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Norway Company Formation

Company formation in Norway follows this 6-stage process:

1. Deposit capital in a company bank account. This takes one day.

2. Have a certified auditor examine the balance sheet, which takes one day and costs approximately 4000 NOK.

3. No later than 3 months after the memorandum has been signed, registration needs to be completed with the Register of Business Enterprises. This takes 3 days and costs approximately 6000 NOK.

4. Register for VAT with the regional tax office - this takes one day.

5. Register for employees' injury insurance. This takes one day and can be done at the same time as stage 4.

6. Register for pension plans for employees. This takes 3 days and can be done whilst stage 5 is being completed.

The most common types of company that foreign investors wishing to establish a business in Norway choose are a branch (filial), private limited liability company (AS), and public limited liability company (ASA). Partnerships are also quite common.

Branch

A branch is the establishment of a business by a foreign company in an office run by local management and one that employs local workers. A branch is both easier to set up, and easier to close down than a limited liability company or a partnership. Though not an actual separate entity, it is a registered office, or department, of a foreign company. The foreign company is liable for the debts of the branch without limitation. This responsibility exists even after the branch has been closed down. The name of the branch must include "Norsk avdeling av utenlandsk foretak" (Norwegian branch of foreign company). Certain limitations apply regarding the name of the company.

It is not essential for a branch to have a separate board of directors or a general manager. However, if there is no general manager, the branch must register a contact person with the Norwegian Register of Business Enterprises, who must be a resident of Norway and can be either an individual or a company. If a branch closes down, it is essential to deregister it in the Register of Business Enterprises.

Limited Liability Companies

There are two types of Limited Liability Company; a private limited liability company (AS) and a public limited liability company (ASA). They are separate legal entities and the liability of the shareholders of the company is limited to the capital originally invested. The shareholders are therefore not responsible for the legal obligations of the company.

A limited liability company can be founded by one or more individuals or legal entities. The company must file for registration within 3 months from the date which the memorandum of association was signed. The founders are personally liable for debts until the company is registered with the Norwegian Register of Business Enterprises. It is not officially deemed as being an established company until it is registered.

The minimum share capital required is NOK 30 000 for a private limited liability company and NOK 1,000,000 for a public limited liability company. The company cannot be registered until all the shares have been paid and all of the shares must have the same value.

From time to time, limited liability companies must have an equity that is sound based on the extent of the activities and risks of the company. If there is a lack of equity, a shareholder's meeting must be arranged. If equity is lower than 50% of the registered share capital, this is considered to be less than sound.

The limited liability company must be registered within three months from the date of the signing of the memorandum of association. Registration can be done on the internet or on a special form (paper). The registration should normally take 3-4 days to process if done electronically. It will usually take 2-3 weeks to process the registration if it is the paper application. No stamp duty applies.

Limited liability companies must have a board of directors. If a private limited liability company has less than NOK 3 000 000 in share capital, it can have a board of directors composed of two members; one director and one deputy member. If the company has a share capital of more than 3 000 000 NOK, it must have a board made up of at least three members. This also applies to a public limited liability company. The board should have at least 5 members if the company has a corporate assembly.

Partnerships

The following partnerships are available to foreign companies wishing to carry out business in Norway:

• General Partnership (ANS)

• General Partnership with Shared Liability (DA)

• Limited Partnership (KS)

• Internal Partnership (indre selskap)

A partner may be an individual or a legal body.

General Partnership (ANS)

All partners are general partners with unlimited liability, and are jointly and severally liable.

General Partnership with Shared Liability (DA)

This differs from the general partnership in that the obligations are unlimited, but is shared pro rata between the partners.

Limited Partnership (KS)

A limited partnership must have one partner with unlimited liability for the responsibilities of the partnership, and at least one limited partner with liability limited to the partner's share of the capital.

Internal Partnership (indre selskap)

This partnership must have at least one general partner with unlimited liability. If there is just one general partner, it is essential to have at least one silent partner. Silent partners can have unlimited liability or liability limited to the partner's share of the capital. The general partners are given any and all rights or obligations; the silent partners are not involved in this process.

