. There are few restrictions, and foreign investors are treated equally, without any discrimination in favor of Icelandic entrepreneurs. Having an uprising economy, mostly due to a capable and instructed workforce, the state of Iceland is prepared to receive investments in any business sectors, provided that investors do not interfere in state affairs or environmental issues. The most common form of investment is done through establishment of new companies, and entrepreneurs often set up limited liability companies, public or private.

Public Limited Liability Company
An Icelandic public limited liability company may be set up by two or more persons, or legal entities providing a minimum capital of 4 million ISK (the currency of Iceland). This business entity must have at least two shareholders who provide a part of the capital, receiving shares with a nominal value and at least three members in the Board of Directors. The member's liability for the company's debts and obligations is limited to the amount invested in the company. The Icelandic public limited liability company has the possibility of offering its shares publicly and enlisting on the stock market.

Private Limited Liability Company
A private limited liability company differs by a public one in the sense that it cannot sell its shares to the public and full consent of other members is needed in case one shareholder whishes to back out from the business. Apart from that the private limited liability companies are the most common form of business used in Iceland. They can be formed by one or more persons and the minimum requested capital is of 500.000 ISK. If the company has more then one shareholder then board and shareholder meetings are required. The liability of the members of an Icelandic private limited liability company relies in the amount invested by each one in the company.

General Partnerships
Partnerships are also allowed by the Icelandic Law. They function as any other common partnership, being established by at least two persons. The founders become general partners, meaning they are in charge with managing the company and ensuring its legal functioning. In exchange the general partners bear unlimited liability for the company's debts and obligations, risking their own personal assets. Unlike usual partnerships, the Icelandic general partnerships have to be registered with the Trade Register and are considered legal entities in their own right.

Limited Partnerships
Icelandic limited partnerships are also created through association of two or more members, or legal entities. However, unlike general partnerships, there is at leas one general partner and at least one limited partner. The general partner plays an important role in the management of the company, being liable for the partnerships' debts and obligations to the extent of his or her personal assets. The limited partner, however, does not have the right to interfere in management decisions, but receives a profit proportionally with his or her contribution, risking just that. A limited partnership also has to be registered and is considered a legal entity in its own right.