Act on the Establishment of Landsnet hf. No. 75/2004

This is an English translation.
The original Icelandic text, as published in the Law Gazette (Stjórnartíðindi), is the authoritative text. Should there be discrepancy between this translation and the authoritative text, the latter prevails.

Article 1

The Minister for Industry shall undertake the electricity and system management pursuant to the provisions of Chapter III of the Electricity Act establishment of a limited liability company which shall be responsible for the transmission of No. 65/2003.
The Minister for Industry shall be responsible for the preparations for the establishment of Landsnet hf. and for the implementation of this Act.

Article 2

The role of Landsnet hf. is to undertake the transmission of electricity and system management pursuant to the provisions of Chapter III of the Electricity Act No. 65/2003, and the Company is not permitted to engage in any activities other than those which are necessary for the Company to be able to discharge its duties pursuant to the Electricity Act. However, the Company is permitted to operate an electricity market. The board of directors of Landsnet hf. shall be independent of other companies engaging in the generation, distribution or sale of electricity, as further provided in the articles of association of the Company.

Article 3
The State Treasury of Iceland is the owner of all the share capital in Landsnet hf. upon its establishment. The Minister for Industry represents the State's interest in Landsnet hf. The Board of Directors of Landsnet hf. shall be composed of three directors appointed by the Minister for Industry without nomination.

Article 4

As of 1 January 2005, Landsnet hf. shall take over the operation of the transmission facilities falling within the definition of Sub-paragraph 6 of Article 3 of the Electricity Act No. 65/2003. Until that time, the Company shall make preparations for the operation, inter alia by representing its own interests in discussions with the owners of transmission facilities in the course of the assessment of the value of such assets, pursuant to the provisions of Interim Provision XI in the cited Act.
All of the State Treasury's shares in Landsnet hf. may be sold when a final assessment has been prepared of the transmission facilities falling within the definition of Sub-paragraph 6 of Article 3 of the Electricity Act No. 65/2003 and it has been established whether their owners will elect to contribute the transmission facilities as share capital in Landsnet hf. Shares can be sold only to owners of the transmission facilities falling within the definition of Sub-paragraph 6 of Article 3 of the Electricity Act No. 65/2003.

Article 5

The declaration of association shall prescribe any points to be included in the memorandum of association pursuant to the Act Respecting Public Limited Companies, other than those mentioned in the present Act.

Article 6

The taxation of Landsnet hf. shall be subject to the same rules as the taxation of other energy companies.

Article 7

Landsnet shall be established at an initial meeting to be held no later than 1 June 2004. At the meeting, the board of directors of Landsnet hf. shall be elected, to remain in office until a new board of directors has been elected at the first annual general meeting held after a final assessment has been prepared of the value of transmission facilities pursuant to Interim Provision XI of the Electricity Act No. 65/2003. Until that point in time, Landsnet is entrusted with the task of preparing for its activities.

Article 8

This Act shall enter into force immediately.

Passed by the Althing on 28 May 2004.