Norway: Doing Business In

Norway is a civil law country.

• Private limited liability companies (No. ‘aksjeselskap’, abbreviation “AS”), regulated by the Norwegian Private Limited Liability Companies Act;
• Public limited liability companies (No. ‘allmennaksjeselskap’, abbreviation “ASA”), regulated by the Norwegian Public Limited Liability Companies Act;
• Companies with liability (abbreviations «ANS» or «DA»), regulated by the Norwegian act of 21 June 1985 no. 83;
• Limited partnerships (No. ‘kommandittselskap’, abbreviation “KS”), regulated by the Norwegian act of 21 June 1985 no. 83;
• Co-operatives (No. ‘samvirkeforetak’, abbreviation “SA”), regulated by the Norwegian act of 29 June 2007 no. 81
• A permanent establishment of a foreign entity (No. ‘Norsk avdeling av Utenlandsk Foretak’, abbreviation NUF) regulated in home jurisdiction and subject to registration in Norway in accordance with the Norwegian act of 21. June 1985 no 78
• Foundation (No. ‘Stiftelse’) regulated by the Norwegian act of 15 June 2001 no 59.
• Sole proprietorships (will not be further included in this questionnaire)

A non-domestic entity carrying out a business in Norway would not necessarily have to incorporate a Norwegian legal entity but would have to register in the Norwegian Business Register as a NUF (see above), as well as for general business purposes such as tax purposes and employer status, and other regulatory purposes depending on the scope of the business.

Public and private limited liability companies have requirements for minimum share capital amounts prescribed by law, and in addition requirements prescribed by law concerning the maintaining of proper levels of equity and liquidity. Also limited partnerships (“KS”) have requirements for a determined capital.

Both public and private limited liability companies, as well as co-operatives are established by a memorandum of incorporation including a minimum set of articles of association, to be filed with the Norwegian Register of Business Enterprises, together with necessary confirmations of share capital insertion from a body with the legal authority to confirm.

Companies with liability (ANS and DA) and limited partnerships (KS) are established by entering into a company agreement, also to be filed with the Norwegian Register of Business Enterprises.

Public and private limited liability companies are required to have a board of directors. For public limited liability companies, the minimum number of required board members is three (five if the company has a corporate assembly as defined in the public limited liability companies act). The minimum number of required board members for private limited liability companies is one (five if the company has a corporate assembly as defined in the private limited liability companies act). The board of directors has the responsibility for administration and supervision of the company and passes its resolutions in meetings unless the chair of the board finds that the matter may be submitted in writing or handled in another manner. There is a requirement pursuant to the public and private limited liability companies acts that the procedure must be adequate.

Public limited liability companies are required to appoint a general manager, while private limited liability companies may appoint a general manager.

For public limited liability companies, the minimum number of required board members is three, while the minimum number of required board members for private limited liability companies is one (in both cases five if the company has a corporate assembly as defined in the public or private limited liability companies act, cf. above under question 6).

The general manager and at least half of the board members shall pursuant to the Norwegian Public Limited Liability Companies Act and the Norwegian Private Limited Liability Companies Act be

1. resident in Norway;
2. citizens of states that are part to the EEA agreement or citizens of the United Kingdom of Great Britain Northern Ireland, when they are resident in such state.

The employees of a public limited liability company or a private limited liability company may have the right to appoint board members if certain thresholds stipulated in the legislation are met.

In public limited liability companies there are also certain gender representation requirements.

From a corporate law perspective, there are no restrictions in expanding business operations in Norway. Unless specifically noted in the articles of association, an entity or establishment is free to work with trade/commercial agents and resellers.

The Norwegian Corporate Governance Board (“NCGB” or “NUES”) issues the recommendation on corporate governance for Companies listed in Norway. For more information, please refer to English | NUES.

Share capital increases, potentially including share premium, are in private limited liability companies executed in accordance with Chapter 10 of the Norwegian Private Limited Liability Companies Act and may be made by for example cash contribution. A resolution for a share capital increase by cash contribution shall be passed by the general meeting of the company following a proposal by the board of directors and requires a confirmation of received share deposit by an entity with authorization to make such confirmation and shall be registered in the Norwegian Register of Business Enterprises.

Dividends from a private limited liability company may be distributed if certain criteria stipulated by law are met based on the latest approved annual accounts, and extraordinary dividend may also be based on an interim balance provided that certain requirements which are outlined in the Norwegian Private Limited Liability Companies Act are met. A general requirement that the company shall have a proper equity following a dividend distribution also exists. Distribution of dividend is resolved by the general meeting following a proposal by the board of directors.

