The most important company documents when doing business in Norway

In this blog we present an overview of the most important company documents when doing business in Norway, and why these are important to have in place in a limited liability company (aksjeselskap). Some of the documents are required by law, while others, based on our experience, are convenient to have in place.

Company documents required by law

The Norwegian Companies Act sets out three mandatory company documents:

Statutes
Incorporation documents
Shareholder register

However, if you have a company with more than one shareholder, several other documents will quickly prove to be both necessary and very practical. We see that limited liability companies that only rely on the Companies Act often encounter challenges and conflicts related to matters that could have been avoided by having a shareholders' agreements or board instructions.

The need for company documents depends on the company and the structure

Companies will have different needs depending on the company's structure, scope, and purpose. It is therefore not a given that all companies need an equally extensive regulation. Below we will give a brief account of certain statutory and voluntary company documents that are useful to know for those who are running a business or who are about to start a company.

Statutes

The articles of association are required by law as a mandatory set of rules that must be included in the foundation of all limited companies. The articles of association must be in place at the time of incorporation and contain basic provisions on the company's content.

The Companies Act provides minimum requirements for the articles of association. The articles of association can be invoked against third parties. Key information that must be included in the company's articles of association:

the company's corporate name
the company's operations and purpose
capital ratio (the size of the share capital and the nominal value of the shares)

Whether or not to include additional information or regulations in the articles of association is up to the company. In terms of experience, we see that a number of matters relating to the company and its shareholders are rather regulated in shareholder agreements, while the articles of association are kept to a minimum. This is due to various reasons, including the publication of the company's articles of association, as well as the access to change which is different for the two different documents.

Incorporation documents

When establishing a legal entity, such as a foundation, a company or an association, an incorporation document must be drawn up and signed by all the founders. This document can be created in written form, or digitally through the Companies Register's electronic solution.

According to the Companies Act, the incorporation document must contain key information about the company and its purpose. This implies that the founders are made aware of several aspects of the company, which again ensures a certain seriousness on the part of the company and its founders.

The company's articles of association
The founders' name or company name, address and social security number or organization number
Number of shares each of the founders must subscribe for
The share deposit
Time for settlement of share contributions
Information about who will be members of the company's board
Information on whether the company will cover expenses for the foundation
If the annual accounts are to be audited, the person who is to be the company's auditor must also be listed.

The foundation document must be kept in a safe manner throughout the company's lifetime.

Shareholder register

To maintain a Shareholder's register is required by law. An acquirer of a share does not get rights as a shareholder until the acquisition is entered in the shareholder's register. It is therefore a fundamental and very important formality that must be in place when a company is set up. The shareholder register must also be updated in the event of changes, in order to safeguard the rights of those who are actually shareholders in the company. There is no room for sloppiness here!

The shareholder register must be kept in a secure manner, normally electronically, and it is public, so that anyone has the right to see it. If the company has different share classes, this must be stated, together with the number of shares, and the number of the shares of the individual shareholder.

It is the company's board of directors that is obliged to enter new owners or other changes in the company in the shareholder register without delay.

Also read: Doing business in Norway: Shareholder register statement

Shareholder agreements

Shareholders' agreements are not required by law in the same way as the articles of association and will not bind the company in such a way as the articles of association do. Shareholder agreements can be entered into based on the general freedom of contract and will bind the relevant parties: Normally the shareholders in a company, but also third parties can enter into such an agreement with shareholders in a company.

The shareholders' agreements will typically supplement, but in some cases also derogate from, the Norwegian Companies Act's regulations. The Companies Act is intended to broadly cover all limited companies, and its standard arrangements will in many cases not cover the conditions or regulations that may be desirable and useful in your particular company.

Shareholder agreements are very practical. These agreements can regulate all relations between the shareholders and thus provide predictability, which again can prevent potential conflicts and disagreements. For example, it will be in the interests of all shareholders to have a clear understanding of how the price of the shares is to be determined in the event of various exits from the company, - and what access there is to freely sell own shares. It may also be appropriate to define the Norwegian Companies Act's provisions on pre-emption rights in more detail in a shareholders' agreement, in order to prevent any conflicts. Perhaps it is not desirable that shares can be freely transferred to a shareholder's relatives, without the right of pre-emption of other shareholders taking effect?

If an issue is not regulated in the shareholders' agreements or in the articles of association, one will fall back on the applicable rules of the Companies Act. One is not guaranteed a solution that is suitable for you and your company.

Also read: Business in Norway - contract drafting and negotiation

Board instructions

A central and important company document is the board instructions. In shareholder companies where the employees are represented in the board, it is required by law to have a board instruction. Even in cases where such instructions are not required, it can be very practical and useful.

In the Companies Act, it follows that the board instructions must contain the following:

Detailed rules on the board's work and proceedings
Rules on which matters must be dealt with by the board
The general manager's tasks and duties towards the board
Rules for convening and handling meetings

There is nothing to prevent the inclusion of further conditions at the board in such instructions, such as regulation of competence, confidentiality, record-keeping, etc.

A good board instruction will contribute to a better structure of the board's work and thus also contribute to more efficient board work. Board instructions are therefore clearly recommended for companies with a certain scope and an active board, to ensure structure and distribution of roles.

Also read: How to choose the right corporate structure in Norway

Minutes

Minutes must document the company's decisions, either during board meetings or general meetings.

Board minutes

The company's board is required to keep minutes of the board proceedings. Minutes have an important role as the evidentiary basis for a board decision and are usually kept by the Chairman of the Board. According to the Companies Act, board minutes must at least contain:

The time and place of the meeting
The participants
The method of processing, including that the board meeting meets the requirements under the law to be able to make decisions
The board's decisions

In cases where the board does not agree, it must be listed which board members have voted in favor and who have voted against. A board member can also demand that the point of view in question is entered in the minutes. The minutes must also be signed by the members of the board.

Board minutes thus provide a good insight into the board's decisions and structure. Both during an audit and during a company review or due diligence, inspection of the company's board minutes will normally be required or requested. If such a protocol does not exist, or is very deficient, it could dampen investor attraction to the company, in the event of a possible acquisition. Good and clear board minutes are therefore both appropriate here and now, but also in the event of an acquisition.

General Assembly minutes

Minutes must also be kept for the general assembly, on paper or electronically. The following must be included:

Company name
Time and place of the meeting
Who has been chosen as chairperson and signatories
Number of shares represented at the meeting
The assembly’s approval of the notice
What decisions were made at the assembly
The number of votes cast and how many shares and the proportion of the share capital each vote represents

Also read: Do the right things when doing business in Norway

Subsequently, the minutes must be kept and be available to the shareholders throughout the life of the company.