Act amending the Annual Accounts Act, no. 3/2006 , with subsequent amendments (simplification and implementation of the Annual Accounts Directive 2013/34 / EU). Article 1 The following changes will be made to Article 1. of the law: Paragraph 1 be worded as follows: This Act applies to companies with limited liability of members as specified in points 1 and 2. and companies with unlimited liability of members as specified in point 3: Public limited companies, private limited companies, limited liability companies, cooperatives and cooperatives, savings banks and registered branches of foreign companies and non-profit institutions engaged in business operations, cf. Act no. 33/1999 . Companies that have their securities listed on a regulated securities market in a state within the European Economic Area, in a member state of the European Free Trade Association or in the Faroe Islands. Partnerships and other companies with unlimited liability of members, as well as cooperatives, if their members are only companies listed in point 1, as well as cooperatives where guarantors are companies listed in points 1 and 2. Furthermore, this Act applies to partnerships, and other companies with unlimited liability of members, as well as cooperatives, provided that they are registered in the register of companies and are medium-sized or large companies, cf. the provisions of points c and d of point 11. Article 2 Instead of "4. in the second and third paragraphs. kemur: 3. tölul. Article 2 Article 2 of the Act reads as follows: In this Act, the meaning of terms is as follows: International Accounting Standards: Accounting Standards (IAS / IFRS) as defined in Article 2. of Regulation (EC) no. 1606/2002 approved by the EU Commission according to Article 3 of Regulation (EC) no. 1606/2002. Register of Annual Accounts: A register that is operated for the purpose of receiving, storing and providing access to documents subject to return, as well as monitoring that these documents are in accordance with the provisions of laws, regulations and established accounting rules. Man-years: The equivalent of one person's full-time contribution for one year. The work of those who did not work all year, the work of those who were part-time, regardless of duration, and the work of seasonal employees are calculated as a fraction of man-years. Employees include: employees, owners and / or managing directors who work for the company. Apprentices or apprentices who are studying or undergoing vocational training under a contract and do not work for remuneration are not considered employees. The same applies to employees who are on maternity leave and parental leave. Subsidiary: A company controlled by a parent company, including all subsidiaries of the final parent company. Assets: Assets that a company controls on the basis of transactions or in connection with events that have taken place and from which the company is expected to benefit financially in the future. Holding company: A company whose sole purpose is to acquire shares in other companies and manage them and return a profit from them, without taking a direct or indirect part in running the companies, subject to the rights of their shareholders. Holdings: Participation of members in public limited companies, private limited companies and equity of other companies. Property-related companies: Two or more companies within a group. Public interest entity: a legal entity domiciled in Iceland and having its securities listed on a regulated securities market in a state within the European Economic Area, in a member state of the European Free Trade Association or in the Faroe Islands, a pension fund that has a valid operating license, credit institution as defined in the Act on Financial Undertakings, a company that has an operating license to operate insurance activities in this country according to the Act on Insurance Activities. Fixed assets: Assets that are intended for use in the company's operations for at least 12 months from the reporting date. Association: Association according to Article 1 who shall prepare annual accounts and consolidated accounts in accordance with this Act: micro-company: a company which at the settlement date does not exceed the limit of at least two of the following three criteria: total assets: ISK 20,000,000, net turnover: ISK 40,000,000, average number of man-years in the financial year: 3, small company: a company that at the settlement date does not exceed the limit of at least two of the following three criteria: total assets: ISK 600,000,000, net turnover: ISK 1,200,000,000, average number of man-years in the financial year: 50, medium-sized company: a company that is not a small company and that at the settlement date does not exceed the limit of at least two of the following three criteria: total assets: ISK 3,000,000,000, net turnover: ISK 6,000,000,000, average number of man-years in the financial year: 250, large company: a company that at the settlement date exceeds the limits of at least two of the following three criteria: total assets: ISK 3,000,000,000, net turnover: ISK 6,000,000,000, average number of man-years in the financial year: 250, shall operate a company according to Article 1 which is an entity related to the public interest as a large company regardless of net turnover, balance sheet total or number of man-years in the financial year. The calculation of the parent company's thresholds shall be based on the amounts in the consolidated accounts for the companies that draw up such an account, but the thresholds of the parent company and all subsidiaries shall be added if the parent company does not draw up a consolidated account. If net turnover is not indicative of a company's operations, other income shall be taken into account, including income from financial instruments and capital gains. The classification of companies shall not change unless a company either exceeds or falls below the limits of the person in question and the last financial year. Member: A shareholder in a public limited company or owner of shares in another company covered by this Act. Financial assets: Any asset that consists of cash, a right under a contract to receive cash or other financial assets from another party, a right under a contract to exchange documents with another party on terms that may be favorable, or a certificate for a share owned by another party . Financial assets stated at fair value through profit or loss at initial listing: Financial instruments that are not considered current assets but the company has chosen to enter fair value and fair value changes in the income statement. Investment property: Real estate, land, building or part of a building, intended for the purpose of generating income, such as for rent or for other profit, but not for use in the company's operations in the production, storage of goods, services in the company's operations, for administrative purposes or sales for traditional business purposes. Investment Company: a company whose sole purpose is to invest in various securities, real estate and other assets, in order to spread investment risk and provide members with financial benefits from asset management, a company linked to investment companies with fixed assets, if its sole purpose is to acquire shares that have been paid in full and have been issued by investment companies. Financial instrument : A financial instrument as defined in the Act on Securities Transactions. Production costs : The purchase price of raw materials, the cost price of non-durable consumer goods and other costs that can be attributed to the product in question. A reasonable proportion of fixed costs or variable indirect costs attributable to the product is included in the price to the extent that such costs are related to the production period. However, distribution costs do not fall under this definition. Fair value: The price obtained on the sale of an asset or would be paid on the transfer of a debt in normal transactions between market participants on the valuation date. A clear picture: A clear picture consists of a reliable presentation of the effects of transactions, other events and conditions in accordance with the definitions and rules on the registration of assets, liabilities, income and expenses that appear in this Act, regulations and established accounting rules. Participation: The