The general rule under the Norwegian Private Limited Liability Companies Act is that the general meeting passes resolutions by simple majority of the votes cast, provided that the Norwegian Private Limited Liability Companies Act does not stipulate otherwise. The Norwegian Private Limited Liability Companies Act requires that resolutions to amend the articles of association of the company requires a majority of two thirds of both the votes cast and the share capital represented at the general meeting. Further, the Norwegian Private Limited Liability Companies Act also contains regulation that certain and specific types of resolutions require a qualified majority of the supporting vote of owners of shares comprising more than nine-tenths of the share capital represented at the general meeting and in addition a majority as required for amendments of the articles of association. Certain and specific types of resolutions may under the Norwegian Private Limited Liability Companies Act also require the majority of all shareholders.

The shareholders of a private limited liability company pass their resolutions through the general meeting of the company which is the highest corporate body of the company. Outside the general meeting the shareholders do not have authorization in the company, and any instruction to the board of directors of the company must consequently be made through a resolution in the general meeting.

A dismissal must be objectively justified based on circumstances which can be related to the undertaking, the employer or the employee.

Before termination of an employment contract, the employer shall arrange for a consultation meeting with the employee.

In the consultation meeting, the employer should explain the reasons for considering termination, and let the employee give his/her statement about these and other reasons why the termination should not be carried out. After the meeting, the employer must take into consideration what was said during the meeting before making a final decision regarding the termination.

The dismissal must be given in writing and shall include specific formalities and information. A dismissal which does not fulfill the specific requirements and formalities is not valid and may be considered as void.

In the event of collective dismissals, the employer shall at the earliest opportunity enter into consultations with the employees’ elected representatives with a view to reaching an agreement to avoid collective dismissals or to reduce the number of persons who will be dismissed. Further requirements related to the cause of the termination and formal requirements in the dismissal also applies in the event of collective dismissals.

The Companies Act of 13 June 1997, No. 44 and No. 45, states that all companies established in accordance with the acts are obliged to form a corporate assembly if the company employs more than 200 employees. The corporate assembly will have a minimum of 12 members, according to decisions made by the general meeting of the shareholders. One-third of the members of the corporate assembly shall be employees elected by the employees. The duties of the corporate assembly are to elect members of the company board, supervise the board and the general manager’s management of the company, and make a statement to the general meeting of the shareholders regarding the accounts.

It is possible to make agreements with the employees that the company shall not establish a corporate assembly, and the company’s articles of association may also stipulate a corporate assembly even if the company employs fewer than 200 employees.

The employees of a company without a corporate assembly can request that there are employee representatives on the board of the company. Such request must be proposed by a majority of the employees, and employee representatives on the board may only be requested if the company employs more than 30 people. The number of employee representatives on the board depends on the size of the company.

Yes, there is anti-bribery legislation in Norway, as well as legislation proscribing the facilitation of tax evasion, both forms part of the Criminal Code of 20 May 2005 no. 28. In both cases, a corporate entity can be liable for failure to prevent bribery or the facilitation of tax evasion (as the case may be).  In addition, a number of laws regulating fraudulent conduct are likely to be relevant in the context of acts of bribery or corruption.

See responses to question 17, above. In certain circumstances, there may be an obligation to report money laundering to the relevant law enforcement agency. In general terms, the obligation applies to individuals and organizations operating in certain regulated sectors, such as banks, law firms, accountancy practices, casinos and estate agents.

Money laundering and terrorist financing activities are proscribed by the Criminal Code of 20 May 2005 no. 28. Measures to combat this type of activity is set out in The Anti Money Laundering and Terrorist Financing Act of 1. June 2018 no 23. Broadly, this legislation: (i) requires obliged entities to undertake appropriate customer due diligence; (ii) requires obliged entities to establish an internal money laundering reporting function.

The Norwegian Transparency Act of 18 June 2021 No. 99 (åpenhetsloven) will enter into force 1 July 2022.

The Act shall promote enterprises’ respect for fundamental human rights and decent working conditions in connection with the production of goods and the provision of services and ensure the general public access to information regarding how enterprises address adverse impacts on fundamental human rights and decent working conditions.

