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Incorporation

Setting up a company in Norway

When setting up a company you may want to consider these factors:

  1. Business Factors

    Among the factors to consider when setting up businesses, business factors are relevant and in particular:

    • The industry and type of business
    • Nationality of the headquarters/individual(s) and
    • Presence of existing trade agreements or relationships

     

  2. Location

    Location will be another factor. Separate cities and regions may have different rules, costs and availability. It is always recommended to seek advice from relevant professionals, such as business or legal advisors, accountants and others depending on your needs.

  3. Language

    Although 95% of the population speaks Norwegian, English is spoken by approximately 90% of Norwegians.

Your Options

Depending on the size of the entity, organisation form and the minimum share capital, Norway recognizes two main forms of business: the companies (with private or public limited liability) or the partnerships (general or limited). There are also the sole proprietorships (the smallest form of business) and the branches of the foreign companies.

In 2013 Norway made starting a business easier by reducing the minimum capital requirement for private joint stock companies.

In 2015 Norway made starting a business easier by eliminating the requirement for limited liability companies to have their balance sheet examined by an external auditor if the capital is paid in cash.

In 2016 Norway made starting a business easier by offering online government registration and online bank account registration.

Private Limited Liability Company - Aksjeselskap (AS)

The Norwegian Limited Liability Company is commonly used in order to set up small and medium businesses. Multinational companies usually use this legal entity when they intend to set up a Norwegian subsidiary.

The minimum paid in capital is NOK 30,000 (approx. AUD 4,500) in share capital. A minimum of two directors must be appointed, one of whom must be a Norwegian or European citizen.

These are the steps required to set up this corporate vehicle (the time required to complete the process is approx. 4 days):

Deposit start-up capital in a bank

The partners have to deposit a paid-in minimum capital of at least NOK 30,000 (approx. AUD 4,500) in a bank. The procedure can be done electronically through the bank’s online platform. One of the commonly used banks by private persons and business owners is DNB ASA and the account remains blocked until the company has been registered.

Register with the Register of Business Enterprises and file for VAT registration

The web-based filing system allows for electronic signature of the registration form and for the possibility to upload all attachments electronically.

It is still possible to file all documents manually by regular mail as well as, in some cases, registration inquiries cannot be filed online and must be filed by mail.

VAT registration is required when the company’s turnover is more than NOK 50,000. VAT cannot be charged on goods and other items before VAT registration is completed. However, in certain cases the company may register for VAT before starting business operations. The VAT registration form can be submitted at the same time as filing for company registration.

The above procedure costs between NOK 5,666 (approx. AUD 900) and 6,797 (approx. AUD 1,000) depending whether it is done electronically or manually.

Arrange for mandatory occupational pension plan for employees in a pension agency

The employer must arrange for a compulsory occupational pension plan for his or her employees. The fees vary with the benefits and level of coverage in the pension plan. The minimum requirement is 2% of each employee’s salary (within average levels of salaries). Pension scheme must be established within 6 months of the date on which the obligation to have an occupational pension scheme arose.

The employer enrols in the mandatory workers’ injury insurance

The employer must have a workers’ injury insurance for the employees and the insurance company is chosen by the employer.

The Norwegian public limited company (ASA)

A Norwegian public limited company (PLC) has much in common with an AS.

The registration at the stock market is important because it is a modality of increasing the share capital. The major decisions are also taken by the general meeting of the shareholders while the daily decisions can be taken by the members of the management board.

The company can be incorporated by a single shareholder, who may be of any nationality and residence. In accordance with Norwegian regulations, the shareholder is required to:

  • In order to go public, a Norwegian Joint Stock Company must have a share capital of at least NOK 1 million (approx. AUD 156,000);
  • Appoint at least 3 directors, at least 2 of whom must be residents in Norway.

All Norway PLCs are required to appoint a statutory auditor at the moment of incorporation and submit audited annual financial statements.

Norwegian company law requires that companies:

  • Have at least 1 director designated by the employees if there are more than 30 employees;
  • Have both genders represented on the company’s board if more than 50 people are employed.

Sole Proprietorship

A sole proprietorship is a form of incorporation in which a ‘physical person’ is liable for a business. There are no separate acts of law regulating sole proprietorships.

The owner of a sole proprietorship must in general be of age (18 years). He or she does not have to be a resident of Norway. However, the enterprise is required to have an address in Norway. The owner of a sole proprietorship is not obliged to set aside funds for the enterprise, since he or she is personally liable in any case.

Sole proprietorships that have employed more than 30 people (on average) during the past three financial years are subject to some of the same requirements as partnerships. These requirements concern the rights of employees to be represented at partnership meetings and, if applicable, on the board.