right to equity of other companies, whether or not a certificate has been issued, which is intended to strengthen the activities of the company to which it has a right by forming a permanent relationship with them. Ownership of part of another company's equity is considered a share if it is at least 20%. Associated company: A company, but not a subsidiary, in which another company has a share and that company has a significant influence on the operating and financial policy of the other company. A company is considered to have a significant influence in another company if it has 20% or more of the voting rights of members in that company. Net sales: Revenue from sales and services in regular operations less discounts and taxes directly related to the sale. Purchase price: Price to be paid and expenses incurred, less any possible reductions in the cost of the purchase. Long-term receivables and risk assets: Receivables or other investments that are expected to remain in the person's property for at least one year. Long-term receivables and risk capital in companies' annual accounts are shares in other companies, other securities, as well as other specifically defined long-term receivables. Long-term liabilities : All liabilities other than those covered by the provisions of point 37. Valuation basis: The methods used to assess the value of individual categories of assets and liabilities in the financial statements, such as cost valuation or fair value valuation. Importance: Information that is omitted or that it is inaccurate may affect the economic decisions that users of the financial statements may make on the basis of it. The importance of individual items shall be assessed in relation to other comparable items. Parent company: A company that controls another company. When calculating the number of votes in subsidiaries and affiliates, the following shall be: add up the number of votes of the parent company and subsidiaries in the company in question, deduct the total number of votes in the company in question which is in the hands of itself or its subsidiaries and deduct from the voting rights of the parent company the votes it has as collateral if the company only exercises the voting rights in accordance with the instructions of the guarantor, or if the occupancy is part of a lending activity and the voting rights are only exercised for the benefit of the guarantor. Intangible asset: An asset that is separable and non-monetary and is not in objective form. Accounting policies : Principles, valuation basis, rules and procedures applied in preparing financial statements. Operability: A company is considered to be operational unless its management intends to dissolve the company or cease its operations or have no realistic choice but to cease the company's operations. When assessing viability, management shall take into account all available information on the future prospects of the company's operations. Group: Parent company and all its subsidiaries: small group: a group which, on a group basis, does not exceed the limit of at least two of the following three criteria at the date of settlement of the parent company: balance sheet total: ISK 600,000,000, net turnover: ISK 1,200,000,000, average number of man-years in the financial year: 50, medium-sized group: a group, but not a small group, which, on a group basis, does not exceed the limit of at least two of the following three criteria at the date of settlement of the parent company: balance sheet total: ISK 3,000,000,000, net turnover: ISK 6,000,000,000, average number of man-years in the financial year: 250, large group: a group that, on a group basis, exceeds the limits of at least two of the following three criteria at the parent company's settlement date: balance sheet total: ISK 3,000,000,000, net turnover: ISK 6,000,000,000, average number of man-years in the financial year: 250. The classification of a group shall not change unless the group either exceeds or ceases to exceed the limit values ??of the person in question and the last financial year. Consolidated financial statements: Financial statements where the accounts of the parent company and its subsidiaries are combined into one. Set accounting rules : Rules issued by the Accounting Standards Board, cf. Article 119, and international accounting standards, cf. 1. tölul. Short-term receivables: Receivables that are expected to be paid within twelve months. Current liabilities : Liabilities that meet one of the following conditions: debt is held for the purpose of profiting from short-term price changes, the debt is settled within twelve months from the balance sheet date or there is no right to defer payment of the debt for more than twelve months from the balance sheet date. Regulated securities market: A market in securities as defined in the Act on Stock Exchanges. Liabilities: The current liability of a company that has arisen as a result of transactions or events that have taken place and it is assumed that the settlement of the debt will result in an outflow of assets that includes financial benefits. Income: Increase in assets or decrease in liabilities during the current accounting period due to the delivery of goods or services or due to other activities of the company, other than those arising from the contributions of the owners of the company in their role as owners of the company. Related party: Has the same meaning as in the relevant International Accounting Standards established on the basis of Regulation (EC) No 1907/2006. 1606/2002 approved by the European Commission. Expenses: Reduction of assets or increase of liabilities during the current accounting period due to the receipt of goods or services or due to other activities or events in the company's operations, other than those arising from owners' audits in their role as owners of the company. Property, plant and equipment: Property, plant and equipment used for the production of goods or services, for rent or for administrative purposes and intended for use for more than one year. Current financial assets: The financial assets that have been purchased for the purpose of profiting from short-term price changes or brokerage fees. Current assets: The assets that are not considered fixed assets according to the definition in point 10. Securities: Securities according to the definition of a financial instrument in Act no. 108/2007 , on securities transactions. Change in value : Changes in the value of individual assets or liabilities that are confirmed at the balance sheet date, whether the change is permanent or not. Dominance: Has the same meaning as according to the relevant International Accounting Standards established on the basis of Regulation (EC) No 1907/2006. 1606/2002 approved by the European Commission. Article 3 The following changes will be made to Article 3. of the law: With the first paragraph. a new sentence shall be added, reading as follows: If a specific item is not prescribed in this Act or regulations, the relevant provisions of the established accounting rules shall be complied with. Paragraph 2 be worded as follows: The Board of Directors and the Managing Director are responsible for the preparation, submission and publication of annual accounts for each financial year. In companies that do not have formal control, this obligation rests jointly with all members. The annual accounts shall include the name of the company, company form, company ID number and address. The financial statements shall include, as a minimum, the income statement, balance sheet and notes. The financial statements of small, medium-sized and large companies shall also contain the report of the Board of Directors and the financial statements of medium-sized and large companies shall also contain a statement of cash flows. After the word "they" in the 1st sentence. Paragraph 3 comes: also. Three new paragraphs are added, as follows: Instead of annual accounts according to Paragraph 1 micro-companies are authorized to draw up an operating statement and a financial statement, based on the company's tax return. Such an overview of operations and financial statements are considered to give a clear picture of the company's results and balance sheet in the sense of point 20. Article 2 The Register of Annual Accounts shall enable micro-enterprises, by electronic submission to the register, to