The Act applies to Norwegian and foreign enterprises residing in Norway, which are offering goods and services in or outside of Norway, and which is one of the following:

• the enterprise is covered by Section 1-5 of the Accounting Act (i.e. public limited companies, listed companies and other accounting entities), or
• an enterprise which, on the balance-sheet date, meets at least two of the following three conditions:
• over 70 MNOK in sales revenue,
• over 35 MNOK in balance sheet total,
• over 50 man-years in the average number of employees in the financial year.

The enterprises must carry out due diligence in accordance with the OECD Guidelines for Multinational Enterprises. Through due diligence the enterprises must

1. embed responsible business conduct into the enterprise’s policies
2. identify and assess actual and potential adverse impacts on fundamental human rights and decent working conditions that the enterprise has either caused or contributed towards, or that are directly linked with the enterprise’s operations, products or services via the supply chain or business partners
3. implement suitable measures to cease, prevent or mitigate adverse impacts based on the enterprise’s prioritizations and assessments pursuant to (b)
4. track the implementation and results of measures pursuant to (c)
5. communicate with affected stakeholders and rights-holders regarding how adverse impacts are addressed pursuant to (c) and (d)
6. provide for or co-operate in remediation and compensation where this is required.

The due diligence must be carried out regularly and in proportion to the size of the enterprise, the nature of the enterprise, the context of its operations, and the severity and probability of adverse impacts on fundamental human rights and decent working conditions.

The enterprise must report annually on how the due diligence process is handled, adverse impacts revealed that the enterprise contributes to or can potentially contribute to, and what the enterprise does to prevent such adverse impacts.

When the Transparency Act enters into force as from July 1, 2022, any person has the right to ask the enterprise to provide information on how actual and potential adverse impacts are addressed, either in general or related to a particular product or service that the enterprise offers. The information must be provided in writing within three weeks.

Enterprises that do not uphold their duties in accordance with the Transparency Act, risks getting sanctions from the Norwegian Consumer Agency. Sanctions may include injunctions/prohibitions, compulsory fine, and fine for violations.

A private limited liability company shall pursuant to the Norwegian Private Limited Liability Companies Act hold an ordinary general meeting within six months following the end of each financial year of the company. At the ordinary general meeting, one of the items prescribed by law to consider and decide is the annual accounts and potential annual report, including distribution of dividend.

The annual accounts shall be audited. There are however certain exemption rules for auditing requirements which are detailed in the Norwegian Private Limited Liability Companies Act (certain thresholds which the company must meet), and provided that the company meets the requirements for such exemption, a decision to omit auditing may be made when incorporating the company or passed by the general meeting of the company.

The annual accounts, annual report and auditor’s report shall be public and must pursuant to law be sent to the Register of Company Accounts.

Please refer to item 23 below.

A private limited liability company must hold an ordinary general meeting each year, within six months from the end of the company’s financial year, with the following required matters to be considered and decided upon pursuant to section 5-5 of the Norwegian Private Limited Liability Companies Act:

1. approval of the annual accounts and potential annual report, including distribution of dividend.
2. other matters which pursuant to the law or the articles of association pertain to the general meeting.

On 1 November 2021, the law related to identification of beneficial owners entered into force in Norway. The purpose of the new rules is for public authorities, AML(“anti-money-laundering”)-reporting entities and the public to have better access to information about who actually controls companies in Norway. The companies must gather and document information about beneficial owners, including size of ownership interests and the scope of voting rights the beneficial owners have. The information shall be provided to the authorities when needed.

The main tax is corporate income tax that is levied on the profits of the company, which consists of business/trading income, passive income and capital gains (with the broad exemptions outlined below). The rate of corporate income tax is 22%. Normal business-related expenses are usually deductible in the computation of the taxable income. Whether the costs are deductible in the income year they are incurred or must be depreciated over a longer period, depends on the nature of the costs.  Losses can be carried forward indefinitely and can be offset against any type of income/gain. Companies with employees are also liable for employer’s contribution tax. This tax is differentiated regionally and ranges from 0 to 14.1 %.  Note that the employer’s contribution tax is deductible as an expense when computing the company’s taxable corporate income.

