Setting up a limited company in Norway? Essential considerations for your Articles of Association

For international businesses exploring opportunities in Norway, establishing a limited company (AS) often involves careful planning around the articles of association, which guide ownership structure and governance. Understanding the Norwegian framework for share classes, voting rights, transfer restrictions, and pre-emption rights can be crucial for aligning with local corporate regulations while supporting long-term growth. This guide highlights essential considerations to help new ventures establish a solid foundation from day one.

Key considerations: 

1. Should there be multiple share classes?
The Norwegian Limited Liability Companies Act assumes that all shares are equal. However, this can be altered in the articles of association by stipulating multiple share classes. When establishing differences between various share classes, it's common to distinguish based on the following aspects:

• Voting rights: The articles of association can stipulate that certain share classes carry limited or no voting rights at the general meeting. This structure is often chosen to allow specific shareholders greater decision-making power over the company’s development. Shareholders with non-voting shares may lack the same influence in governance matters but can still retain equal rights to dividends and distributions.
• Dividends, liquidation proceeds, and other distributions: The law allows for the creation of preference shares that have a preferential right to receive dividends and other distributions. This can be useful if the company aims to attract investors who require a better return on their investment than equal distributions would provide.
• Other restrictions: You can stipulate in the articles that a class of shares is not freely transferable or that a specific share class has the right to elect the board, the chairperson, or a certain number of board members. This provides opportunities to assign different characteristics to share classes depending on how you wish the company to be managed and developed.

2. Should you restrict who can acquire shares in the company?
The default rule is that share acquisitions require the board’s consent. The board cannot refuse consent unless there is a justifiable reason.

Building on this, the articles of association can impose stricter requirements on who can acquire shares in the company. This may be practical in an employee-owned company, a family-owned company, or a company established to coordinate collaboration among different stakeholders who all become shareholders. In the latter case, it is often desirable to prevent external parties not involved in the collaboration from acquiring shares in the company, which can be achieved by regulating this in the articles.

It is also possible to make the shares freely transferable without requiring board consent or to set guidelines on the considerations the board may take into account and how the approval process should be conducted.

3. Pre-emption rights or not
The default rule is that other shareholders have a pre-emption right if shares in the company are sold.

In the articles of association, it is possible to remove the shareholders’ pre-emption right or set a shorter deadline for exercising it, for example, to make the shares more attractive to external buyers.

In other cases, it may be desirable to introduce a more extensive pre-emption right. For example, the pre-emption right could be triggered if there is a change of control in a shareholder, typically through the sale of the shareholder’s own shares.

The pre-emption right can also be specified in more detail, for instance, by setting clearer guidelines on how the price for exercising the right should be determined or by introducing a rule that is easier to apply than the Companies Act’s requirement of “fair value.”

4. Who can bind the company?
The default rule is that the company is bound by the joint signature of the entire board unless otherwise specified in the articles. This can be cumbersome if the board has several members. It's advisable to include provisions in the articles about who has the authority to sign on behalf of the company, such as the CEO or board chairperson individually, or any two board members jointly.

5. Simplified procedures
The articles can also be used to simplify operations and procedures. In companies expecting many shareholders, it may be practical to stipulate that documents for the general meeting can be published on the company's website instead of being sent to each shareholder, provided that this complies with legal requirements and shareholders have consented to electronic communication.

6. Legal limitations
The above are practical examples of matters to consider including in the articles, and the list is far from exhaustive. However, it's important to remember that the law sets limits on what can be regulated. You should ensure that any provisions included are within legal boundaries and do not conflict with mandatory provisions of the Norwegian Companies Act.

If regulation in the articles is not possible or practical, you might consider whether the matter should be addressed in a shareholders' agreement. Note, however, that a shareholders' agreement under Norwegian law is generally only binding between the parties involved and does not have direct corporate legal effect.