Structuring and financing your Norwegian acquisition

In this article we take at look at how to structure an acquisition in Norway. We will also discuss how to finance it, look at important tax issues, and how to optimise repayment of the investment.

Equity requirements

An acquisition of a Norwegian business may be conducted directly from a foreign enterprise or through a Norwegian special purpose vehicle (SPV). The SPV may be a limited liability company, a limited partnership or a partnership without limitation for its partners. A Chinese investor may finance the SPV by equity and/or loans from the parent company, by a combination of equity from the parent company and loans from other financial sources, or with equity from the parent company and loans from both the parent company and other financial sources. In many cases, a Norwegian SPV is financed by equity, as well as subordinated loans from the parent company and secured loans from other financial sources, with the shares in the target as collateral.

Under Norwegian legislation there is a requirement of reasonable equity compared with the activities of the enterprise in question and risks involved. Subordinated loans may reduce the requirement of equity. If a company does not have reasonable equity, this may influence the right of limitation of liability, tax considerations (related to payment of interests on loans versus dividend) as well as liability for board members for loss creditors may suffer.

Arne Didrik Kjørnæs is a senior partner at Wikborg Rein in Oslo and Geir Sviggum is a partner at Wikborg Rein in Shanghai. Tormod Ludvik Nilsen, a senior associate at Wikborg Rein in Shanghai, also contributed to this article