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. 

See attachment
Rules on Foreign Exchange nr. 1130, December 15, 2008