Articles of Association for Festi hf.
Chapter I
Company name, domicile and objective
Article 1
The Company is a limited liability company and its name is Festi hf.
Article 2
The domicile of the Company is at Dalvegur 10-14 in Kópavogur.
Article 3
The objective of the Company is to own and operate companies that are leaders in their markets, including but not limited to the sale of food and beverage products, energy, electronics, pharmaceuticals and health-related services. A further objective of the Company is the purchase, sale, ownership and operation of real estate, purchase, sale and ownership of securities as well as credit activities related to the operation and other related operations.
Chapter II
The Company's share capital
Article 4
The Company's share capital amounts to ISK 301,500,000 – ISK three hundred and one million five hundred thousand 00/100 – in nominal value. Each share is worth one Icelandic krona or a multiple thereof. There are no restrictions on shareholders' disposal of shares in the Company.
Article 5
The Company's share capital may be increased, whether effected through subscription to new shares or by issuing compensatory shares, by a resolution of a shareholders' meeting, where the same amount of votes is required as for changes to these Articles of Association. Shareholders have pre-emptive rights to new shares in proportion to their shareholding in the Company and within the time limits specified in an agreement on the increase of share capital. Should some shareholders choose not to exercise their pre-emptive right, the rights of other shareholders to subscribe will increase. A shareholders' meeting can, with 2/3 of the votes, decide to suspend pre-emptive rights during increase of share capital, provided that shareholders are not discriminated against in any way.
If the shareholder does not pay the required share capital on the due date, a late payment penalty will accrue on the amount from that date until payment is made, in addition to which, the shareholder takes on all collection costs. Furthermore, the Company is permitted to make use of any remedies permitted by Icelandic law at any time. The Company's Board of Directors also has the option to terminate subscription of issued shares, should the shareholder not meet the payment obligation on the due date. The Board of Directors is then authorised to reallocate the issued shares according to the rules prescribed by Icelandic law and the Company's Articles of Association. Where the established rules are ignored, the Board of Directors has autonomy over the distribution of the share capital.
Only a shareholder’s meeting may decide to reduce the share capital.
All shares shall have equal rights.
Festi hf.'s shareholders' meeting, held on August 23, 2023, agrees to authorize the Company's Board of Directors to issue new share capital in the Company at a nominal value of up to ISK. 10,000,000. The Board of Directors' authorisation shall only be used to fulfil the Company's obligations regarding the partial payment of the purchase price according to an agreement between Festi hf. and SID ehf., dated 13 July 2023, regarding the acquisition by Festi hf. of all shares in Lyfja hf. Pre-emptive right of shareholders according to paragraph 1. Article 5 of the Company’s Articles of Association do not apply to the new share capital and shareholders therefore waive their subscription rights to the capital increase in accordance with the provisions of paragraph 3 of Article 34, Act no. 2/1995 on limited companies. The newly issued shares will be in the same class and carry the same rights as other shares in the Company, subject to the restrictions resulting from the imposition of a sales ban under the purchase agreement. The newly issued shares shall grant rights from the record date of the capital increase. The authorisation is granted until August 15, 2024. The Company's Board of Directors shall be authorised to make any necessary amendments to the Company's Articles of Association in connection with the use of the authorisation. This authorisation shall be deleted from the Articles of Association once it is utilised.
The Annual General Meeting of Festi hf., held on March 6, 2024, agrees to authorize the Company's Board of Directors to issue new share capital in the Company at a nominal value of up to ISK. 10,000,000. The authority of the Board of Directors shall only be used to fulfil the Company's obligations under stock option agreements with the Company's employees in accordance with approved stock option plans. Preferential rights of shareholders according to paragraph 1 of Article 5 of the Company’s Articles of Association do not apply to the new share capital and shareholders therefore waive their subscription rights to the capital increase in accordance with the provisions of paragraph 3 of Article 34, Act no. 2/1995 on limited companies. Newly issued shares must be in the same category and with the same rights as other shares in the Company. The newly issued shares shall grant rights from the record date of the capital increase. The authorisation is granted until June 30, 2028. The Company's Board of Directors shall be authorised to make any necessary amendments to the Company's Articles of Association in connection with the exercise of the authorisation. This authorisation shall be withdrawn from Articles of Association once it is utilised.
Article 6
The Company's shares are issued electronically in a securities depository in accordance with the provisions of the Act on Electronic Asset Registration of Securities. When a shareholder has paid their shares in full to the Company, electronic shares will be issued in a securities depository and the asset right to it duly registered, affording the shareholder the full rights provided in the Articles of Association of the Company.