use the information submitted to the Director of Internal Revenue to prepare the statement of operations and the balance sheet. The auditor is not required to review such statements of account. The Minister shall issue a regulation on the presentation of the operating statement and balance sheet and other matters pursuant to Art. 1st sentence in the application of the 3rd sentence. Exemption according to Paragraph 7 does not apply to: companies falling within the definition of public interest entities within the definition of this Act, companies other than those referred to in point a and are subject to the provisions of Article 2. Act no. 87/1998 , on official supervision of financial activities, companies that fall under the definition of investment companies in this Act, companies that fall under the definition of holding companies in this Act, companies that make use of exemptions IV. section from the application of cost accounting. A company that uses an authorization according to Art. Paragraph 7 to prepare an operating statement and financial statement based on the company's tax return shall, if applicable, disclose the following: liabilities, guarantees and contingent liabilities not shown in the balance sheet, advance payments and loans to the company's management and owners, including information on interest terms, terms, repayments by management and owners and cancellation of the debts of management and owners in whole or in part, and the nominal value of shares owned by a company per se and their proportion of total share capital; if a company has acquired a share in itself during the year, it shall disclose the reasons for the purchase, the total number of shares purchased during the year, their proportion of total share capital, the nominal value of the shares and their purchase price. their selling price. Article 4 Paragraph 2 Article 5 of the Act reads as follows: If the provisions of this Act are not sufficient to give a clear picture of the results, balance sheet and change in cash, the company shall provide additional information so that the account gives a clear picture. If the provisions of this Act lead to the invoice giving a misleading picture, they shall be waived in exceptional cases in order for the invoice to give a clear picture within the meaning of point 20. Article 2 and the company shall then disclose the following items in the notes: that the company's management believes that the financial statements give a true and fair view of the financial position, results and changes in cash, if applicable; that the preparation and presentation of the annual accounts are in accordance with this Act, with the exception of deviations from certain provisions of this Act in order for the annual accounts to give a clear picture, what the discrepancy is, the reason why the application of the law would have meant that the account had not given a clear picture and what accounting method was used instead, and what financial impact it would have had on individual items in the annual accounts if the provisions of law had been applied instead of deviating from them. Article 5 The following changes will be made to Article 6. of the law: Instead of the word "is" in the 1st sentence. Paragraph 4 kemur: skal. 3rd sentence Paragraph 4 is deleted. For the word "year" in the 6th paragraph. comes: fiscal year. Article 6 2nd and 3rd sentences Paragraph 2 Article 7 of the Act reads as follows: If a company also publishes its annual accounts in a currency other than the functional currency, the notes shall state what the functional currency of the company is and what methods are used in preparing the annual accounts. If a company has been authorized to keep accounts and prepare annual accounts in foreign currency, all amounts in the account sent to the Register of Annual Accounts for safekeeping and publication shall be in the same currency and the text of the annual accounts and consolidated accounts if the company prepares such accounts shall always be in Icelandic. in addition in English if necessary. Article 7 The following changes will be made to Article 9. of the law: The words "two months" in the 1st sentence. Paragraph 1 fall off. After the word "krónur" in the third paragraph. comes: or a new functional currency, cf. Article 8 Article 8 Article 11 of the Act shall read as follows: The annual accounts shall be prepared based on the following basic assumptions: It must be assumed that the company will continue its operations. If a business is partially closed down, this shall be taken into account regarding the assessment and presentation of the annual accounts. Accounting policies shall be applied in a similar manner from year to year. If the provisions of this Act, regulations or established accounting rules do not provide for the application of certain accounting methods, managers shall use their judgment in choosing an accounting method that is appropriate to the needs of the users of the financial statements and reliable so that it gives a clear picture of the company's performance, financial position and changes. on cash. When assessing individual items, due care must be taken and the following shall be included: only indicate the profit earned on the reporting date, take into account all liabilities that may arise during the financial year or in connection with previous financial years, even if this only becomes apparent after the end of the financial year but before the annual financial statements are prepared; show in the financial statements all valuation changes that involve a reduction in the value of individual assets, cf. Article 30, regardless of the effect it has on equity and performance. Amounts entered in the balance sheet or profit and loss account shall be calculated on an accrual basis. Individual elements of assets and liabilities shall be valued separately. The balance sheet at the beginning of each financial year shall correspond to the balance sheet at the end of the previous financial year. It is not permitted to offset assets against liabilities or income against expenses unless this is specifically permitted in other articles of this Act or such netting is in accordance with established accounting rules. Individual items in the income statement and balance sheet shall be entered and presented based on the content or arrangement of the item in question. The conditions of this Act on entry, assessment, presentation and explanations need not be met if the item in question is not considered alone or together with others to be important, cf. Number 28 Article 2 The layout of the balance sheet, income statement and cash flows, if applicable, as well as accounting policies, may not change from year to year except in exceptional cases where the change gives a clearer picture or the change is necessary to adopt new rules in accordance with changes in law or new or changed accounting policies. If a company has changed the layout of the balance sheet, income statement or cash flow, if applicable, as well as accounting methods in accordance with the provisions of the second paragraph. it shall state the reason for the change in the notes. Article 9 Article 12 of the Act reads as follows: If the provisions of point 2 are deviated from. Paragraph 1 Article 11 the new accounting method shall be applied retroactively, unless a change in law or the adoption of new or amended accounting rules specifically provides that this is not necessary. If it is particularly difficult to determine the effect of the change in comparative amounts for one or more periods, the new method shall be applied to the carrying amount of assets and liabilities at the beginning of the first period when the method is feasible and the appropriate items of equity shall be corrected. at least provide information on the following items in the notes: the reason why the accounting method was changed, what the change entails and the reason why the change leads to a clearer picture, if the reasons for the change were to achieve a clearer picture, if the change affects the amounts in the financial statements during the current accounting period and in previous periods, the company shall, unless it is subject to special difficulties, disclose the effect on each item in the financial statements that the change affects and if it is particularly difficult to determine the effect on