REGULATION No. 140/2008 on funds and institutions operating under approved charters
on funds and institutions operating under approved charters.
This Regulation shall apply to funds and institutions, hereinafter referred to as ‘private institutions’, which operate under approved charters on the basis of the Act on Funds and Institutions Operating According to Approved Charters, No. 19/1988.
Origin of funds and institutions.
For the purposes of this Regulation, private institutions are funds and institutions that have been established to administer assets that have been irrevocably made over to the relevant institution by donation, bequest or another private legal deed, for one or more aims.
Obligation to provide information to the district commissioner
and the Office of the Auditor-General.
The managers of the private institution, its employees and its inspectors and auditors shall be obliged to give the Sauðárkrókur District Commissioner and the Office of the Auditor-General all information and assistance necessary for them to carry out their duties under the Act No. 19/1988 and this Regulation.
Contents of charters.
At least the following shall be stated in the charter of a private institution that is submitted to the district commissioner for approval under the Act No. 19/1988:
1. The name of the private institution.
2. The local government area in which the private institution is to be domiciled.
3. The aims of the private institution.
4. How the assets of the private institution are to be disposed of in the pursuit of its aims.
5. The identity of the founders (names and ID Numbers).
6. The foundation capital (amount and provenance).
7. The number of directors, their periods of appointment and how they are chosen.
8. Other administrative entities, e.g. the general manager and representative council, where these exist, how they are chosen and what their functions are.
9. The auditors and/or inspectors, how they are chosen and what their functions are.
10. What the accounting year is to be (whether it is to be the calendar year or another period) and the first period for which accounts are to be drawn up.
11. Who is to be responsible for the management of funds (the fund manager), if this is not the same party as the board.
12. A provision stating that an application is to be made for the approval of the charter by the district commissioner.
Requests for approval of charters.
The founders or board of the private institution may request to have its charter approved in accordance with the provisions of the charter.
Requests for the approval of charters shall be directed to the Sauðárkrókur District Commissioner.
Materials to be submitted together with requests for the approval of a charter.
The following materials shall be submitted with a request for the approval of a charter:
1. The original of the private institution’s charter, signed by the founder or board of the private institution. A copy shall also be sent to the district commissioner by electronic means.
2. The names and ID Numbers of the directors and their confirmation that they will take their seats on the board of the private institution.
3. The confirmation by an auditor, lawyer or a bank/savings bank that the foundation capital has been paid into the private institution.
4. The memorandum of association of the private institution or, e.g., the deed of donation or will, if the institution is also based on a legal deed other than the charter.
5. A statement as provided for in the second paragraph of Article 7, if appropriate.
The district commissioner may request such other materials as he considers necessary in order to approve the charter.
When the charter has been approved, the party who requested the approval shall register the private institution in the Company Register and inform the district commissioner of its ID Number.
Foundation capital and other assets.
Payment of foundation capital.
The foundation capital must be paid to the private institution before an application is made to the district commissioner for the approval of its charter.
If the foundation capital is paid in the form of assets other than cash, an auditor’s statement shall be obtained concerning the value of the assets and how they were assessed.
Handling and management of assets.
The board of the private institution shall be responsible for handling and managing its assets.
Further provisions may be made in the charter regarding the private institution’s assets, how they are to be disposed of in the service of the institution’s aims and the use of the foundation capital.
The board shall take decisions on the distribution of the assets of the private institution; these may only be disposed of in the service of the institution’s aims in accordance with the provisions of its charter, taking its asset position into account.
Other parties may be entrusted with the management of the private institution’s assets under a provision in its charter (cf. Article 12).
The board and other administrative entities.
Appointment of the board of directors.
The private institution’s board of directors shall be appointed in accordance with the provisions of its charter.
Directors shall be legally and financially competent. Legal persons may not be appointed to the board.
Role of the board.
The board shall exercise supreme authority in the private institution’s affairs.
It is the responsibility of the board to ensure that the administration of the private institution and the management of its assets are at all times in good order and in conformity with its charter.
If a fund manager is appointed, the board shall monitor to ensure that he discharges his duties in accordance with the law, this Regulation and the institution’s charter.
The board shall represent the private institution; it has the authority to bind it in agreements with other parties and to grant authorisations to other parties in accordance with the provisions of the charter.
Other administrative entities.
Unless other provisions are made in the charter, the board may engage a general manager to attend to the day-to-day running of the private institution.
A provision may be made in the charter covering the appointment of a representative council or of other committees within the institution. Provision shall then be made in the charter for their election and functions, e.g. deciding the emoluments of the directors, monitoring the institution’s activities, commenting on the annual accounts and the annual report, the authority to decide on a special examination of the institution’s finances, choosing auditors or commenting on specific matters regarding the institution.
