Reynisson will also have to pay 20,000 lats ($31,000) in fines for violating Latvian securities law by failing to make the share buyout offer before now, the commission decided.
According to the Latvian law on securities, if a single shareholder or shareholders' group has either directly or indirectly acquired more than 50 percent of a company, they have to offer to buy outstanding shares from minority shareholders.
The commission ruled that Reynisson was "related indirectly" to two other Icelandic shareholders of Staburadze - its board chairman, Tryggvi Hallvardsson, and businessman Johann Valbjorn Olafsson, who purchased the company's shares "under Reynisson's order."
Reynisson controls Nordic Food, which owns 43 percent in Staburadze. Together with Hallvardsson and Olafsson, the three own more than 57 percent of Staburadze.
Reynisson called the stock market commission ruling "absurd" and said he would appeal.
"Just because Iceland has a small population doesn't mean we are all just one big family," he told the Latvian business daily Dienas Bizness.
The commission said it had eyed the deal closely.
"We prepared our resolution thoroughly and seriously," Latvian Stock Market Commission's Chairman Viktors Gustsons told The Baltic Times. He said the motives of the commission's decision were confidential.
The Latvian Stock Market Commission launched an investigation into Staburadze last November after Hallvardsson purchased 14.5 percent of company shares from the Latvian bank Latvijas Krajbanka.
In March, Hallvardsson sold 8.5 percent of Staburadze shares to Olafsson, thus decreasing his and Nordic Food's stake in the company to 49.5 percent, the commission said.
After the commission's announcement, the share price has increased only slightly.
"No one believes he (Reynisson) is really going to repurchase these shares as he has problems with cash and other loans," said Ervins Jonass, the head of the treasury and securities department at Latvijas Krajbanka.
According to provisional calculations, more than 1 million lats would be needed to complete the share buyout offer. Reynisson would need to take out significant loans for buying the shares, which would also indirectly affect the operations of Staburadze, the company's spokeswoman Ineta Rudzite told the Baltic News Service.
Reynisson would have to purchase the shares for 1.40 lats to 1.65 lats per share.
"I would sell my shares for any price above 1 lat," Aldis Sipols, a small shareholder of Staburadze, told The Baltic Times. "I do not believe that Staburadze will work normally with such an ownership structure. They should really make it a closed company and then do whatever they want."
The Latvian Competition Council decided on May 17 to allow Staburadze to merge with the country's largest chocolate-maker, Laima. Staburadze purchased 73.2 percent of Laima's shares for $8 million last November, acquiring credit to pay for them.
Competition council chairman Peteris Vilks said that the merger would increase the competitiveness of these companies on the local and international markets.
Reynisson denied that he is merging the two companies to sell them. "We haven't come to Latvia to make financial speculations," he stressed.