amounts in the financial statements, the reason for this shall be stated. Article 10 Article 13 of the Act reads as follows: If a company changes its accounting method on the basis of the provisions of law, regulations or accounting standards on such an amendment, the items in the annual accounts that it affects shall be changed in accordance with the new method. The difference is transferred to equity. Comparative amounts change in accordance with the new method. These changes should be explained in the notes. If the accounting assessment is changed from the previous financial year, the effect shall be shown in the income statement during the period in which the assessment is made, and in subsequent periods, if applicable. Comparative amounts for previous years remain unchanged. If it is unclear whether there is a change in accounting valuation or an accounting method, the change should be classified as a change in valuation. If the annual accounts of the previous financial year have been incorrect to the extent that they have not given a clear picture, the effect of the adjustment shall be recognized in equity at the beginning of the year and the comparative amounts shall be adjusted accordingly. These changes should be explained in the notes. Article 11 Article 15 of the Act is repealed. Article 12 Article 16 of the Act reads as follows: Companies may, in compliance with the provisions of the established accounting rules, consider intangible assets to be owned, and they shall then be mentioned in the notes. It is not permitted to capitalize costs that have been incurred due to intangible assets and have been expensed in previous financial years. Companies that capitalize development costs according to Paragraph 1 shall transfer the same amount of retained earnings to a special item among equity from which no dividends may be distributed. This item shall be settled at the level of the annual depreciation of capitalized development costs. The item shall also be dissolved if the property is sold, taken out of use or fully depreciated. Article 13 In Article 18, the word "may" is replaced by of the Act comes: shall. Article 14 2nd sentence Article 19 of the Act is repealed. Article 15 Article 21 of the Act is repealed. Article 16 The following changes will be made to Article 23. of the law: Instead of the word "service life" in the 1st sentence. Paragraph 1 comes: useful life. After the 1st sentence. Paragraph 1 a new sentence is added, reading as follows: The choice of depreciation method shall be based on the use of the asset during its useful life. Article 17 The following changes will be made to Article 24. of the law: Paragraph 1 be worded as follows: Costs that are capitalized, cf. Article 16, due to intangible assets, shall be depreciated in a systematic manner during the estimated useful life of the assets in question. The choice of depreciation method shall be based on the use of the asset in question during its useful life. If these assets do not have a specific useful life, however, they may be valued annually in accordance with established accounting rules and shall be subject to an annual impairment test or more often if there is evidence of impairment. Goodwill should always be depreciated over 10 years and development costs should also be depreciated over 10 years if its useful life cannot be defined. After the first paragraph. a new paragraph is added, reading as follows: If it is particularly difficult to determine the useful life of an intangible asset, it should be assumed that the useful life of the asset is 10 years, and at the same time the explanations for the difficulties in estimating the useful life shall be stated in the notes. Article 18 With the first paragraph. Article 28 of the Act, a new sentence is added, which becomes the first sentence, as follows: Annual accounts of companies according to Art. points c and d of point 11. Article 2 shall contain a cash flow statement. Article 19 For the word "Lease agreements" in the 5th paragraph. Article 29 of the Act comes: Financing lease agreements. Article 20 The following changes will be made to Article 30. of the law: For the word "market price" in the first paragraph. comes: fair value. With the third paragraph. a new sentence is added, as follows: If goodwill has been written down, cf. Paragraph 1, the book value of goodwill may not be reversed. 2nd sentence Paragraph 4 be worded as follows: They shall be explained in the notes. Article 21 The following changes will be made to Article 31. of the law: Paragraph 1 be worded as follows: Property, plant and equipment may be entered at fair value. If property, plant and equipment are revalued, a revaluation shall be performed annually. Paragraphs 4 and 5 be worded as follows: Gains or losses arising when an asset acc. Paragraph 1 is sold or taken out of use or the preconditions for the revaluation no longer exist, shall be entered in the income statement. Dividends may not be allocated from a revaluation account. Article 22 For the word "real value" in the first paragraph. Article 32 of the Act comes: fair value. Article 23 Instead of the word "real value" in the 1st sentence. Article 35 of the law comes: value. Article 24 The following changes will be made to Article 36. of the law: 1st sentence Paragraph 1 is worded as follows: Financial instruments may be valued at fair value and shall be classified either as financial assets at fair value through profit or loss or as financial assets for sale. 2nd sentence Paragraph 1 is deleted. For the words "This provision" in the second paragraph. comes: The provisions of the first paragraph. Paragraph 3 be worded as follows: Notwithstanding the provisions of the first paragraph. derivative contracts shall be measured at fair value. Article 25 The following changes will be made to Article 38. of the law: Paragraph 1 be worded as follows: The changes in the value of financial instruments and liabilities that are assessed in accordance with Article 37 shall be entered in the income statement. The same amount due to a change in the valuation of financial assets stated at fair value on initial recognition of retained earnings in the fair value account is included in equity, which may not be allocated dividends, taking into account tax effects as appropriate. Instead of the word "price change" in point 1. Paragraph 2 comes: assessment change. Instead of the words "price changes in the value of financial instruments acquired for the purpose of resale" in point 2. Paragraph 2 comes: valuation change of financial asset for sale. Instead of the word "price changes" in point 3. Paragraph 2 comes: evaluation changes. For the word "changes" in the third paragraph. comes: evaluation changes. For the word "price change" in the 4th paragraph. comes: assessment change. Article 26 The following changes will be made to Article 39. of the law: Instead of the word "investment assets" in the 1st sentence. Paragraph 1 and the second paragraph. comes: investment real estate. 2nd sentence Paragraph 1 is deleted. Article 27 The following changes will be made to Article 41. of the law: 3rd sentence Paragraph 1 shall read as follows: Shares in restricted capital accounts with subsidiaries or affiliates shall be entered in the corresponding restricted capital accounts of the company. 