A partnership in Norway is established by either two or more individuals or legal entities, who enter into a partnership agreement. Except for internal partnerships, all partnerships must have a written partnership agreement. The agreement must be drawn up referring to and according to the stipulations set out in the Norwegian Partnership Act. The agreement should include:

• The name of the partnership

• The name and place of residence of the partners (except for silent partners)

• The goal/purpose of the partnership

• The municipality of the head office of the partnership

• Whether the partners will make contribute capital to the partnership, and the

• Value of any assets

The Norwegian Partnership Act governs the partnership if no written agreement is drawn up. However, a written agreement is advisable.

General partnerships and general partnerships with shared liability do not need a minimum committed capital. Limited partnerships must follow regulations regarding capital. Each limited partner must have a committed capital of at least NOK 20 000, and the general partner must have at least 10% of the total committed capital. The committed capital of the general partner must be at least NOK 2 223 and the minimum committed capital of the company must be NOK 22 223, in a limited partnership. In order to register a limited partnership with the Norwegian Register of Business Enterprises, it is essential that each partner contribute at least 20% of their committed capital. Additionally, the partners have to pay in a further 20% of the committed capital within two years after the date of registration of the partnership.

There are no obligations in the Norwegian Partnership Act regarding the committed capital of an internal partnership. All partnerships must be registered with the Norwegian Register of Business Enterprises, apart from internal partnerships. No stamp duty is applicable when you register partnerships, committed capital or changes in the committed capital.

Offshore Companies

By choosing to incorporate an offshore company, business owners and investors can set-up a business outside the jurisdiction of its operations. Offshore companies are traditionally, but not exclusively, incorporated for lower fees and taxes. Business owners must abide the regulations of the offshore jurisdiction, and must not trade within the jurisdiction.

The benefits are vast. As aforesaid, reduced tax and fees are often big factors when considering offshore incorporation. A company may also choose and offshore location to:

• Simplify set-up and maintenance - entrepreneurs may find bureaucracy and red tape less of an obstacle in offshore jurisdictions

• Assume anonymity - the names of owners and directors are not for public record, and references to the company may only be made in its registered agent

• Ensure legal protection - for instance, some jurisdictions favour corporate governance, meaning a company is only liable to offshore laws as opposed to those in its areas of operation

• Protect assets - business owners may opt to arrange their assets and transactions in such a way that protects them from liability

Characteristics of an offshore company:

• Memorandum and Articles of Association

• Certificate of Incorporation

• Registered Office/Agent

• Shareholders / Members

• Directors / Managers

• Company secretary

• Statutory Register

• Bookkeeping

Traditional locations for offshore incorporation are tax havens, such as the British Virgin Islands, Panama and Monaco. Other favoured areas include India, the Bahamas, Dubai, the Cayman Islands, Cyprus, Seychelles, Marshall islands, Delaware, Turks & Caicos Islands, Hong Kong, Jersey, Guernsey and the Isle of Man.

Registering a business in Norway

You must register your business with the Register of Business Enterprises in Norway (RBE). The registration fee for sole proprietors and partnerships is NOK 2400, NOK 2500 for a branch, NOK 6000 for a limited partnership, NOK 2 500 for other partnerships and NOK 6000 for limited liability companies. The registration form is only available in Norwegian. The process will usually take two to three weeks, or three to four days if you register electronically online.

For more information on types of business in Norway and the business practices involved, Ernst and Young has compiled a guide to establishing a business in Norway. Visit the following link to view the document:

http://www.ey.com/Global/Assets.nsf/Norway/Establishing_a_Business_in_Norway/$file/EBIN%20web.pdf

The Brennysund Register Centre's website and Bedin's website are also very helpful:

http://www.brreg.no/english
http://www.bedin.no

If a company's turnover is more than 30, 000 NOK in a twelve month period, the company is required to register for VAT. Companies must send their VAT accounts to the county tax offices. It is essential for businesses to register with the local tax office, preferably before they begin business.

The corporate tax rate is currently 28% for all taxable income. This is also the rate of tax for capital gains.

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