Dividends and capital gains on shares are as a starting point taxable. However, pursuant to the Norwegian participation exemption method, dividends and capital gains on shares derived from Norwegian limited companies and limited companies tax resident in the EEA area are largely tax exempt. Only 3% of dividends are subject to the corporate income tax of 22% (resulting in an effective taxation of 0.66%). The participation exemption method can also apply to gains on shares and dividends from limited companies tax resident in non-EEA countries, provided that the company is not resident in a low-tax jurisdiction. An additional requirement for non-EEA companies is that the shareholder owns at least 10% of the shares and voting rights in the company over a two-year period. Intragroup dividends from Norwegian companies are 100% tax exempt, provided the ultimate parent company owns more than 90% of the shares and voting rights of in the company grating the group contribution and the recipient of the group contribution. If said requirements are met, the Norwegian companies can also distribute group contributions to and from each other, to offset profits in one part of the group with losses in another.

Norway does also have Controlled Foreign Company (CFC rules) whereby Norwegian owners are taxed for the income earned by low-taxed companies resident abroad.

Certain industries, oil and waterpower, are subject to special tax regimes.

One incentive regime is «SkatteFUNN». The purpose of this regime is to provide incentives for investments into R&D. In this incentive scheme, a company can receive a tax credit of 19% of the cost related to a R&D project. The tax credit of 19% is not applicable for costs above NOK 25 million per income year and certain other limitations. If the tax credit exceeds the taxpayer’s tax for the income year, the difference will be paid to the taxpayer. Note that it is a requirement that the R&D project has been approved by the Norwegian Research Council (“Forskningsrådet”). Furthermore, the form in the corporate income tax return applying for the tax credit must be signed off by an auditor.

There is also a tax incentive scheme relating to share options in startup companies. Under this incentive scheme, neither the offering nor the exercise of the option will be taxable for the employees in the share option program. I.e., the taxation will take place when the employee sells the shares. There are however several requirements that must be met for the company employing the participants in the share option program. The company cannot i.e., be older than 10 year at the time of the offering of the options. Furthermore, it cannot have more than 50 full time employees, or a balance and turnover that exceeds NOK 80m. There are also restrictions as to the business activities the startup company can engage in.

Shipping companies are subject to a generous tonnage tax regime where operating income is basically exempt and finance income is taxable at the ordinary CIT rate.

Domestic rules contain provisions for levying withholding taxes (“WHT”) on dividends, interest, and royalties. Note however that WHT on royalty and interest payments is limited to where the recipient is a related party entity tax resident in a low-tax jurisdiction. The rate of WHT is 15% for both interest and royalty payments. An exemption to this applies for residents of EEA countries that are carrying out real economic activities in the EEA state.  The statutory WHR rate on dividend distributions is 25%. However, no WHT is levied on dividends paid by a Norwegian limited company to an EEA resident corporate shareholder, provided that the dividend is lawful according to company law and the shareholder carries out real economic activities in the EEA state.

If the above-mentioned exemptions are not available, relief from WHT can be sought from tax treaties to avoid double taxation. Currently, Norway has entered into tax with more than 90 jurisdictions. Most of the treaties are based on the OECD model. Through these treaties WHT on dividends, royalties and interest payments may be reduced or altogether eliminated.

There is no branch remittance tax.

There is no withholding tax to fees for technical services (unless a part can be deemed as royalty, see above.

No significant transfer taxes are levied in Norway.

The Norwegian rules on takeover bids are stipulated in the Norwegian Securities Trading Act Chapter 6 and the Securities Trading Regulations Chapter 6. The rules implement Directive 2004/25/EF on takeover bids (the Takeover Directive). The obligation to make a mandatory bid is triggered by the acquisition of shares representing more than 1/3 of the voting rights in a company listed on a Norwegian regulated marked. The mandatory bid obligation is again triggered by acquisitions of shares representing more than 40 % and 50 % of the voting rights (repeat bid obligation).

More information: Oslo Børs as the Norwegian Takeover Supervisory Authority | euronext.com

Yes, there is. Companies and other business enterprises have a duty to notify the Norwegian Competition Authority of any mergers, acquisitions and agreements by which they acquire control of other companies, if the turnover of the undertakings concerned exceeds certain turnover thresholds, see Section 18 of the Norwegian Competition Act. The Act uses the term “concentrations” about such mergers, acquisitions and agreements.

A concentration must be notified to the Authority if the combined annual turnover of the undertakings concerned exceeds NOK 1 billion in Norway. However, there is no duty to notify a concentration if only one of the undertakings concerned has an annual turnover exceeding NOK 100 million in Norway. Concentrations may not be implemented before the Norwegian Competition Authority has received a notification and has finalised its review of the notified transaction (standstill obligation).