3rd sentence Paragraph 2 is worded as follows: If the difference is considered goodwill, it shall be depreciated in a systematic manner over 10 years, cf. Article 24 A new paragraph is added, reading as follows: If a share entered in the income statement exceeds the amount of the dividend received or the dividend that has been decided to be distributed, the difference shall be entered in a restricted share account among equity. If the company's share in a subsidiary or associated company is sold or written off, the share account shall be dissolved and the change recognized in retained earnings or unequaled losses as the case may be. Article 28 Article 42 of the Act is deleted together with a heading. Article 29 Article 43 of the Act reads as follows: In the notes to the annual accounts, at least information shall be provided on the items specified in Articles 44-64. Article, in addition to the information required under other provisions of this Act. In addition, information shall be provided on: the name of the company, the form of the company, the domicile of the company's head office and, if applicable, whether the company is being wound up, the basis of the financial statements as well as the main accounting policies, including valuation techniques and explanations of the relevant accounting policies; amounts and nature of individual items in the income statement and balance sheet that are unusual in size or frequency, the exchange rate used when the amounts in the financial statements are based on foreign currencies and, for comparison, the exchange rate used in the previous year's financial statements. When the notes to the individual items of the income statement and balance sheet are presented, they shall be in the order in which the relevant items are presented in the income statement and balance sheet. Article 30 Article 44 of the Act reads as follows: Information shall be provided on the following when property, plant and equipment are revalued in accordance with Art. Article 31: the methods used in the revaluation, together with information on the main assumptions underlying the valuation techniques, information on the depreciation of revalued fixed assets and whether or not the revaluation was carried out by an independent party; for each category of property, plant and equipment that has been revalued, the carrying amount of the assets in question would have been disclosed if the revaluation had not taken place and movements in the revaluation account during the year, including valuation changes for the year and accumulated valuation changes at the beginning and end of the financial year, as well as information on the tax treatment of the items in question. Article 31 The following changes will be made to Article 45. of the law: Instead of the words "are valued at fair value according to Art. Article 37 "in the 1st sentence. comes: investment properties or properties created by the breeding of live animals and the cultivation of plants are valued at fair value according to Art. Article 37 or 39 For the words "whether the change has been entered in the income statement or in the fair value statement" in point 2. comes: and other assets according to 1. – 3. tölul. Paragraph 2 Article 37 Article 32 The following changes will be made to Article 46. of the law: Paragraph 1 is deleted. Instead of "3. mgr. Article 36 "in the second paragraph. kemur: 17. tölul. Article 2 Article 33 The following changes will be made to Article 56. of the law: Instead of "1. and point 2. Paragraph 1 Article 1 "is replaced by the following: points c and d of point 11. Article 2 A new paragraph is added, reading as follows: Companies according to Number 9 and points c and d of point 11. Article 2 shall disclose the total amount of fees to each auditor or audit firm for the audit of the financial statements and consolidated financial statements. Companies according to 1st sentence shall also disclose the total amounts of fees to each auditor or audit firm for other work, including work on assistance with the company's tax returns and business consulting. Article 34 In Article 58, the words "average employees" are replaced by of the Act comes: man-years. Article 35 Instead of "1. and point 2. Paragraph 1 Article 1 "in the 1st sentence. Article 59 of the Act reads: c- and d-points 11. Article 2 Article 36 The following changes will be made to Article 63. of the law: 1st sentence is worded as follows: Companies according to points c and d of point 11. Article 2 shall account for transactions with related parties, including what the relationship with the parties in question is based on, the amount of such transactions and other information about the transactions that is necessary to be able to assess the company's financial position. 2nd sentence is deleted. Article 37 Instead of "1. and point 2. Paragraph 1 Article 1 "in Article 64 of the Act comes: point 9. and points c and d of point 11. Article 2 Article 38 The following changes will be made to Article 65. of the law: Instead of the words "report of the board" in the 6th sentence. Paragraph 3 comes: submission of annual accounts. Two new paragraphs are added, as follows: If a company owns its own shares, its number and nominal value must be disclosed. If the company has acquired or disposed of its own shares during the financial year, the reason for the shares being acquired or disposed of shall also be stated and the number and nominal value of the shares that the company acquired or disposed of together with information on the consideration of the shares. If there is any doubt as to its viability, this shall be stated in the report of the Board of Directors. Article 39 The following changes will be made to Article 66. of the law: Instead of the words "In the report of the boards of directors according to Art. Points 1 and 2 Paragraph 1 Article 1 shall "in the first paragraph. comes: Companies according to Number 9 and points c and d of point 11. Article 2 where the ownership or use of financial instruments is significant in assessing the assets, liabilities, financial position and gains or losses. 4. – 6. tölul. Paragraph 1 fall off. After the first paragraph. four new paragraphs are added, as follows: In companies where research and development activities are of significant importance to the company's operations, such activities shall be accounted for. Important indicators of non-financial performance should be disclosed, including information on environmental and human resources and the company's knowledge base if it is of significant importance for future revenue generation. Companies shall inform about the existence of the company's branches abroad. The items provided for in Articles 1–4 may be disclosed. mgr. in the notes to the annual accounts instead of the report of the board. Instead of "1. point. "in the second paragraph. kemur: 2. tölul. Article 40 Instead of "1. point. "in Article 66. b of the Act comes: 2. point. Article 41 The following changes will be made to Article 66. c laganna: Instead of "1. tölul. Paragraph 1 Article 1 "in the first paragraph. comes: point a of point 9. Article 2 or point 2. Paragraph 1 Article 1 For the words "preparation of financial statements" in point 2. Paragraph 2 comes: the accounting process. In paragraph 3, the words "the Board of Directors, the Executive Board and the Supervisory Board and their committees" are replaced by Paragraph 2 comes: the representative committee, the board, the executive board and the committees of the board. With the second paragraph. a new item is added, as follows: Description of the policy on diversity in relation to the company's board, executive board and supervisory board with regard to factors such as age, gender or educational and professional background, the policy's objectives, how it is implemented and the results of the reporting period. If no such policy is followed, the reason shall be stated in the report. Article 42 After Article 66 c of the Act introduces two new articles, Article 66. d and Article 66 e, together with headings, as follows: a. (Article 66 d.) Non-financial disclosure. A company that falls under point 9. and point d of point 11. Article 2 and the parent companies of large groups shall include in a summary with the report of the board of directors information necessary to assess the development, scope, position and impact of the company in connection with environmental, social and personnel matters. It shall also explain the association's policy in human rights matters and how the association fights corruption and bribery matters. The summary shall also include the following: a brief description of the company's business model, a description of the company's policy in connection with matters pursuant to this Article, together with a description of the due diligence process the company implements, a summary of the results of the company's policy in matters pursuant to this Article, a description of the main risks associated with these matters in the company's operations, including, as appropriate and in proportion, its business relationships, products or services that are likely to have a detrimental effect in these areas, and how the company manages at that risk and non- financial key metrics that are relevant to the business in question. If the company does not have a policy in connection with one or more cases according to this article, this shall be clearly and substantiated