Legal due diligence in Norway: key considerations for foreign investors

Identifying matters that may affect contractual claims

Under section 20 of the Norwegian Sale of Goods Act, a buyer cannot generally rely on as a defect a matter that the buyer knew or ought to have known at the time of the purchase. Where the buyer has examined the subject matter before the purchase, or without reasonable cause has failed to comply with the seller's request to carry out an examination, the buyer may also be prevented from relying on matters that should have been discovered through that examination.

The provision does not impose a general statutory obligation to conduct due diligence before every acquisition. However, the buyer's knowledge, the investigations actually carried out and the terms of the transaction agreement may all affect the buyer's ability to bring subsequent claims.

In Rt-2002-1110 (the Bodum case), the Norwegian Supreme Court considered an acquisition of all the shares in a Norwegian company where the company's financial position proved materially different from what the buyer had been led to expect. The Court found that there was a material defect and attached significant weight to the seller side's failure to disclose an irregular and substantial intercompany receivable.

For a professional buyer, appropriate due diligence therefore remains an important means of identifying risks before the contractual allocation of those risks is finalised.

Avoiding obstacles to subsequent claims

A share purchase agreement will normally contain detailed provisions governing the seller's liability. These may include warranties, disclosure provisions, de minimis thresholds, baskets, liability caps, time limits and other restrictions on claims.

Where an issue is identified during due diligence, the buyer can consider it before signing or completion rather than relying solely on a subsequent claim against the seller. Depending on the issue, the parties may address the risk through an adjustment to the purchase price, a specific indemnity, a condition precedent, a pre-completion undertaking or other contractual protection.

This can be particularly important for matters that would be difficult to quantify or remedy after completion.

The opportunity to rectify issues before completion

Issues identified before completion are often easier to address than problems discovered afterwards.

Before completion, the seller will normally have a strong interest in resolving matters that could prevent or delay the transaction. Corporate documentation may be corrected, consents obtained, contracts renewed, regulatory matters addressed or other deficiencies remedied as part of the completion process.

After completion, the buyer may instead have to resolve the issue itself and consider whether it has a contractual claim against the seller.

Practical difficulties in enforcing claims

Even where the buyer has a valid claim, enforcement may involve practical and legal difficulties.

The seller may no longer have sufficient assets to satisfy the claim. There may also be disagreement over the interpretation of warranties, disclosure, causation or the amount of the buyer's loss. Litigation or arbitration may be expensive and necessarily involves an element of litigation risk.

Due diligence cannot eliminate these risks, but it can reduce the likelihood that material issues first become apparent after completion.

Supporting post-acquisition integration

Following an acquisition, the buyer will generally want to integrate the target into its existing business or implement its investment strategy.

Disputes with former owners may complicate that process, particularly where sellers or founders remain employed by, or otherwise involved in, the target after completion.

A well-planned due diligence process can also identify issues that require action immediately following completion and thereby assist with the buyer's integration planning.

Regulatory approvals and investment control

Foreign investors should identify at an early stage whether the proposed acquisition requires regulatory approval or notification under Norwegian law. Depending on the transaction and the target's activities, this may include Norwegian merger-control requirements, sector-specific ownership or regulatory approvals, or ownership-control rules under the Norwegian Security Act.

Norway does not currently have a general foreign investment approval regime applying to all acquisitions of Norwegian businesses. The principal national-security screening rules are found in the Security Act and apply to acquisitions of qualified interests in certain undertakings that are subject to ownership control under that Act. Whether the rules are relevant should therefore form part of the legal due diligence, particularly where the target operates in a regulated, security-sensitive or strategically important sector.

The Norwegian investment-control framework is developing. Amendments expanding the ownership-control regime have been adopted but are not yet fully in force, and the Norwegian government is developing separate legislation for investment control outside the Security Act. The position should therefore be verified for each transaction.

For a broader overview of the Norwegian foreign investment and ownership-control framework, see LexOslo's contribution to the Chambers Global Practice Guide on Doing Business in Norway.

Where acquisition financing is involved, due diligence findings may also affect the financing structure, conditions precedent and security arrangements and should therefore be coordinated with the financing process.

Reducing the risk of subsequent objections

The buyer's due diligence can also benefit the seller.

A properly conducted process provides both parties with a clearer understanding of the business being sold and of the matters that have been disclosed before the transaction agreement is entered into. This may result in more accurate pricing and a clearer allocation of risk between buyer and seller.

Good disclosure may also reduce uncertainty as to which matters may subsequently form the basis of contractual claims.

Seller's due diligence

A seller may benefit from carrying out its own review of the business before the buyer begins its due diligence.

A seller-side review can identify corporate, contractual, regulatory or operational deficiencies that may be corrected before a prospective buyer is given access to the information. It also allows the seller to organise the documentation and anticipate issues that are likely to arise during negotiations.

In larger or competitive sale processes, the seller may commission a vendor due diligence report for prospective bidders. This can make the process more efficient and provide potential buyers with an initial structured overview of the target, although buyers will normally need to consider the scope of the report, any limitations and whether they are entitled to rely on it.

For most acquisitions of a company, some form of due diligence should be the starting point.

The scope should, however, be proportionate to the transaction. Where the value or complexity of the acquisition does not justify a full review, the buyer may instead carry out a more limited due diligence focused on the areas presenting the greatest legal and commercial risk.

The appropriate scope will depend on factors such as the target's business, industry and regulatory status, the transaction structure, the buyer's existing knowledge, the warranties and other protections available under the transaction agreement, and the significance of the investment to the buyer.

This article has focused primarily on company acquisitions. Similar considerations arise in acquisitions of minority interests, asset transactions, mergers, joint ventures and other investments. Due diligence may also extend beyond legal matters to financial, tax, commercial, technical and other areas depending on the transaction.

For foreign investors in Norway, legal due diligence should ultimately do more than identify technical legal deficiencies. Its purpose is to identify issues that may affect the decision to invest, the price, transaction structure, financing, contractual protections, regulatory approvals and the steps required before and after completion.


(Initally published 8 March 2025 – Updated August 2026)