Administrative entities other than the board of directors may not be entrusted with such wide-ranging tasks or broad powers that their appointment will undermine the independence of the board and its position as the supreme administrative entity in the institution as provided for in the first paragraph of Article 10.
Appointment of a fund manager.
Provision may be made in the private institution’s charter by which a party other than the board is to be responsible for the management of its funds, or by which the board is authorised to entrust management of the funds to a fund manager.
The fund manager may be a legally competent individual or a legal person. The fund manager shall be financially competent and shall be domiciled in Iceland.
The fund manager shall be responsible for the handling of the institution’s funds and for ensuring that they are handled properly at any given time.
Amendments, mergers and the dissolution of the private institution.
Provisions in the charter covering amendments, mergers or dissolution.
Provisions may be made in the private institution’s charter laying down further details on amendments to the charter, merger with another institution or dissolution, including who may request amendments and propose amendments to the provisions of the charter and related aims to which the institution’s assets may be channelled in the event of its dissolution.
However, provisions made in the charter may not deviate from the conditions laid down in Article 6 of the Act No. 19/1988 regarding the amendment, merger or dissolution of private institutions.
Requests for amendments to the charter, a merger or the dissolution
of the private institution.
The board and founders of the private institution, and the parties named in its charter, or others who have an interest in its existence and activities, may apply to a district commissioner requesting an amendment of the charter, the merger of the private institution with another one or its dissolution. The Sauðárkrókur District Commissioner and the Office of the Auditor-General may also take the initiative on these moves.
A request for the amendment of a charter shall be accompanied by the amendment proposed and the reasoning on which it is based.
A request for the merger of a private institution with another one shall be accompanied by a proposed amendment of its charter or a draft of a new charter, with the reasons for the merger.
A request for the dissolution of a private institution shall be supported by reasons, together with a proposal as to how its assets are to be disposed of.
Merger of two or more institutions.
If the conditions of this Article and those of Article 6 of the Act No. 19/1988 are met, two or more private institutions may be merged, either by one or more making their assets, rights and obligations over to another private institution, or by their merger under a new private institution.
The district commissioner may demand that the boards of private institutions that are to be merged, or those who have requested the merger, submit a written report on the planned merger and its significance for the private institutions. It shall include an account of the implications of the merger for creditors of the private institution and for others who have an interest in its existence.
The district commissioner may demand a joint balance sheet and profit and loss account showing all the assets and liabilities of each private institution separately and the draft initial balance sheet of the combined private institution. The provisions of the Annual Accounts Act shall apply, as appropriate, to the presentation of these accounts and the explanatory notes they contain.
When assessing whether the merger is to be approved, the district commissioner shall take into account whether, in the merger, sufficient consideration is given to the interests of each of the individual private institutions to be merged and to those of its creditors and other persons who have an interest in its existence.
When the district commissioner has approved the merger, an announcement to this effect shall be published in the B division of the Law and Ministerial Gazette, together with the charter of the private institution.
Dissolution of a private institution.
If a private institution is dissolved, its financial assets shall be disposed of in accordance with its aims or related aims.
If it is decided to dissolve a private institution, the district commissioner may appoint a receiving committee consisting of at least two persons, of whom at least one shall be a lawyer or an auditor.
The receiving committee shall take over the role of the board and the general manager, if there is one. Expenses associated with the work of the receiving committee shall be paid from the private institution’s funds.
The board or the receiving committee, if one has been appointed, shall draw up a survey of the private institution’s assets, rights and obligations, and deliver it to the Office of the Auditor-General.
The receiving committee shall publish an announcement twice in the Official Gazette stating that it has been decided to dissolve the private institution, together with a call to its creditors to declare their claims against the institution to the receiving committee within two months of the publication of the first of these announcements. If no receiving committee has been appointed, the district commissioner may request that the board of the private institution publish comparable announcements in the Legal Gazette.
The board or receiving committee, if one has been appointed, shall settle creditors’ claims against the private institution, and shall for this purpose liquidate its assets to the extent necessary. When this has been completed, the board or receiving committee shall submit a financial settlement statement to the Office of the Auditor-General containing, amongst other things, an account of how the assets have been disposed of (cf. the first paragraph of this Article) and acknowledgements from those who have received the private institution’s assets (cf. the fourth paragraph of Article 14). The Office of the Auditor-General shall approve the financial settlement and inform the Sauðárkrókur District Commissioner that the settlement has taken place. The district commissioner shall confirm that the institution has been dissolved and publish an announcement to this effect in Section B of the Law and Ministerial Gazette.
This Regulation, which is issued under Article 7 of the Act on Funds and Institutions Operating According to Approved Charters, No. 19 of 5 May 1988, enters into force immediately.
Ministry of Justice and Ecclesiastical Affairs, 29 January 2008.