in the summary. In the summary according to Paragraph 1 shall also, where applicable, provide further explanations regarding the amounts reported in the financial statements. When the company referred to in the first paragraph makes a consolidated account, it is sufficient that information according to Art. 1. – 2. mgr. apply only to the group. A subsidiary is exempt from providing information according to Art. 1. – 3. mgr. if the 4th paragraph. applies. b. (Article 66 e.) Report on payments to the government. Companies with activities in the mining industry or in logging that fall under point 9. and point d of point 11. Article 2 shall prepare and publish a report on payments to the government on an annual basis. The Minister shall issue a regulation on the implementation of this Article. This obligation does not apply to a company that is on the domestic market and is a subsidiary or parent company if the following conditions are met: the parent company is subject to Icelandic law, information on payments to the government provided by the company is included in the consolidated report on payments to the public sector, which the parent company draws up, in accordance with a regulation pursuant to Art. Paragraph 1 Article 43 Paragraph 2 Article 67 of the Act is repealed. Article 44 The following changes will be made to Article 68. of the law: Paragraph 1 be worded as follows: A parent company does not have to prepare consolidated accounts if the group as a whole does not exceed the size limits of a small group unless it is a public interest entity. At the 1st sentence. Paragraph 3 is added: or if all its subsidiaries can be excluded from the consolidated financial statements, cf. Article 70 Article 45 The following changes will be made to Article 70. of the law: Foremost in point 3. Paragraph 1 comes: in very exceptional cases. Paragraph 3 is deleted. Article 46 Instead of the words "before the end" in the 1st sentence. Paragraph 2 Article 72 of the Act comes: before or after the end. Article 47 The following changes will be made to Article 73. of the law: For the words "and explanations" in the first paragraph. comes: explanations and report of the board, together with the auditor's signature or the signatory's signature. In the 2nd sentence. Paragraph 3 added: including canceling intra-group transactions and reversing unrealized results from those transactions. In the fifth paragraph, the words "may" and "take over its management" are replaced by kemur: skal; and: gain control thereof. In paragraph 6, the words "may" and "relinquish control" are replaced by kemur: skal; and: loses its control. Article 48 Paragraph 3 Article 74 of the Act reads as follows: The share of a minority interest in the equity of subsidiaries shall be entered as a separate item among equity. The income statement shall show the division of profits between the owners of the parent company on the one hand and the minority owners in subsidiaries on the other. Article 49 Article 76 of the Act reads as follows: If a subsidiary, which is part of a group, prepares its accounts in a currency other than the parent company, its accounts must be converted into the currency of the parent company before the consolidated accounts are prepared by the following procedure: assets and liabilities in each balance sheet, together with comparative figures, shall be translated at the closing exchange rate based on the balance sheet date; income and expenses in each income statement, together with comparative figures, shall be translated at the exchange rate on business days and all exchange rate differences arising from items a and b shall be entered as a separate item in equity. When converting according to Paragraph 1 may use the average exchange rate of the period when converting income and expense items, provided that the exchange rate has not fluctuated significantly during the period. When exchange rate differences according to Paragraph 1 in connection with a foreign operation that is part of a group that is not wholly owned by the parent company, the part of it that can be attributed to the minority interest shall be entered as part of the minority interest in the consolidated balance sheet. Article 50 3rd and 4th sentences. Paragraph 3 Article 79 of the Act reads as follows: Goodwill shall always be amortized over 10 years, cf. Article 24 Negative goodwill shall be recognized in income over 10 years. Article 51 Instead of "1. point. "in the first paragraph. Article 87 a, Article 87 b, Article 87 c and Article 87. e of the Act comes: 2. point. Article 52 The following changes will be made to Article 87. d of the law: Instead of the amount "ISK 4,600,000" in the 1st sentence. kemur: 16,000,000 kr. 2nd sentence is worded as follows: This amount is the basic amount that is tied to the exchange rate of the euro on 19 July 2013 (159.13). Article 53 The following changes will be made to Article 90. of the law: Instead of "1. point. "in the first paragraph. kemur: 2. tölul. The second sentence of the second paragraph is deleted. Paragraph 3 is deleted. Instead of "1. tölul. Paragraph 1 Article 1 and the third paragraph. of this Article "in the 4th paragraph. kemur: 2. tölul. Paragraph 1 Article 1 Article 54 With Article 91 of the Act, a new sentence is added, as follows: If a company decides to discontinue the application of the standards, it shall notify the Register of Annual Accounts of its intention before the beginning of a new financial year. Article 55 The following changes will be made to Article 92. of the law: Paragraph 1 be worded as follows: A member according to Article 1 may apply international accounting standards in the preparation of its financial statements. The same applies to the company's consolidated accounts if applicable. 2nd sentence Paragraph 2 is deleted. With the third paragraph. a new sentence is added, reading as follows: If a company decides to discontinue the application of international accounting standards, after applying them continuously for five consecutive years, it shall notify the Register of Annual Accounts of its intention before the beginning of a new financial year. Article 56 The following changes will be made to Article 94. of the law: The words "cf. Article 92 "in the 1st sentence. Paragraph 1 fall off. For the words "each inspection" in the 5th paragraph. comes: supervision of the year. Article 57 Instead of the words "cf. 1. tölul. Paragraph 1 Article 1 "in the first paragraph. Article 95 of the Act comes: cf. 2. tölul. Paragraph 1 Article 1 Article 58 The following changes will be made to Article 96. of the law: At the 1st sentence. Paragraph 1 added: to audit the financial statements. A new paragraph is added, reading as follows: Companies that make use of the authorization in Article 3. to submit a statement of operations and a balance sheet based on the company's tax return are exempt from the obligation to elect one or more auditors, audit firms or auditors of the annual accounts. Article 59 The following changes will be made to Article 97. of the law: Paragraph 1 be worded as follows: The parties elected to audit shall meet the eligibility requirements of Article 2. Act on Auditors, no. 79/2008 . 