Is being a shareholder in a Norwegian company "A piece of cake"? Part 1
September 29, 2021
We would like to introduce the subject of shareholders’ rights and obligations in an aksjeselskap – AS that might be compared to Polish Sp. z o.o., Swedish AB or English LTD.
Obviously, the answer to the question contained in the title depends on the individual situation of the shareholder. If someone has never owned a company in their country of origin, they may feel slightly lost in the Norwegian laws and regulations.
Our experience shows that the situation of each client should be considered individually. One of our clients - Ms. Novak did not enjoy the obligations of a limited liability company’s owner in Czechia. Therefore she chose to establish a sole proprietorship in Norway. However, her business is developing so quickly and steadily that Novum recommends her to establish an AS company.
Three partners: Thomas, Anders and Piotr have only just received a contract proposal in the construction industry. They were considering to open a sole proprietorship - enkeltpersonsforetak (ENK), instead of paying the share capital and establishing a Norwegian limited liability company in order to save the initial costs. However, opening an AS would give them full-time employment and social rights on an equal level with employees. After thorough consideration, they decided in favor of an AS, also because it gives more credibility on the market.
Have you opted for the limited liability company – AS? What’s next
In order to become an owner of the company one can acquire shares or contribute share capital in the amount corresponding to the number of shares held. Holding shares entails certain obligations, but also privileges, e.g. the right to vote at the general meeting of the board (generalforsamlingen) and the possibility of getting dividends. One has to be aware that the share capital should be replenished so that it would be at a safe (forsvarlig) level.
Dividend
The profit generated by the company may be paid to shareholders in the form of a dividend. The amount of the dividend should be determined taking into account the company's situation. The requirement of "safe" capital and financial liquidity (forsvarlig kapital i likviditet) has to be met.
The decision to pay out dividends is made by the general meeting of shareholders based on the management board's proposal. It is not possible to set the amount of the dividend higher than that proposed by the management board.
The dividend tax for private persons is calculated on a different basis than the tax for legal persons (companies).
Shareholders outside the European Union and the EEA
It is worth knowing that citizens from countries outside the EU and the European Economic Area can become shareholders in a Norwegian company. However, matters become more complicated when the management board is appointed and when such persons actually influence the management of the company. Also in this case, it is best to consult the matter with an authorized accounting office!
In the next post, we will write about the division of shares in a Norwegian company on how to diminish damaging outcome of a conflict between the shareholders.
Do you consider establishing company in Norway, but you don’t know what type is best for you? Let’s talk!
Novum Økonomi AS is authorized accounting and consulting office with almost 20 years’ experience and also an expert in establishing and running business in Norway. We are as well specialized in payrolls and HR for foreign companies. Our portfolio includes companies from many industries including: construction, IT, shipbuilding, trade, hiring of employees etc.
