Good corporate governance is an important foundation for trust, accountability and sound corporate decision-making. A clear division of responsibilities, transparency and active managerial accountability strengthen companies’ foundations and contribute to a healthy and competitive business environment.

The Guidelines on Corporate Governance are now issued for the seventh time by the Iceland Chamber of Commerce, SA – Business Iceland and Nasdaq Iceland. Since the first edition was published in 2004, the Guidelines have evolved in line with changes in Icelandic business, the legal environment and international standards of good corporate governance. As before, the objective is to provide company boards and managers with practical standards for discharging their roles diligently and responsibly, thereby promoting trust among shareholders and other stakeholders.

The Guidelines continue to be based on the "comply or explain" approach. This provides important flexibility, as companies differ in size, activities, ownership and organisation, and the same arrangements will not necessarily suit them all. A reasoned explanation of a deviation that gives stakeholders a clear picture of the considerations underlying it may be as consistent with good corporate governance as compliance with an individual recommendation.

From the outset, the preparation of the seventh edition focused on continuing to develop the Guidelines without unnecessarily increasing their scope or the requirements imposed on companies. Before the review, the views of member companies of the Iceland Chamber of Commerce and SA – Business Iceland, companies listed on Nasdaq Iceland and other stakeholders were sought regarding their experience of the Guidelines and the need for amendments. The consultation indicated general satisfaction with the principal substance of the Guidelines, with calls for simplification and clearer presentation rather than extensive substantive changes.

That conclusion shaped the work on this edition. The text has been reviewed and simplified, the number of footnotes reduced, terminology harmonised and definitions consolidated in one place. The general wording of the recommendations has also been changed from using terms such as "shall" or "must" to "should" to better reflect their nature as guiding standards. The use of "shall", "must" and "should" in individual recommendations should not, in itself, be understood as giving them different weight. A company that states that it complies with the Guidelines must continue either to comply with each recommendation or clearly explain any deviation. The discussion of Director independence has also been clarified by distinguishing independence from the Company and its Day-to-day Management, on the one hand, and independence from Major Shareholders, on the other. This edition also places greater emphasis on the role of internal controls and the Audit Committee in promoting reliable disclosure to stakeholders.

The review also took account of changes in the legal environment since the previous edition and developments in international corporate governance standards. Once a draft of the seventh edition had been prepared, it was circulated to key stakeholders for comment, and numerous useful observations were received and taken into account in finalising the Guidelines.

Further details on the substantive comments received, the publishers’ position on those comments, and the amendments made are set out in a supplementary report on the review of the seventh edition.

The publishers hope that the seventh edition of the Guidelines will continue to serve as a practical tool for boards and executives and support companies in developing their corporate governance practices in the manner best suited to their operations. Good corporate governance is not a static framework of rules, but an ongoing endeavour founded on accountability, transparency, and regular assessment of how companies can best be governed.