4th sentence Paragraph 2 be worded as follows: The Minister shall issue a regulation on further conditions that inspectors must meet in terms of qualifications and independence. Article 60 The following changes will be made to Article 98. of the law: 1. – 3. tölul. Paragraph 1 be worded as follows: balance sheet total: ISK 200,000,000, net turnover: ISK 400,000,000, average number of man-years in the financial year: 50. Paragraph 2 be worded as follows: Companies classified as public interest entities are not covered by the first paragraph. Article 61 Paragraphs 2 and 3 Article 99 the law is repealed. Article 62 With the second paragraph. Article 102 of the Act, a new sentence is added, as follows: The Minister shall issue a regulation on what shall be included in the work and scope of work of inspectors when reviewing the annual accounts. Article 63 The following changes will be made to Article 104. of the law: Paragraph 1 be worded as follows: The auditors shall, after the audit, sign and date their endorsement, and the endorsement shall accompany the annual accounts as well as the consolidated accounts, if any. 3rd sentence Paragraph 2 is deleted. Paragraph 3 be worded as follows: Following the review of the annual accounts, the auditors shall sign and date confirmation of their review of the annual accounts as well as the consolidated accounts if it is prepared in accordance with a regulation issued by the Minister, and the confirmation shall accompany the accounts. If the auditor considers that the annual accounts or consolidated accounts contain significant misstatements, he shall state this separately. Article 64 The following changes will be made to Article 109. of the law: After the word "annual accounts" in the 1st sentence. Paragraph 1 comes: and consolidated financial statements, if applicable. Instead of the words "in electronic form" in the 4th sentence. Paragraph 1 comes: in electronic form. Paragraph 2 be worded as follows: Notwithstanding the provisions of the first paragraph. is companies that have exercised their authorization in Article 3. to submit a statement of operations and a balance sheet based on the company's tax return may submit such annual accounts within the deadline that the Director of Internal Revenue gives taxpayers to submit their returns, cf. the provisions of the second paragraph. Article 93 Act on Income Tax, no. 90/2003 . With the third paragraph. a new sentence is added, reading as follows: The Minister shall issue a regulation on fees. Article 65 Paragraph 1 Article 110 of the Act is repealed. Article 66 Article 111 of the Act is repealed. Article 67 Instead of "4. point. "in the first paragraph. Article 114 and the first, second and third paragraphs. Article 115 of the Act comes: point 3. Article 68 Article 116 of the Act is repealed. Article 69 The following changes will be made to Article 117. of the law: After the word "required" in the 2nd sentence. Paragraph 1 comes: everyone. Paragraph 2 be worded as follows: In order to verify whether companies comply with the provisions of the Size Classification Act, the Register of Annual Accounts is authorized to obtain information from the Director of Internal Revenue on the names and ID numbers of companies that fall under size categories according to Art. 11, 29 and 33. Article 2 Article 70 Article 118 of the Act reads as follows: The Minister shall appoint five experts for a term of four years at a time to a committee called the Accounting Board. One of the committee members shall be nominated by the Association of Certified Public Accountants, another by the University Level Co-operation Committee, a third by the Iceland Chamber of Commerce, a fourth by the Register of Annual Accounts, and one committee member shall be appointed without nomination. The Minister appoints the chairman of the Accounting Board from among the committee members. Article 71 XII. Chapter 12 of the Act is worded as follows, and at the same time Article 126 falls. crime: a. (Article 120) Administrative fines for submission of annual accounts. The Register of Annual Accounts shall impose administrative fines on those companies that are obliged to neglect in accordance with this Act in order to submit annual accounts or consolidated accounts for public publication within the deadlines provided for in Article 109. When the deadline according to Article 109 to submit annual accounts or consolidated accounts, the Register of Annual Accounts shall impose a fine on the company in question in the amount of ISK 600,000. and at the same time demand improvements. If a company submits annual accounts or consolidated accounts within 30 days of notification of the imposition of a government fine, the Register of Annual Accounts shall reduce the amount of the fine by 90%. If improvements are made within two months of the notification of the fine, the fine shall be reduced by 60%. If improvements are made within three months of the notification of the fine, the fine shall be reduced by 40%. If the annual accounts or consolidated accounts do not comply with the provisions of this Act in the opinion of the Register of Annual Accounts, it shall notify the company of that position, giving it the opportunity to amend and the possibility of objecting. If satisfactory explanations or improvements are not received within 30 days, the company shall be fined ISK 600,000. If a company submits satisfactory information or explanations with annual accounts or consolidated accounts within 30 days of notification of the imposition of a government fine, the Register of Annual Accounts shall reduce the amount of the fine by 90%. If improvements are made within two months of the notification of the fine, the fine shall be reduced by 60%. If improvements are made within three months of the notification of the fine, the fine shall be reduced by 40%. The administrative fines are enforceable. Fines accrue to the Treasury less the cost of collection. Decision of the Annual Accounts Register on the imposition of a fine according to Art. Paragraph 3 can be appealed to the Internal Revenue Committee, cf. Act no. 30/1992 . Administrative fines will be imposed regardless of whether the offenses are committed intentionally or negligently. b. (Article 121) If the annual accounts or consolidated accounts have not been submitted within eight months of the deadline according to Art. Article 109 to submit the annual accounts or consolidated accounts has expired or since the Register of Annual Accounts has come to the conclusion that explanations or information with the annual accounts or consolidated accounts submitted for public publication have not been satisfactory, the Register of Annual Accounts shall require replacement of the company's estate. If the decision of the Register of Annual Accounts, that explanations or information with the annual accounts or consolidated accounts has not been satisfactory, is appealed to the Internal Revenue Committee, the start of the deadline shall be based on the time when the conclusion of the Internal Revenue Committee is available. The Minister shall lay down further instructions on the handling of such matters in the Register of Annual Accounts in a regulation. When a district judge has received a request for a replacement according to Art. Paragraph 1 he shall handle it in accordance with the instructions of the Bankruptcy Act, etc. on the handling of the creditor's claim that the debtor's estate be taken into bankruptcy. The district court judge shall issue a ruling on whether the requirement that the company's estate be taken over has been complied with. If the claim is taken into account, the estate shall be treated in accordance with the provisions of the Act on the Exchange of Estates, etc. on the treatment of the estate of the deceased where the heirs do not take responsibility for the obligations of the deceased other than that the shareholders do not enjoy the position enjoyed by the heirs in such an exchange until it is revealed after the claim deadline that the estate's assets will recoup. c. (Article 122) Fines or imprisonment. It concerns sanctions according to Article 124 to violate the following provisions of this Act and rules established on the basis thereof: 11. tölul. Article 2 if a company is incorrectly classified as a small company or micro-company in order to avoid publishing the information that medium-sized and large companies must publish. Article 3 on the obligation to prepare annual accounts in accordance with this Act, regulations and established accounting rules, as applicable. Article 5 if the annual accounts, consolidated accounts or cash flows do not give a clear picture of results, balance sheets and changes in cash. Article 11 on the basic assumptions of the annual accounts. Article 14 on the balance sheet. Article 16 on capitalization of development costs and intangible rights. Article 17 on the entry of costs of establishing a company or an increase in share capital. Article 18 on discounts and borrowing costs on sold or purchased securities. Article 20 on income and expenses for the financial year. Article 22 on income and expenses not related to regular activities. Article 23 on fixed assets that are used for a limited time. Article 26 on fees incurred during the financial year but relating to subsequent financial years. Article 28 on cash flow. 29. – 42. gr. on evaluation rules. Article 43 on notes in the annual accounts. Articles 65 and 66 on the disclosure of information in the Board's report with annual accounts. Article 66 a on the obligation of the Board of Directors of companies that have been listed for one or more classes of shares on a regulated securities market to provide information. Article 66 b on the signing of a declaration by the directors of a company that has issued securities that have been admitted to trading on a regulated securities market within the European Economic Area. Article 66 c on the publication of a statement of governance. Article 66 d on the publication of non-financial information. Article 67 on the obligation to prepare consolidated accounts. Article 73 on the obligation to prepare consolidated accounts in accordance with the provisions of VII. chapter. Article 74 on holdings in subsidiaries. Article 75 on methods for valuing a group's assets and liabilities. Article 77 on consolidated accounts. Article 79 on the method of purchase when establishing a group. 