Benefits of Making Business in Iceland | Buy & Sell Business

1. BENEFITS OF MAKING BUSINESS IN ICELAND WWW.MERGERSCORP.COM

2. At MergersCorp M&A International we help our clients confidentially buy and sell privately held businesses, aligning the interests of all parties for mutual success and satisfaction. It is our goal to make the process of either buying a new business or selling your current business as smooth and efficient as possible. We know how important confidentiality is to our sellers and we treat it with the utmost importance. WWW.MERGERSCORP.COM

3. BENEFITS OF MAKING BUSINESS IN ICELAND WWW.MERGERSCORP.COM

4. Country Overview Iceland, island country located in the North Atlantic Ocean. Lying on the constantly active geologic border between North America and Europe, Iceland is a land of vivid contrasts of climate, geography, and culture. The capital, Reykjavík (“Bay of Smokes”), is the site of the island’s first farmstead and is a thriving city, handsome in aspect and cosmopolitan in outlook. Other major population centres are Akureyri, on the north-central coast; Hafnarfjördhur, on the southwestern coast; and Selfoss, in the southern lowlands. Iceland’s rugged coastline, of more than 3,000 miles (4,800 km), meets the Greenland Sea on the north, the Norwegian Sea on the east, the Atlantic Ocean on the south and west, and the Denmark Starit on the northwest.

5. Executive Summary The population of Iceland is extremely homogeneous. The inhabitants are descendants of settlers who began arriving in AD 874 and continueda in heavy influx for about 60 years thereafter. The Lutheran faith has been the dominant religion since the mid- 16th century. More than two-thirds of the population belongs to the state-supported Evangelical Lutheran church. There is freedom of religion. The economy is based heavily on fishing and the production of a broad variety of fish products, but it also includes manufacturing and services. Exports account for about two-fifths of the gross national product.

6. Introduction – Doing business in Iceland Ease of Doing Business in Iceland averaged 16.58 from 2008 until 2019, reaching an all time high of 26 in 2019 and a record low of 9 in 2011. Business operations may be conducted in a variety of forms. Foreigners have customarily established a branch of a limited company in Iceland. It is also possible to establish an independent company (subsidiary) in Iceland or buy stocks in Icelandic companies, though not in certain types of them such as those engaged in fisheries and primary fish processing. Icelandic company law is in line with the requirements of the company law provisions of the Agreement on the European Economic Area, and consequently EU company law.

7. Conducting business in Iceland The operating forms of business in Iceland include: • Sole proprietorship/firm. •Public limited companies/publicly owned companies/private limited companies. •Co-operative societies. •Partnerships. •Self-governing corporate entities. Special licenses, permits or rights are needed to establish a company, as these demonstrate recognition by the authorities. Anyone starting a business in Iceland must have an identification (ID) number, which is a ten-digit number.

8. Taxation in Iceland Before the year 2016 Iceland used a 3-tier income tax system base on the individual's level of income. Since 2016, Iceland uses a 2-tier system. Children under 16 years must pay 6% income tax if their annual income exceeds 180,000 ISK. For the Person with unlimited tax liability The rate of income and municipal tax is calculated on two levels: 36,94 % for income between ISK 0 - 927.087 pr. month 46,24 % for income exceeding ISK 927.088 pr. Month For the Persons with limited tax liability The rate of income and municipal tax is calculated on two levels; 36,94 % for income between ISK 0 - 927.087 pr. month 46,24 % for income exceeding ISK 927.088 pr. month

9. Trade Iceland is the 103rd largest export economy in the world. In 2017, Iceland exported $5.63B and imported $7.53B, resulting in a negative trade balance of $1.9B. In 2017 the GDP of Iceland was $23.9B and its GDP per capita was $53.2k. The top exports of Iceland are Raw Aluminium ($2.02B), Fish Fillets ($936M), Non-fillet Frozen Fish ($383M), Animal Meal and Pellets ($185M) and Non-fillet Fresh Fish ($182M), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Refined Petroleum ($678M), Cars ($630M), Aluminium Oxide ($606M), Planes, Helicopters, and/or Spacecraft ($534M) and Carbon-based Electronics ($310M).

10. Banking in Iceland The Central Bank of Iceland is an independent institution owned by the State and operating under the auspices of the Prime Minister. Its objective is to promote price stability, financial stability, and sound and secure financial activities. As of 1 January 2020, the Central Bank is responsible for the tasks entrusted by law and Governmental directives to the Financial Supervisory Authority, and the financial supervision is now part of the Central Bank. There are three commercial banks in Iceland, Arion Bank, Islandsbanki and Landsbankinn, and one investment bank, Kvika.

11. Our M&A Process NEGOTIATION & CLOSE POST MERGER INTEGRATION (PMI) INTEGRATION (PMI) POST MERGER TARGET APPRAISAL APPROACH DUE DILIGENCE Key Areas  Target & market analysis;  Initial assessment of synergies & value drivers;  Indicative valuation;  Go or No-Go decision;  Preparation of transaction documents (NDA – Non- disclosure Agreement/LOI- Letter of Intent);  Select Transaction team;  Appoint advisors;  Consider funding ability.  Initial approach letter;  Signing of NDA;  Prepare & share initial information requests;  Formulation of LOI (Letter of Intent) & possible negotiations;  Initial meeting and Q&A;  Circulate information on the Target to the Transaction team.  Set scope of due diligence;  Set up VDR (virtual data room);  Coordinating of due diligence, further meetings and Q&A sessions;  Consider points relevant to the Post-Merger (PMI) phase;  Revisit indicative valuation & prepare detailed valuation based on due diligence findings;  SPA negotiations with the seller;  Development of final structure (share/asset deal) and final valuation;  Approvals;  Signing of SPA & Close.  Consider the extent of integration;  Development of 100 Day PMI Plan;  Consider short & long term objectives;  Estimate requirements to capture synergies;  Determine resource needs & optimal allocation. Parties Involved  CFO;  Head of M&A;  Accountants;  Corporate finance advisors;  Consultants.  Senior management;  CEO, CFO, CTO;  Strategy director;  Head of M&A;  Head of Business Development;  Consultants.  Company general counsel;  Lawyers;  Senior management.  Company general counsel;  Lawyers;  Senior management/HR. 11 © Midaxo 2018 www.midaxo.com

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13. MergersCorp.com The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. Member firms of the MergersCorp network of independent firms are affiliated with MergersCorp International. MergersCorp International provides no client services. No member firm has any authority to obligate or bind MergersCorp International or any other member firm vis-à-vis third parties, nor does MergersCorp International have any such authority to obligate or bind any member firm. Copyright © 2020 MergersCorp International. All rights reserved. 13 © Midaxo 2018 www.midaxo.com