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Ministry of Industries and Innovation

Financial Services and Markets - Act No 50/1997 on the Establishment of Limited Liability Companies to Operate Landsbanki Íslands and Búnaðarbanki Íslands.-

Translated from the Icelandic

22 May 1997 No. 50
THE PRESIDENT OF ICELAND
Announces: Althingi has approved this Act and I confirmed it with my approval:
CHAPTER I
The establishment of limited liability companies
to operate the state-owned commercial banks
Article 1

Limited liability companies shall be established to operate Landsbanki Íslands (The National Bank of Iceland) and Búnaðarbanki Íslands (The Agricultural Bank of Iceland) respectively. Their purpose shall be to pursue any activities legally authorised to commercial banks.
The Treasury shall transfer all the assets, rights, debts and obligations of each state-owned commercial bank to its respective limited liability company.

Article 2

Upon the entry into force of this Act, the Minister of Commerce shall appoint two three-man committees, each of which is intended to carry out the preparations and take the actions necessary for the establishment of a limited liability company for each of the state-owned commercial banks. The committees shall prepare legal procedures concerning the establishment of the limited liability company banks and their prospective activities on behalf of the Minister of Commerce and in consultation with the state-owned commercial bank in question. These legal procedures shall, with regard to the tasks performed by the boards of directors and management boards in accordance with Articles 39 and 41 of Act No. 113/1996 on Commercial Banks and Savings Banks, be confirmed by the appropriate party which, until the boards of directors and bank managers of the limited liability company banks begin their duties, means the boards of directors and management boards of the state-owned commercial banks. The Minister of Commerce shall provide the committees with formal terms of reference .
The committees provided for in paragraph 1 shall have full access to the records of the state-owned commercial bank in question, notwithstanding provisions on confidentiality in accordance with Article 43 of the Commercial Banks and Savings Banks Act, No. 113/1996. Management and personnel of the state-owned commercial banks shall provide the members of the committee concerned with such assistance as is necessary. Committee members are subject to Article 43 of Act No. 113/1996.

Article 3

As of 1 January 1998, Landsbanki Íslands Ltd. shall take over the operations and activities of Landsbanki Íslands, and Búnaðarbanki Íslands Ltd. shall take over the operations and activities of Búnaðarbanki Íslands, by which time the Minister of Commerce shall have issued operating authorisations for the limited liability company banks in accordance with Chapter II of Act No. 113/1996.
Landsbanki Íslands and Búnaðarbanki Íslands shall be abolished upon the commencement of operations of the limited liability company banks in accordance with paragraph 1.
The board of directors of each limited liability company bank shall be elected at a founding meeting, which shall be held prior to the take-over of the state-owned commercial banks by the limited liability company banks. The authority of the boards of directors of Landsbanki Íslands and Búnaðarbanki Íslands, most recently elected by the Althingi in accordance with Article 27 of Act No. 43/1993 on Commercial Banks and Savings Banks, cf. at present Act No. 113/1996, shall be terminated upon the commencement of operations of the limited liability company banks in accordance with Article 1.

CHAPTER II
Share capital, shares and handling of shares
Article 4

The Minister of Commerce shall manage the state's shareholdings in Landsbanki Íslands Ltd. and Búnaðarbanki Íslands Ltd.

Article 5

Upon the establishment of Landsbanki Íslands Ltd. and Búnaðarbanki Íslands Ltd, their entire share capital shall be owned by the Treasury.
The Minister shall determine the total amount of share capital of each limited liability company bank upon its establishment. For purposes of reference, the total amount of share capital of each limited liability company bank shall not exceed the equity of Landsbanki Íslands and Búnaðarbanki Íslands respectively according to their audited annual accounts for the year 1996.
The Minister shall appoint a three-man committee to advise him in assessing the total amount of initial share capital in each of the limited liability company banks in accordance with paragraph 2. The conclusions of the committee shall be available no later than 1 October 1997. The provisions of paragraph 2 of Article 2 shall apply to the work of the committee. The Minister of Commerce shall provide the committee with formal terms of reference.

Article 6

The Minister of Commerce shall decide the division of share capital into shares.
No sale of share capital owned by the Treasury in Landsbanki Íslands Ltd. and Búnaðarbanki Íslands Ltd. is permitted without the approval of the Althingi.
Notwithstanding paragraph 2, a Minister may, in order to strengthen the equity position of the limited liability company banks, authorise the issuing of new shares. The total holdings of parties other than the Treasury may not, however, exceed 35% of the total share capital of each bank respectively.