Steps required to register a sole proprietorship:

In order to register a sole proprietorship, the following information must be provided upon registration:

  • Name of the enterprise;
  • Owner;
  • Type of business activity to be carried out;
  • Municipality and address of business premises;
  • General manager if the enterprise has one.

Names of sole proprietorships shall contain the owner’s surname and all sole proprietorships can register free of charge with the Central Coordinating Register for Legal Entities. The enterprise will be assigned an organization number. Sole proprietorships also have a right to register in the Register of Business Enterprises.

Registration in the Register of Business Enterprises is subject to a fee that depends on which form of incorporation is registered and whether a paper form or electronic registration is used.

If the sole proprietorship has at least five employees or is to engage in the resale of purchased goods, it has a duty to register in the Register of Business Enterprises.

When the coordinated register notification has been filled in, the form is sent for signing.

Partnerships

Partnerships in Norway are subjected to the provision of the Partnership Act 1985. According to the Partnership Act, a partnership represents a commercial business established for the joint account of two or more partners, one of whom must have unlimited personal liability for the total obligations of the business. The term partnerships refers also to the situation in which two or more partners have unlimited liability for parts of the obligations and the combined parts constitute the total obligations of the business.

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;
  • 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, while limited partnerships must follow regulations regarding capital.

Each limited partner must have a committed capital of at least NOK 20,000 (approx. AUD 3,100), 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 (approx. AUD 350) and the minimum committed capital of the company must be NOK 22,223 (approx. AUD 3,500) 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.

There are five forms of partnership:

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.

While the general partners are given any and all rights or obligations, the silent partners are not involved in this process.

Branch

A branch is considered the establishment of a business by a foreign company in an office run by local management, employing local workers. A branch is both easier to set up and 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.

If the branch will hire employees, it is necessary to establish mandatory workers’ injury insurance and the occupational pension plan.

There is no minimum share capital that has to be registered at incorporation. The capital and the branch’s assets must be assured by the parent company.

A list with all the branch’s assets will also include the assets of the foreign company. In case of liquidation, these assets can be used to cover the debts.

A Norwegian branch must pay the same taxes as a local company, with some exception in the cases where the company is from a country that has signed double tax treaties with Norway.

In this case, the withholding tax on dividends, interests and royalties may be exempt or decreased and the corporate tax on income may be credited or exempt.

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.

Norway has a favorable attitude to foreign investment and establishing a branch in Norway is a popular choice. There are a few restrictions on the name of the branch – it is compulsory to end in “Norsk avdeling av utenlandsk foretak” (Norwegian branch of foreign company) – but generally it is a straightforward procedure.

These are the requirements regarding Norway branches:

  • Memorandum and Articles of Association of the parent company
  • A copy of the parent company’s Certificate of Incorporation
  • A copy of the parent company’s Certificate of Good Standing
  • A formal resolution from the parent company’s board of directors detailing the decision to establish the branch
  • A Norwegian branch representative should be assigned

There is no share capital required to set up a Norwegian branch.

The documents detailed above are required for branch registration with the Norwegian Central Coordinating Register for Legal Entities and must be officially notarized and translated into Norwegian by a certified translator.

The branch can only begin commercial activities after all the requirements mentioned above have been fulfilled.

If a branch closes down, it is essential to deregister in the Register of Business Enterprises.

Time: The whole process does not take longer than ten working days if all the documents are accurate.

Outsourcing Employment Through a GEO Employer of Record Service

Whether to incorporate in Norway, and what sort of entity to setup are just two of the many choices companies must make when expanding into a new market.

If the company intends to have staff in Norway they must also decide whether they will administer that employment internally or use a Global Employment Organization to handle payroll and Employer of Record responsibilities.  A GEO Employer of Record solution is an attractive alternative where

  • the company is looking to setup an office quickly
  • the company wants to work within a defined budget
  • the company wants to limit its initial commitment in Norway
  • the company needs help with tax, employment, immigration and payroll compliance in Norway

The complexity of employment regulations in Norway makes use of a GEO advisable coupled with local legal counsel to ensure full compliance with employment laws, for example the drafting of local contracts for workers.

Shield GEO provides a comprehensive service in Norway allowing companies to deploy their staff quickly with reasonable, clearly stated costs and timeframes. The company contracts directly with Shield to employ and payroll their staff on their behalf in Norway.

Shield GEO then becomes the Employer of Record. Shield GEO assumes the legal responsibility for these employees, sponsoring them on work permits, complying with local employment law and running their monthly payroll. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into Norway. Read more about outsourced employment through Shield GEO.

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