The UK formally withdrew from the EU and the EEA-agreement on 31 January 2020. The transition period during which the UK were to be treated as if it still were a member of the EU and part of the EEA-agreement, lapsed on 1 January 2021.
The Norwegian Private Limited Liability Companies Act (the "Companies Act") has several provisions under which it is relevant whether or not a state is an EEA-state. Brexit will impact the applicability of certain provisions when there are British companies in Norwegian group structures and where British citizens serve as directors on the board or as general manager of Norwegian companies.
Residential and nationality requirements
The Companies Act Section 6-11 sets out provisions on residential and nationality requirements for the general manager and the directors of the board. The general manager and at least half of the board must consist of persons resident in Norway. This requirement does not apply to citizens of EEA-states when they also are resident in an EEA-state. This means that the general manager and the whole board may consist of only foreign persons if they are citizens of and resident in an EEA-state.
As of 1 January 2021, companies with general managers and boards of which more than half of the directors are UK citizens, will no longer qualify for the exemption. This means that such boards are no longer validly composed, and the companies may risk forced liquidation proceedings, cf. Section 16-15 subsection 1 no. 2 of the Companies Act.
The Norwegian Government recently proposed new legislation related to the geographical requirement. The new legislation will include UK citizens and resident in the Companies Act Section 6-10, meaning that citizens of UK and EEA-states will fulfil the residential and nationality requirements if they are resident in such state.
The legislation is yet to be approved by the Parliament. In addition, the legislation is subject to Norway and the UK entering into a free trade agreement. If they cannot come to an agreement regarding free trade, the Norwegian Government cannot give special treatment to UK, due to Norway’s obligations towards the World Trade Organisation.
It is however in the meantime possible to apply for exemption from the residential and nationality requirement to the Ministry of Trade, Industry and Fisheries by submitting a form. The processing time is approx. 1-2 weeks from when the ministry receives all necessary documents for the application. Exemptions for UK general managers and board members will normally be granted.
Financial assistance for acquisition of shares
The Companies Act Section 8-10 regulates the situation where a target company provides financial assistance in favour of the buyer in connection with acquisition of the shares in the target company or its parent company.
Pursuant to subsection one, the financial assistance provided by the target company must be within the limits of available assets for distribution of dividend, cf. the Companies Act Section 8-1. This limitation does not apply when the buyer is a company incorporated in an EEA-state, and the buyer and target are or will become part of the same group of companies.
Buyers from the UK will no longer satisfy the exception, and thus the financial assistance from target to an UK buyer must be within the limits of funds available for distribution.
The Companies Act Section 13-25 and the Norwegian Public Limited Liability Companies Act Section 13-25 to 13-36 set forth provisions regarding cross-border mergers. The provisions only allow cross-border mergers between companies incorporated in an EEA-state, meaning that such mergers no longer can be completed for companies incorporated in the UK.