The Board of Directors shall maintain a register of shares pursuant to Icelandic law. Ownership registration in a securities depository is considered valid proof of ownership rights to shares in the Company and a sufficient basis for registration in the share register.
The share register shall be preserved in the offices of the Company and all shareholders shall have access to it and permission to inspect its contents.
Article 7
Shareholders are permitted to sell and pledge shares in the Company without restrictions, unless otherwise stated by Icelandic law.
Regarding sale of shares to foreign parties, the provisions of Icelandic law at any given time apply.
Any transfer of ownership of shares, whether by sale, gift, inheritance, change of estate or execution, must be reported to the securities depository immediately, and the share register must be updated accordingly.
Any party that acquires shares in the Company cannot exercise their rights as a shareholder unless their name has been entered in the share register or they have notified and provided proof of ownership of the share.
For the Company, the share register shall be considered valid proof of ownership rights to shares in the Company, and dividends at any time, as well as all notifications, shall be sent to the person who at any time is the registered owner of the relevant share in the share register. The Company is not responsible if payments or notifications are lost due to the shareholder's failure to notify a change of ownership or change of address.
Article 8
There are no special rights attached to shares in the Company.
The shareholders are not subject to redemption unless provided by Icelandic legislation.
Article 9
The Company may not grant loans against its shares unless permitted by Icelandic law. The Company is permitted to buy its own shares to the extent permitted by Icelandic law, and such authorisation shall then be stipulated in a separate appendix to these Articles of Association, and the appendix shall be part of the Articles of Association for the duration allowed. It is not permitted to exercise voting rights attached to any shares owned by the Company itself.
The Company is neither authorised to grant loans to shareholders, board members, directors or managers of the Company, nor to place security for them. However, the provisions of this article do not apply to ordinary commercial credit or the purchase of shares by employees of the Company or an associate company of shares in the Company for such parties as governed by Icelandic law as well as the Company’s Remuneration Policy.
Article 10
Shareholders are obliged, without any special obligation, to abide by the Company's Articles of Association, both those currently in place and those that may later be enacted in a legal manner. Shareholders will not be obliged, either by the Company's Articles of Association or by changes in the Icelandic law, to increase their shareholding.
Shareholders are not liable for Company obligations beyond their own share in the Company, unless they take on additional responsibility according to a special legal agreement. This provision cannot be amended by any decision made by a shareholders’ meeting.
Chapter III
Shareholders' Meetings
Article 11
Supreme authority in the affairs of the Company is in the hands of lawful shareholders’ meetings, within the limits set by these Articles of Association and Icelandic law.
Shareholders exercise their decision-making rights at shareholders’ meetings.
All shareholders shall be permitted to attend shareholders’ meetings, participate and exercise their voting rights.
A shareholder may have a representative attend the shareholders’ meeting on their behalf. The representative must submit a written and dated Power of Attorney.
A shareholder is allowed to attend the meeting with an advisor. An advisor has neither freedom of speech, a right to make proposals nor the right to vote at a shareholders’ meetings.
The Company's auditor and CEO have full freedom of speech as well as a right to make proposals at shareholders’ meetings, even though they are not shareholders.
The Company's Board of Directors is authorised to invite specialists to sit in on individual meetings if their opinion or assistance is needed.
The Company's Board of Directors is authorised to allow shareholders to participate in shareholder meetings electronically, either in such a way that the shareholder meeting will be entirely or partially electronic. Should the Board of Directors decide to exercise this authority, it must be specifically stated in the meeting notice and instructions regarding participation provided.
A shareholder who intends to participate electronically must notify the Company's office in writing no later than two days before the scheduled shareholder meeting. The notification must be accompanied by written questions regarding the meeting agenda or submitted documents if they wish to receive answers during the meeting.
If the Company's Board of Directors does not find sufficient reasons or required circumstances to include electronic participation, shareholders shall nevertheless have the opportunity to exercise their voting rights on matters on the meeting’s agenda in writing. The meeting announcement shall specify the voting procedure. A request for such voting shall be delivered to and received by the Company, no later than five days prior to the announced shareholders’ meeting.
Other than what is stipulated in this document, the provisions of Article 80 shall apply to electronic participation and/or electronic voting according to Act no. 2/1995 on limited companies, cf. Act. no. 89/2006.
Article 12
The Board of Directors shall call for a shareholders' meeting when deemed necessary, as well as if the Company's auditor or shareholders who control at minimum 1/20 of the Company's shares demand it in writing. The parties should then also send the Board of Directors a statement of why they demand the meeting to be called, and the Board of Directors will notify shareholders of the meeting's agenda with the meeting announcement.
