The amendments to the laws (in English, the laws are known as the Limited Companies Act and Public Limited Companies Act) would revise corporate governance rules, remove certain dividend constraints, and ease the ability for intra-group loans form Norwegian subsidiaries to foreign group companies.
It is uncertain when these amendments would become effective, but it is assumed that they would be effective from 2014 at the latest.
Simplification of incorporation procedures
A simplification of the rules proposed with respect to the incorporation of companies would aim to make the process of incorporation quicker, less expensive, and require fewer external resources. Among the proposed amendments are measures that would
- Repeal the requirement for preparation of an opening balance when the share contribution is made in cash only
- Provide fewer requirements as to what information the articles of incorporation must contain
- Allow for incorporation to be filed for electronically
The proposal would repeal certain rules that concern dividends, including:
- A rule stipulating that a dividend distribution is not to be allowed in instances when the equity capital is lower than 10% of the total shareholder’s equity and liabilities
- Rules constraining the distribution of share premiums
- Rules that require year-end financials in order to allow to distribute dividends; dividends could be distributed based on audited interim accounts
The changes also would allow a vote at the shareholders’ annual general meeting to be used to authorize the board of directors to make a dividend distribution.
The changes would make ownership and general corporate changes easier to implement through: (1) liberalized rules for a company to provide financial assistance in connection with a third person's purchase of its shares; and (2) liberalized rules for a company to have an opportunity to purchase own shares.
Some of the liberalizing measures under the proposal would:
- Allow the annual general meeting to be conducted in other “alternative” formats (e.g., by telephone, e-mail or other media); all that would be required is for shareholders to agree with such alternative methods of holding a meeting
- Allow the company to decide on the number of board members and whether there is to be a general manager
- Repeal a requirement for a company to have a “deputy” in the event the company has less than three board members
Rules on loans
Changes to the rules on loans (and guarantees) to a foreign parent are proposed.
Under these measures, it would be possible for the parent company to be a different legal entity rather than a Norwegian limited liability company, and it would no longer be required that the parent company be domiciled in a country / state that is party to the European Economic Area (EEA) Agreement.
When the parent company is not a Norwegian limited liability company, the credit facility or collateral would need to “serve the group’s financial interests." This requirement would only apply when the parent company is a foreign entity and has a different legal form than a limited liability company (i.e., under the “AS” designation for Norwegian purposes).
Another proposal would reduce the procedural requirements for group loans.
For more information, contact a tax professional with the KPMG member firm (KPMG Law Advokatfirma DA) in Norway:
47 4063 9183
Daniel L. Høgtun
47 4063 9437
Per Daniel Nyberg
47 4063 9265