This law amends rules governing public support for innovation companies to simplify administration of the support system. Key changes include allowing small companies with annual costs under 125 million ISK to receive two-year approvals instead of one year, extending the management period from two to three years, and establishing clear rules about purchased research services where such costs can never exceed 20% of maximum project costs. The law also requires assessment of a parent company's financial position when evaluating whether an innovation company is in financial difficulty, and mandates that collaboration agreements must accompany applications.