Article 7

Provisions of Article 6 of Act No. 113/1996, on Commercial Banks and Savings Banks, and paragraph 2 of Article 14 of Act No. 2/1995 Respecting Public Limited Companies, shall not apply to the down payment of share capital in Landsbanki Íslands Ltd. and Búnaðarbanki Íslands Ltd.
The provisions of paragraph 2 of Article 3, of paragraph 1 of Article 20, and of subparagraph 2 of paragraph 1 of Article 107 of Act No. 2/1995 Respecting Public Limited Companies, shall not apply to the number of founders and number of shareholders of Landsbanki Íslands Ltd. and Búnaðarbanki Íslands Ltd.

CHAPTER III
Rights of employees
Article 8

All employees of Landsbanki Íslands and Búnaðarbanki Íslands, who are paid in accordance with the collective agreement of the Union of Icelandic Bank Employees or collective agreements with other trade unions, shall be offered a comparable post in Landsbanki Íslands Ltd. or Búnaðarbanki Íslands Ltd. upon the take-over by the latter of the State commercial banks.
Persons previously employed by Landsbanki Íslands or Búnaðarbanki Íslands who accept positions with Landsbanki Íslands Ltd. or Búnaðarbanki Íslands Ltd. shall enjoy the same rights as they had under their collective agreements and/or employment contract. Their right to wages from Landsbanki Íslands or Búnaðarbanki Íslands shall lapse when they enter their new position.

Article 9

The hiring and terms of employment of bank managers, their deputies, heads of the accounting departments and, where applicable, assistant bank managers, of Landsbanki Íslands Ltd. and Búnaðarbanki Íslands Ltd. shall be as provided for in Act No. 113/1996 on Commercial Banks and Savings Banks, cf. the provisions of Act No. 2/1995 Respecting Public Limited Companies.

Article 10

With regard to any right to severance pay, which may have accrued to employees of state-owned commercial banks, the provisions of Act No. 70/1996, on the rights and obligations of state employees, shall apply.

Article 11

The Treasury shall guarantee the obligations of Landsbanki Íslands towards the Retirement Pension Fund of Employees of Landsbanki Íslands and the Central Bank, and the obligations of Búnaðarbanki Íslands towards the Retirement Pension Fund of Employees of Búnaðarbanki Íslands, which are incurred with respect to employees of the state-owned commercial banks prior to the take-over of their operations by Landsbanki Íslands Ltd. and Búnaðarbanki Íslands Ltd. and which exist in accordance with the regulations of the retirement pension funds as applicable, at the time specified in Article 3, unless other arrangements are agreed upon. The same shall apply to other pension obligations of the state-owned commercial banks than retirement pension funds.
Should the guarantee in paragraph 1 be invoked, the respective proportional payment from the Treasury and the limited liability company bank shall be the same as the proportional length of employment of the employee in question by each.

Article 12

Collective agreements of Landsbanki Íslands Ltd. and Búnaðarbanki Íslands Ltd. with their employees shall comply with Act No. 34/1997 on collective agreements for employees of state-owned banks.

CHAPTER IV
State guarantees for deposits and loans
Article 13

The Treasury shall guarantee all domestic and foreign obligations of Landsbanki Íslands and Búnaðarbanki Íslands which were undertaken prior to the take-over of their respective operations by Landsbanki Íslands Ltd. and Búnaðarbanki Íslands Ltd. The Treasury guarantee shall remain as originally granted and shall apply until the respective obligation has been honoured in full. Guarantees by the Treasury for deposits shall, however, be subject to paragraph 2 and guarantees by the Treasury for pension obligations of state-owned commercial banks shall be subject to Article 11 of this Act.
Treasury guarantees for deposits shall cease upon the take-over of the state-owned commercial banks by the limited liability company banks. The Treasury shall, however, continue to be responsible for term deposits which have been deposited before the take-over of the state-owned commercial banks by the limited liability company banks. Treasury guarantees shall cease once the deposit in question falls due upon the expiry of the fixed term.
The Treasury is not responsible for the obligations of Landsbanki Íslands Ltd. or Búnaðarbanki Íslands Ltd. beyond the provisions of this Act and the Act Respecting Public Limited Companies.