When a legitimate request for a meeting has been submitted, the Board of Directors shall be obliged to call a shareholders’ meeting no later than 14 days after receiving such a request. If the Board of Directors has not called a shareholders’ meeting within that time, shareholders may demand that a meeting be called in accordance with the provisions of the Act of Public Limited Companies.
Article 13
Shareholders’ meetings must be convened electronically to ensure prompt access to any information on an equal basis. It is mandatory to use reliable media to ensure effective distribution of information to the public in the European Economic Area. The shareholders’ meeting shall be convened with at least three weeks’ notice and the Annual General Meeting with at least three weeks' notice and no more than six weeks' notice. A shareholders' meeting is legal regardless of attendance if it is duly convened. Attendance shall be based on delivered ballots.
The Board of Directors can decide that shareholders must notify the Company of their participation in a shareholders' meeting within a certain timeframe before the meeting, which shall not be longer than two days. The meeting announcement must contain information about the registration date. Voting rights at the meeting depend on the number of shares at the time when the registration period ends.
When a shareholders' meeting is called, the agenda, proposals, as well as the annual financial statement (of the parent company also the consolidated accounts), the Board of Directors' report, the remuneration policy and an auditor's report, in the case of an Annual General Meeting, must be presented to shareholders for viewing at the Company's office and simultaneously sent to every registered shareholder who so requests. If a proposal to amend the Company's Articles of Association is to be considered at the meeting, the main points of the proposal must be specified in the meeting announcement. If a shareholder wishes to get an issue or a proposal on the agenda of a shareholders' meeting, such a request must be made no later than two weeks before the meeting. The Board of Directors shall present a revised agenda for this occasion as soon as possible. Matters that have not been specified in the agenda of the shareholders' meeting cannot be decided at the meeting unless approved by of all the Company's shareholders, but a resolution can be made as a guide for the Board of Directors. Lawfully submitted appendix proposals and amendments may be brought up at the meeting itself.
Article 14
The Annual General Meeting shall be held before the end of August each year.
At the Annual General Meeting, the following matters shall be considered:
1. The Company's Board of Directors reports on the Company's operations and financial position in the preceding year of operation.
2. Audited financial statements, with the auditors' comments, submitted for approval.
3. A decision shall be made on the disposal of the Company's profits or losses during the accounting year.
4. Proposals for changes to the Company's Articles of Association, which are legally submitted.
5. Election of the Company’s Board of Directors.
6. Election of auditors of the Company.
7. A decision regarding remuneration to members of the Board of Directors.
8. Presentation of the Company's remuneration policy for confirmation.
9. Other matters, lawfully presented.
Article 15
Shareholders' meetings are chaired by a Chairperson, elected by the shareholders in attendance. The Chairperson of the meeting shall resolve all issues related to the lawfulness of the meeting according to these Articles of Association, as well as determine its form and procedure, handling of issues at the meeting and voting process.
The Chairperson of the meeting shall elect a Secretary of the meeting, who will keep minutes of the meeting. The decisions of the shareholders' meeting as well as the results of voting shall be recorded in the minutes. A list of present shareholders and proxies must be entered into the meeting minutes or attached to it. The Chairperson and Secretary must sign the minutes. No later than fourteen days after the shareholders' meeting, shareholders must have access to the meeting minutes or a certified copy of the minutes at the Company's office.
Article 16
One vote is attached to each Icelandic krona of share capital.
At shareholders' meetings, the majority of votes determines the outcome of all ordinary matters, unless otherwise stipulated in these Articles of Association or Icelandic law. In the event of equal votes, the result will be decided by a toss-up.
Chapter IV
Board of Directors and more
Article 17
The Company's Board of Directors shall be composed of five members elected at the Annual General Meeting for a term of one year. Eligibility of directors shall be subject to Icelandic law. Elections must be held by ballot if nominations exceed the number of board members to be elected.
The elections must ensure that the proportion of each gender on the Board of Directors is not lower than 40%. If an election of members for the Board of Directors does not reach appropriate results regarding gender ratio, the election is void. Until the gender ratio requirement has been met by a lawful election, the previous members of the Board of Directors remain in place, as appropriate. Pursuant to availability of information on unsatisfactory results, the election of the members of the Board of Directors shall be repeated, as necessary, at the same meeting. Before the elections are repeated, and to the extent necessary, the meeting shall be adjourned and more candidates, of the gender underrepresented in the previous election, may be nominated. In the event of repeated election, the two persons of each gender who receive the most votes in the election to the Board of Directors shall be considered duly elected and also the person who received the second most votes, if a repeated election was deemed necessary.
