Act on Municipality Credit Iceland
According to Article 4 of Act No. 150/2006 this Act shall expire when Municpiality Credit Iceland
[ohf.] has been established.
Municipality Credit Iceland is an independent organisation, jointly owned by all the
municipalities of Iceland, which are not, however, liable for its undertakings. Municipality
Credit Iceland shall be operated as a credit institution pursuant to the Act on Financial
Undertakings and comply with the conditions of that act, except as otherwise provided herein.
The principal objective of Municipality Credit Iceland is to secure for the municipalities,
its institutions and enterprises loan capital on favourable terms through loans or guarantees.
The condition for the granting of loans or guarantees by Municipality Credit Iceland to
municipally-owned enterprises and institutions is that such enterprises and institutions must
be wholly owned by municipalities or jointly owned by municipalities and the State Treasury,
which will act as guarantors for the loans.
The supreme authority in the affairs of Municipality Credit Iceland rests with owners’
meetings, which are attended by representatives elected by the municipalities to attend the
national congress of the Association of Local Authorities in Iceland pursuant to the statutes of
The annual general meeting of Municipality Credit Iceland shall be held in conjunction
with the national congress of the Association of Local Authorities in Iceland, irrespective of
deadlines provided for in the Companies Act. The annual general meeting shall address, at a
minimum, the audited accounts of Municipality Credit Iceland, the report of the board of
directors concerning the operation of Municipality Credit Iceland in the preceding year and
the election of a board of directors and auditor.
The owners’ meeting will submit statutes for Municipality Credit Iceland providing in
detail for its governance and operation. The statutes, or amendments to the statutes, shall take
effect on their publication in section B of Stjórnartíðindi [Law and Ministerial Gazette].
The annual general meeting shall elect the board of directors of Municipality Credit
Iceland pursuant to the provisions of its statutes. The board shall establish lending rules
providing in detail for the conditions governing loans from Municipality Credit Iceland. The
board of directors shall also formulate a policy concerning the financial services of
Municipality Credit Iceland to the municipalities and other activities conducted in the normal
pursuit of its principal objective.
The fiscal year of Municipality Credit Iceland is the calendar year. The annual financial
statement shall be fully prepared, audited and signed by the board of directors before the end
of March each year. Following approval at the annual general meeting of Municipality Credit
Iceland, the financial statement shall be published in section B of Stjórnartíðindi [Law and
The equity and any earnings of Municipality Credit Iceland shall not be disposed of
through the payment of dividends or reduction of equity.
Municipality Credit Iceland cannot be dissolved or merged with any other institutions or
companies or reincorporated in any other form except by statutory law.
Bonds relating to loans taken and granted by Municipality Credit Iceland shall be exempt
from stamp tax.
This Act shall enter into force on 1 January 2005. ...
The Minister of Social Affairs will confirm the first statutes of Municipality Credit Iceland
at the proposal of its board of directors.
The mandate of the current board of directors shall remain unchanged until a new board of
directors has been elected at the first annual general meeting of Municipality Credit Iceland.
In the event that a municipality is in default of payment on the correct due date of the
principal and interest of loans taken from Municipality Credit Iceland before the entry into
force of this Act, the Minister of Social Affairs may pay the amount in default out of the
allocation due to the municipality in question from the Local Authorities’ Equalization Fund
to the extent that the allocation will cover the payment. The same applies to any payments
which Municipality Credit Iceland may have made in respect of its guarantees undertaken
pursuant to Article 10 of Act No. 35/1966.
Municipality Credit Iceland shall, within a month of the entry into force of this Act, apply
for an operating licence as a credit institution pursuant to Sub-paragraph 3 of Paragraph 1 of
Article 4 of the Act on Financial Undertakings No. 161/2002, as amended, and Sub-paragraph
2 of Paragraph 1 of Article 3 of the same act. Municipality Credit Iceland is permitted to
operate pursuant to the provisions of this Act and its own statutes pending the decision on the
issue of an operating licence.
This Act shall be reviewed no later than by the end of the year 2008.
[This translation is published for information only.
The original Icelandic text is published in the Law Gazette.
In case of a possible discrepancy, the original Icelandic text applies.]