82. – 84. gr. on notes to the consolidated financial statements. Article 85 on the report of the Board of Directors on consolidation. Article 86 on accounting for mergers and divisions. Article 87 a on the obligation of a company that has issued shares or bonds that have been admitted to trading on a regulated securities market in a state within the European Economic Area to prepare interim financial statements for the first six months of the financial year. Article 87 b on the interim report of the Board of Directors of companies pursuant to Art. 2. tölul. Paragraph 1 Article 1 for the first six months of the financial year. Article 87 e on the obligation of a company that has issued shares or bonds that have been admitted to trading on a regulated securities market in a state within the European Economic Area to publish interim financial statements. Article 90 on the obligation of a company according to 2. tölul. Paragraph 1 Article 1 to apply international accounting standards in the preparation of its consolidated financial statements. Article 91 on the obligation of a company that no longer fulfills the listing of a regulated securities market in a state within the European Economic Area, in a member state of the European Free Trade Association or in the Faroe Islands, to apply international accounting standards. Article 96 on the selection of an auditor, auditing firm or auditor of annual accounts. Paragraph 2 Article 97 on the qualifications of inspectors. Article 99 on the obligation of the parent company, which is obliged to prepare consolidated accounts according to Art. VII. to elect one or more auditors or audit firms who shall also audit its subsidiary if possible. Article 102 on the audit and review of annual accounts. Article 103 on the disclosure obligations of the company's board of directors and managing director to auditors and auditors. Paragraphs 1 and 2 Article 104 on the auditors' signatures on the annual accounts and consolidated accounts. Paragraph 3 Article 104 on the signing by auditors of the annual accounts and consolidated accounts. Article 105 on the suggestions and comments of the auditor or inspector. Article 108 on the prohibition of auditors or auditors and their colleagues providing information to individual members or unauthorized parties on the interests of the company. Article 108 a on the appointment of an audit committee to a public interest entity. Article 108 d on the duty of an auditor or audit firm to report annually to the audit committee on its work and independence and to submit a written report on important issues that have emerged during the audit. d. (Article 123) Auditors or inspectors are guilty of a criminal offense under this Act by acts or omissions as follows: If they undertake to perform an audit or review of the annual accounts without fulfilling the eligibility requirements of the law. If they conduct their work in contravention of the provisions of this Act or in accordance with good auditing practice. If, by their signature or signature, they give false or misleading information or fail to mention important matters concerning the company's operating results or finances. e. (Article 124) Anyone who intentionally or with gross negligence violates the provisions of this Act in the manner described in Articles 122 and 123. shall be subject to fines or imprisonment for up to six years, provided that there is no heavier penalty for an offense under other laws. Serious violations of Articles 122 and 123 concern punishment according to Paragraph 2 Article 262 of the Penal Code or fines if the compensation is substantial. Direct or indirect profits derived from violations of the provisions of this Act concerning fines or imprisonment may be confiscated by a court. Attempt to commit an offense or complicity in an offense under this Act is punishable under the Penal Code. A legal entity may be fined for a violation of this Act, regardless of whether the violation can be traced to the criminal act of a representative or an employee of the legal entity. If his representative or employee has been guilty of a violation of this Act, in addition to the punishment he faces, the legal entity may be fined and deprived of professional rights, provided that the violation is committed for the benefit of the legal entity or that he has benefited from the violation. f. (Article 125) The District Prosecutor is investigating serious violations of this Act. If the violation is not considered so serious as to violate the second paragraph. Article 262 of the General Penal Code, the Director of Tax Investigations conducts investigations into violations of the law. The Director of Tax Investigations may, at any stage of the investigation, refer a case to the police for investigation voluntarily, as well as at the request of the accused if he does not wish to have the case resolved by the Internal Revenue Committee. The Internal Revenue Committee rules fines for violations of this Act, other than violations of Article 120, unless the violation is subject to an investigation and court proceedings by the District Prosecutor according to Art. Paragraph 1 The Director of Tax Investigations may, at any stage of the investigation, refer the case to the District Prosecutor voluntarily, as well as at the request of the plaintiff if he does not wish to have the case resolved by the Internal Revenue Committee. Cases under this Act expire in six years from the commencement of an investigation by the District Prosecutor or the Director of Tax Investigations against a person as a defendant, provided that there are no unreasonable delays in the investigation of a case or a decision on punishment. Article 72 Paragraph 2 Article 127 of the Act reads as follows: The reference limits in points 11 and 33. Article 2 and points 1 and 2. Paragraph 1 Article 98 are the basic amounts based on the exchange rate of the euro on 19 July 2013. The Minister may change these amounts in accordance with changes in the amounts in Directive 2013/34 / EU or if there are significant changes in the exchange rate of the euro. Article 73 Article 128 of the Act reads as follows: This Act transposes Directive 2013/34 / EU of the European Parliament and of the Council of 26 June 2013 on annual accounts, consolidated accounts and related reports of certain types of undertakings, amending Directive 2006/43 / EC of the European Parliament and of the Council and repealing Council Directives 78/660 / EEC and 83/349 / EEC, as incorporated into the Agreement on the European Economic Area by Decision of the EEA Joint Committee no. 293/2015 of 30 October 2015, and amending it by Directive 2014/95 / EU, Regulation (EC) no. 1606/2002 as regards the annual accounts of limited liability companies and their consolidated financial statements, as well as Commission Regulation (EC) no. 1569/2007. Article 74 This Act shall enter into force immediately and shall be implemented for the financial year beginning on or after 1 January 2016, except for the provisions of Article 55. and Article 64 (d). which are already being implemented. Article 75 Upon the entry into force of this Act, the following amendments will be made to other Acts: Act on Public Limited Companies, no. 2/1995 , with subsequent amendments: point 4. Paragraph 1 Article 107 of the Act is repealed. Act on Private Limited Companies, no. 138/1994 , with subsequent amendments: point 3. Paragraph 1 Article 82 of the Act is repealed. Approved by Althingi on 2 June 2016.