Mergers of Norwegian limited companies

How to Execute a Merger

In practice, mergers often involve considerations beyond legal formalities. Parties need to agree on matters such as the valuation of each company, location, reconciling cultural differences, determining new leadership, and understanding how the merger will affect employees' roles. While we won't delve into these aspects in detail here, we will provide an overview of the merger process from a corporate legal perspective in Norway:

1. Preparation of the merger plan
The boards of both the transferring and acquiring companies must prepare a joint merger plan, including proposals for capital increases and necessary amendments to the articles of association. Although the requirement for an opening balance sheet has been removed, companies may still prepare one if they choose.

2. Drafting the merger report
The boards must prepare a report on the merger plan, possibly a joint report (common in group mergers). The aim is to demonstrate how the consideration for the transferring company's shareholders was determined and to ensure that the non-cash contributions in the acquiring company correspond to the value of the shares issued as consideration. This report must be confirmed by an auditor or an independent expert. The report can be waived if all shareholders agree, except for the statement on non-cash contributions in the acquiring company, which must always be prepared.

3. Employee and shareholder involvement
Under Norwegian law, employees must be involved in the merger process, particularly in reviewing its impact on their roles. Additionally, shareholders must be properly notified and approve the merger, meeting standards under Norwegian and EU laws for transparency.

4. Approval by shareholders
The merger plan and related documents are sent to the shareholders. The merger must be approved at the general meeting in each company involved, requiring a majority as stipulated for amending the articles of association.

5. Notification to the register of business enterprises
Upon approval, a notification must be sent to the Norwegian Register of Business Enterprises within one month. The Register announces the merger decisions and notifies that objections must be submitted within six weeks. Any objections from creditors must be addressed.

6. Final registration and effectuation
After resolving any objections, the acquiring company must notify the Register that the merger is to take effect. The merger becomes legally binding upon registration.