Accountancy in Norway

>> Choice of Legal Form in Norway

Limited liability company (AS) /  Public limited liability company (ASA)

The New Norwegian Companies Acts were passed by the Norwegian Parliament on June 13th, 1997. The new laws were enacted on January 1st, 1999. The most common type of corporation for small companies is the limited liability company (AS), whereas large companies often choose to establish themselves as public limited liability companies (ASA). The two corporate forms will now be governed by two separate Acts. The two acts are to a large extent similar in structure and content.

The main difference between AS and ASA is that only ASA companies may invite subscriptions from the general public for the purpose of obtaining new share capital. An AS may only make limited placings, and issue shares to a specific group of investors.

Another important difference is the minimum share capital requirement. An AS must have a minimum share capital of NOK 30,000, whereas an ASA must have a minimum share capital of NOK 1,000,000.

As a general rule, shares in an ASA are freely negotiable, but the articles of association may stipulate that the consent of the board of directors is required. Acquisition of shares in an AS requires the consent of the company’s board of directors unless otherwise provided for in the articles of association. The shares in an ASA must be registered with a register of securities. This is optional for  AS companies.

An ASA may have non-voting shares or shares with limited voting power for up to half the share capital. An AS may freely limit the voting rights of its shares.

The formation rules are generally the same for an ASA and an AS. The documentation requirements regarding non-cash contributions are somewhat more stringent for an ASA. This also applies when the share capital is to be increased.

In an AS with less than 20 shareholders, the general meeting may be held without an actual meeting being convened as long as none of the shareholders so demand. In an ASA, a meeting must be held for the general meeting to adopt valid resolutions. There are different requirements regarding the number of directors and the general management.

The rules on mergers and demergers are less complicated for an AS than for an ASA.

Pursuant to the Accounting Act the additional information to be supplied in the annual accounts is considerably more comprehensive. The valuation rules, however, are not materially different.

Partnerships

A partnership involves two or more people carrying on a common business. Most partnerships are unlimited liability ventures with all partners having joint liability for the debts of the business.

Any business debts may be recoverable from partners’ personal as well as business assets. Personal debts may be recovered against a partner’s individual share of the business.

Partnership profits are shared by the partners as income and they pay tax on this income in the same way as for a sole trader.

Sole traders

A sole trader is a person carrying on business on their own account. The business and personal affairs of the individual are not separated in any way. Any debts, whether business or personal, can be recovered against business and personal assets. All business profits are treated as income for the individual.

Branch / Representative office

An overseas business wishing to commence operations in Norway does not need to set up a company in Norway. As alternatives, it can establish a “place of business”, a representative office or a branch. These subsidiary entities are all part of the inbound corporate investor and reflect the increasing legal and corporate substance of the Norwegian presence. All require to be registered with the Registrar of Companies.

All these entities will need to file, annually, the financial statements of the overseas business and will need to deal with corporation tax, VAT and employment matters in the same way as any other business in Norway.


Latest version updated 20th December 2017

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