In the notification to the Company Registry where the result of the election of new members to the Board of Directors is announced, information on the proportion of genders on the board shall be specified. This notification must also contain information in the same form regarding the gender ratio among the Company's employees and managers. The Board of Directors must pay special attention to the gender ratio when hiring a managing director.
The Nomination Committee shall work on behalf of the Company in accordance with the Rules of Procedure of the Nomination Committee approved by a Company meeting. In its work, the Nomination Committee shall be bound by its Rules of Procedure, which shall be confirmed by the shareholders' meeting. The duties of the Nomination Committee do not change the rights and obligations of procedure for nomination to the Board of Directors or the rules for handling such nominations in accordance with other paragraphs of Article 17 of the Articles of Association.
Those who intend to stand as candidates in the election to the Board of Directors shall notify the Company's Board of Directors in writing at least ten days before the Annual General Meeting, or an Extraordinary Meeting where election of the members of the Board of Directors is on the agenda. Only candidates who comply with this obligation are eligible to stand as candidates at a shareholders’ meeting.
Mandatory elections of members of the Board of Directors are held at the Annual General Meeting and therefore only candidates who submitted their notification in due time are to be considered eligible.
In addition to a candidate's name, social security number and address, the candidate must include information about their main profession, other directorship, education, experience and share ownership in the Company, in the notice of candidacy for the Board of Directors. They must also disclose any personal interests with the Company's main customers and competitors, as well as shareholders who own more than 10% of share capital in the Company.
The Board of Directors shall review candidacy notifications and allow candidates to rectify any deficiencies contained in the notification within a specified deadline. If the defects in the application notice are not rectified within the set deadline, the Board of Directors will decide on the validity of the candidacy. The decision of the Company's Board of Directors can be appealed to the shareholders' meeting, which has final power of decision on the validity of the candidacy.
Information on candidates shall be available at the Company's office, no later than two days prior to the shareholders' meeting, for the shareholders to inspect. Shareholders shall always have the right to request a proportional voting or cumulative voting to the Board of Directors for the duration of 48 hours from the date on which the Board of Directors announces the list of candidates, unless the members are chosen without an election.
Article 18
The Board of Directors holds the supreme authority in the affairs of the Company between shareholders' meetings and shall ensure that the organisation of the Company and its operations are always in good and fair condition.
The Board of Directors appoints the Chief Executive Officer (CEO) of the Company and decides on his or her terms of employment. The Board of Directors and the CEO have joint administration of the Company.
The Board of Directors shall ensure adequate supervision of the accounting of the Company and the disposal of its assets.
The Board of Directors shall establish rules of procedure, code of conduct, rules on eligibility, reputational risk and conflicts of interest in accordance with the provisions of the Public Limited Companies Act and conventions on corporate governance in public limited liability companies, taking particular care of the Company's reputation, as well as its directors and CEO. The rules shall include the division of work among the Board of Directors, the convening of board meetings, communication and handling of information, evaluation of the specific and general qualifications of directors and reassessment of qualifications, appointment of sub-committees and other matters appropriate to be regulated to promote the successful work of the Board of Directors. Furthermore, rules on eligibility established by the Board of Directors shall give a person hired by the Board of Directors a formal role in receiving notifications of alleged violations of the Code of Ethics by directors and CEO and to process such notifications in accordance with the Company's rules on eligibility, reputational risk and conflicts of interest between board members and CEO.
Only the Board of Directors may grant Powers of Procuration.
The signature of the majority of the Board of Directors binds the Company.
Article 19
The Board of Directors shall elect a Chairperson and Vice-Chairperson from among its own group, but in other respects assigns tasks as necessary.
The Chairman calls for board meetings and ensures that all members of the Board of Directors have been notified. A board meeting shall be held whenever the Chairman deems it necessary. In addition, the Chairman is obliged to call for a board meeting at the request of one member of the Board of Directors or the CEO. Board meetings are duly held if the majority of the members of the Board of Directors is present. However, an important decision must not be made without all members of the Board of Directors having an opportunity to discuss the matter, if possible. A majority of votes determines the result. In case of a tie, the matter is deemed rejected.
The CEO is present at meetings of the Board of Directors, even if that person is not a member of the Board of Directors, and has the right to participate and make proposals, unless the Board of Directors decides otherwise in individual cases.
Board meetings shall be recorded in a book of minutes, which shall be signed by those attending. If any member of the Board of Directors or the CEO does not agree with the Board's decision, the concerning party has the right to have their dissenting opinion recorded in the minutes.