CHAPTER V
Miscellaneous provisions
Article 14

Deposit accounts with Landsbanki Íslands and Búnaðarbanki Íslands shall be transferred to the respective limited liability company banks upon their take-over. Landsbanki Íslands and Búnaðarbanki Íslands shall publish two notices to this effect in the Official Gazette. The notices shall be published with an interval of around two weeks, the former at least 30 days prior to the take-over by Landsbanki Íslands Ltd. and Búnaðarbanki Íslands Ltd. of the state-owned commercial banks.

Article 15

The location for payment of debt instruments owned by specific branches of Landsbanki Íslands, or by Landsbanki Íslands in general, shall remain the respective branches of Landsbanki Íslands Ltd., or Landsbanki Íslands Ltd. in general, as applicable in each case upon the commencement of the operations of Landsbanki Íslands Ltd. Landsbanki Íslands Ltd. shall assume all rights and all obligations of Landsbanki Íslands, including rights or obligations arising from debt instruments owned by Landsbanki Íslands, and involvement in litigation pursued by Landsbanki Íslands or directed against Landsbanki Íslands. Landsbanki Íslands shall publish two notices to this effect in the Official Gazette.
The location of payment of debt instruments owned by specific branches of Búnaðarbanki Íslands, or by Búnaðarbanki Íslands in general, shall remain the respective branches of Búnaðarbanki Íslands Ltd., or Búnaðarbanki Íslands Ltd. in general, as applicable in each case upon the commencement of the operations of Búnaðarbanki Íslands Ltd. Búnaðarbanki Íslands Ltd. shall assume all rights and all obligations of Búnaðarbanki Íslands, including rights or obligations arising from debt instruments owned by Búnaðarbanki Íslands, and involvement in litigation pursued by Búnaðarbanki Íslands or directed against Búnaðarbanki Íslands. Búnaðarbanki Íslands shall publish two notices to this effect in the Official Gazette.
The depository of documents for collection by individual branches of Landsbanki Íslands or Búnaðarbanki Íslands shall be the corresponding branch of the respective limited liability company bank after its take-over of the operations of the state-owned commercial bank. Landsbanki Íslands and Búnaðarbanki Íslands shall publish two notices to this effect in the Official Gazette.
Notices in accordance with the present Article shall be in accordance with Article 14 of this Act.

Article 16

No notice to submit demands for payment shall be issued to creditors of Landsbanki Íslands or Búnaðarbanki Íslands.

Article 17

The statement of establishment shall prescribe any points to be included in the statutes of association in accordance with the Act Respecting Public Limited Companies other than those mentioned in the present Act.

Article 18

Landsbanki Íslands Ltd. shall assume all rights and obligations relating to the taxation of Landsbanki Íslands, and Búnaðarbanki Íslands Ltd. shall assume all rights and obligations relating to the taxation of Búnaðarbanki Íslands. In other respects, the tax obligations of Landsbanki Íslands Ltd. and Búnaðarbanki Íslands Ltd. shall comply with legislation on the tax obligations of credit institutions.

Article 19

In any instances where Landsbanki Íslands or Búnaðarbanki Íslands have been legally entrusted with specific tasks, Landsbanki Íslands Ltd. and Búnaðarbanki Íslands Ltd. shall assume these rights and obligations as appropriate.
Landsbanki Íslands Ltd. assumes all rights and obligations of Landsbanki Íslands, and Búnaðarbanki Íslands Ltd. assumes all rights and obligations of Búnaðarbanki Íslands resulting from take-overs of savings banks by state-owned commercial banks.

Article 20

Apart from the provisions of this Act, the limited liability company banks provided for by this Act shall comply with provisions on the activities of limited liability company banks according to Act No. 113/1996 on Commercial Banks and Savings Banks, and the provisions of Act No. 2/1995 Respecting Public Limited Companies, as appropriate.

Article 21

All expenses deriving from the establishment of the limited liability companies and their take-over of the operations of Landsbanki Íslands and Búnaðarbanki Íslands shall be paid by Landsbanki Íslands Ltd. and Búnaðarbanki Íslands Ltd. respectively.

Article 22

This Act shall enter into force at once.

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Disclaimer: This section of the site details available translations on legislation relating to the Government Offices in Iceland. In case of any discrepancies between the translations and the original text in Icelandic, the original text as published in the Icelandic Legal Gazette prevails.

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