Amended Rules on Foreign Exchange
The Central Bank of Iceland has issued new Rules on Foreign Exchange with the approval of the Minister of Business Affairs. The primary changes from the previous Rules pertain to exemptions granted to specified groups because of critical interests at stake and because it is considered unlikely that these groups’ transactions will cause serious and significant volatility in exchange rate and monetary affairs. The State and the municipalities are granted exemptions, as are companies in which the State and the municipalities own a majority holding and which operate in accordance with special legislation. Companies that are parties to investment agreements with the Icelandic Government and those that have been granted permits to search for oil by the Minister of Industry are exempt. Furthermore, resolution committees appointed on the basis of the Act on Financial Undertakings are exempt.
Companies that have over 80% of their revenues and expenses abroad may apply to the Central Bank for an exemption from specified articles of the Rules pertaining to securities trading abroad, borrowing and lending, guarantees and derivatives trading, and the obligation to submit foreign currency. The Central Bank will publish a list of the companies granted such exemptions on its website.
In addition, commercial banks, savings banks, and credit institutions have been granted extended authorisation to engage in foreign exchange transactions.
Other minor changes involve the clarification of the lack of limits on direct investment; however, it is emphasised that the movement of capital from Iceland in connection with the sale of direct investments is prohibited.
The Rules are to be reviewed no later than March 1, 2009. It should be noted that the legislation on which the Rules are based is temporary and will expire at the end of November 2010.
December 16, 2008