If committees are elected by the Board in accordance with provisions in the working Rules of Procedure, their reports shall be indicative only to the Board of Directors, who will not be bound by them in any individual cases unless otherwise stipulated by Icelandic law.
Article 20
The CEO and the Board of Directors undertake the administration of the Company in a joint capacity.
The CEO takes care of any day-to-day operations of the Company and in that, must follow both policy and instructions laid down by the Board of Directors. The day-to-day operations do not include measures that are unusual or major arrangements. Such arrangements can only be entered into by the CEO subject to a special authorisation from the Board of Directors, unless the decision of the Board of Directors cannot be awaited without significant disadvantage for the Company's operations. Should such a situation arise, the CEO shall consult with the Chairman if possible, and then the Board of Directors shall be notified of the arrangement without delay.
The CEO shall ensure that Company’s bookkeeping is in accordance with Icelandic law and general practices and that the handling of the Company’s assets is performed in a secure manner.
The CEO is required to provide the Board of Directors and auditors of the Company any information on the operation of the Company that they may request and should be provided by Icelandic law.
Chapter V
Accounting, auditing, etc.
Article 21
At the Company's Annual General Meeting, a statutory auditor or audit firm shall be elected to a term of one year, to audit the Company's accounts and present their conclusions at the Annual General Meeting. The auditor shall have access to all the Company's books and documents for that purpose. Auditors may not be elected from among the company's directors or employees. The qualifications and capabilities of auditors are otherwise governed by Icelandic law.
The Company's operating year and fiscal year is the calendar year. The Board of Directors shall annually complete the preparation of annual accounts and submit to auditors no later than one month before the Annual General Meeting.
Chapter VI
Amendments to the Articles of Association, liquidation, etc.
Article 22
These Articles of Association may only be amended at a lawful Annual General Meeting or an Extraordinary Meeting, as long as it is clearly mentioned in the meeting announcement that such an amendments contemplated and the main elements of the amendment explained. A decision is only considered valid if it receives no less than 2/3 of votes, as well as the consent of shareholders controlling no less than 2/3 of the share capital for which there are votes at the shareholders’ meeting, provided that no other quantity of votes is made conditional in the Articles of Association or Icelandic legislation, cf. Article 93 of the Companies Act.
Article 23
The liquidation of the Company, its division or merger is governed by current Icelandic law on limited companies.
Article 24
Where the provisions of these Articles of Association do not state how to proceed, the process shall be governed by the provisions of applicable Icelandic law on limited companies, as well as other legal provisions.
Thus adopted in Kopavogi on 12 July 2012
As amended in Kopavogi, May 7, 2013
Thus modified in Kopavogi August 20, 2014
Thus modified in Kopavogi 21 October 2014
Thus modified in Kopavogi March 23, 2015
Thus modified in Kopavogi November 20, 2015
Thus modified in Kopavogi March 16, 2016
Thus modified in Kopavogi on 21 November 2016
Thus modified in Kopavogi October 26, 2017
Thus modified in Kopavogi August 20, 2018
Thus modified in Kopavogi September 25, 2018
Thus modified in Kopavogi March 23, 2020
Thus modified in Kopavogi March 22, 2021
Thus changed in Kopavogi on 22 March 2022
Thus modified in Kopavogi on 22 March 2023
Thus modified in Kopavogi on 23 August 2023
Thus modified in Kopavogi March 6, 2024
F.h. Festi hf.:
Appendix No. 1. we agree with Festi hf.
Annual General Meeting of Festi hf. held on March 6, 2024 agrees to authorize the Company's Board of Directors, on the basis of Article 55. Act no. 2/1995 on limited companies, to purchase on behalf of the Company up to 10% of its share capital. This authorisation shall be used for the purpose of setting up a formal repurchase plan or to make a general offer to shareholders for the Company's purchase of its own shares, e.g. through a tender arrangement, provided that the equality of shareholders is observed when inviting participation in such transactions. The Company’s purpose with buybacks is to reduce the Company’s share capital and/or to enable the Company to meet its obligations according to stock option agreements with employees. Upon repurchase, the highest allowable remuneration per share shall not exceed the price of the last independent transaction or the highest available independent bid in the trading systems in which the shares are traded, whichever is higher. The Company's transactions with its own shares must be reported in accordance with Icelandic laws and regulations. This authorisation is valid until the Company's Annual General Meeting in 2025. Other previous authorisations for the purchase of own shares become invalid upon approval of this authorisation.