More information: Mergers and acquisitions – Konkurransetilsynet

In general, no. There is a requirement to act loyal to contracting parties.

The rights and obligations for the employer and employee differ depending on whether an asset or share deal is undertaken.

Asset deal

If the employee is being acquired through the sale of assets to a third party, a transfer of ownership of the undertaking is likely. Whenever there is a change of ownership of undertakings, the employees do have rights according to the EU Directive 2005/56/EF, which is implemented in Norwegian Law. Local Norwegian legislation defines clear obligations towards employees in the event of transfer of ownership of undertakings in the Working Environment Act (WEA) of 2005 chapter 16. According to chapter 16, the new and former employer shall inform the employee’s elected representatives and the employees in due time before the merger.

As a minimum, the employees must be informed 14 days before the transfer of undertaking. The employees’ elected representatives should be informed in advance so that the process will allow for minimum discussions and consultation. The information to the employees and employee elected representatives should as a minimum include the following:

• the reason for the transfer,
• the agreed or proposed date for the transfer,
• the legal, economic and social implications of the transfer for the employees,
• changes in circumstances relating to collective pay agreements,
• measures planned in relation to the employees,
• rights of reservation or preference and the time limit for exercising such rights.

Mandatory legislation does not require negotiations on the mentioned topics, but a minimum of discussions and consultations with the employee elected representatives is required. Special rules related to process, negotiations, consultation and timelines may be laid down in an applicable CBA.

If the previous or new owner is planning measures in relation to their respective employees, such as restructuring/changes of work/positions, terminations etc., they shall consult with the elected representatives as early as possible on the measures with a view to reaching agreement. The timeline must allow for the employees’ elected representative to do appropriate investigations.

As a main rule, the employee is entitled to, and obliged to, be transferred to new employer if the deal is covered under the EU Directive 2005/56/EF. The individual rights and obligations in the contract of employment on the date of transfer shall be transferred unchanged to the new employer, cf. WEA § 16-2 (1). An employee may object to the transfer of the employment relationship (right of reservation) to the new employer and has a minimum of fourteen days counting from the day that the information regarding the transfer is provided, cf. WEA § 16-3.

Share deal

There is no specific obligation to inform and discuss a share deal with the employees in advance, however, there is a general duty for employers employing more than 50 employees to inform and discuss issues of importance with the employees’ elected representatives. A share deal could represent an issue of importance. The information to the employees’ elected representatives shall be provided “as soon as possible”. According to case law, the consultation should already be done at the stage of planning the change. The employees’ elected representatives should be allowed an “appropriate amount of time” to assess the information, make appropriate investigations and prepare any consultations. Normally some days are needed for submitting invitation to consultation to hold the meeting, up to maximum one week, depending on whether any of the parties are covered under a CBA.

If the employer is covered under a CBA, the CBA may require to inform the employees’ elected representatives about the transfer of shares immediately after the board has certain knowledge of the transfer when the change of ownership is above a certain threshold.

The National Security Act of 1. January 2018 no 24 requires the notification of certain proposed transactions involving entities operating in certain specified sectors of the economy. Notifiable transactions cannot proceed to completion without approval having first been obtained from the Ministry of Justice and Public Security. There are also many-faceted restrictions on the purchase of land, as set out in Act of 28 November 2003 no. 98 on concession to purchase land. Foreign investments in the hydro power production sector are further severely restricted under the Water Rights Act of 14. December 1917 no. 16.

Norway has no relevant exchange control requirements.

The dissolution and liquidation of a private limited liability company is regulated in Chapter 16 of the Norwegian Private Limited Liability Companies Act.

A private limited liability company may be dissolved and liquidated by resolution of the general meeting of the company. The dissolution and liquidation process requires to be started by a resolution of the general meeting which must be notified and registered in the Norwegian Register of Business Enterprises, triggering a six-week creditor notice period. There are certain further obligations for the board of directors to be made during the liquidation period, which are detailed in Chapter 16 of the Norwegian Private Limited Liability Companies Act, before an audited final settlement may be presented to the general meeting. When the general meeting has resolved to approve the audited final settlement, a notification to the Norwegian Register of Business Enterprises on the final dissolution and deletion of the company from the register may be sent.

The foregoing is only a brief and not exhaustive overview of the process, and details to be adhered to follows from Chapter 16 of the Norwegian Private Limited Liability Companies Act.