Norway – FDI Screening Practical Q&A Overview

The control of foreign investments (including transactions) on grounds of national security in Norway is governed by Act of 1 June 2018 No. 24 regarding National Security (the “Security Act”), in particular its Chapter 10 on ownership control of and Section 1-3 which empowers the relevant ministries to decide the personal scope of application of the Act within their field of responsibility.

The provisions on ownership control in the Security Act are not directed specifically against foreign investments and foreign investors, but apply both to foreign and domestic acquirers without discrimination if the acquisition or transaction concerns an undertaking that has been brought within the scope of application of the Security Act by way of an decision by a ministry pursuant to Section 1-3.

If a company has been brought within the scope of application of the Security Act an acquirer is obliged to notify the relevant ministry, so that the acquisition can be reviewed, when the acquirer has acquired a “qualified ownership interest”. “Qualified ownership interest” is defined as an ownership interest where the acquirer obtains:

• a third of the company’s stock capital, or the interests or votes;
• a right to become owner of a third of the stock capital or interests; or
• significant influence over the company through other means.

The provisions on ownership control of the Security Act are general. There are not any sector-specific review mechanisms in place.

Examples of undertakings that can be covered by the provisions on ownership control are companies within defence, telecommunication, transport, or energy sectors, food and water supply, and health services.

The provisions on ownership control in the Security Act are applicable regardless of the acquirer’s nationality, i.e. the rules apply both to foreign and domestic acquirers without discrimination. As a result, the Act does not define terms such as “foreign investor” or “foreign investment”.

“Qualified ownership interest” is defined as an ownership interest where the acquirer obtains:

• a third of the company’s stock capital, or the interests or votes;
• a right to become owner of a third of the stock capital or interests; or
• significant influence over the company through other means.

When assessing whether the acquirer has obtained a “qualified ownership interest” also shares or other equity interests that are owned or procured by parties that are regarded as “close associates” to the acquirer within the meaning of the Norwegian Securities Trading Act shall be taken into account. The notion “close associate” in the Securities Trading Act covers:

1. the spouse or a person with whom the shareholder cohabits in a relationship akin to marriage;
2. the shareholder’s under-age children, and under-age children of a person as mentioned in no. 1 with whom the shareholder cohabits;
3. an undertaking within the same group as the shareholder;
4. an undertaking in which the shareholder himself or a person as mentioned in nos. 1, 2 or 5 exercises influence as mentioned in the Private Limited Companies Act section 1-3 subsection (2), the Public Limited Companies Act section 1-3 subsection (2) or the General and Limited Partnerships Act section 1-2 subsection (2);
5. a party with whom the shareholder must be assumed to be acting in concert in the exercise of rights accruing to the owner of a financial instrument, also in cases where a bid is frustrated or prevented.

Please see the answer to question two (2).

Also domestic.

See above.

Yes, see no. 2 above.

Yes.

Under the Norwegian Freedom of Information Act the starting point is that any document that is sent to or sent from an administrative authority is accessible for the general public.

There are however many exceptions from this starting point, and e.g. information that qualifies as trade secrets is as a main rule excluded from disclosure.

There are no standard practices about mitigation agreements and/or specific clauses in relation to FDI.

The filing of a notification of the acquisition of a qualified ownership share in an undertaking covered by the Security Act is mandatory. The filing shall be submitted to the relevant ministry responsible for the sector in question.

If the undertaking does not fall within the field of responsibility of any ministry the filing shall be submitted to the National Security Authority. There are no filing fees.

The obligation to obtain the necessary approval is with the acquiring party.

Yes.

As part of the filing of the notification the acquirer must provide the following information:

1. The acquirer’s name, address, company register number, birth number or similar number.
2. The company register number of the company that the acquisition relates to.
3. The acquirer’s ownership share after the concerned acquisition is completed.
4. The ownership structure of the acquirer.
5. The names of the person that are members of the acquirer’s Board of directors.
6. The names of the persons that are members of the acquirer’s management.
7. Possible relations between the acquirer and other existing owners of the company that the acquisition relates to.
8. The acquirer’s ownership interests in other companies that are covered by the Security Act.
9. The acquirer’s ownership interests in other companies within the concerned sector.
10. The acquirer’s annual turnover and annual accounts for the last five years, to the extent this information is available.
11. Other circumstances that the acquirer assumes may be of relevance for the assessment of whether the acquisition shall be approved.

Within 60 working days after having received a notification regarding an acquisition the responsible authority (i.e. the relevant sector ministry or the National Security Authority) shall either (i) inform the acquirer that the acquisition is approved or (ii) inform the acquirer that whether approval shall be granted or not will be decided by the King in Council (i.e. the Government). If the authority has requested further information from the acquirer within 50 working days from the notification was received the 60 working days deadline is suspended until the requested information is received by the authority.

There are no provisions regarding expedited procedures or similar, but the authority has an obligation to handle the case as fast as possible.

It is the ministry that is responsible for the sector/field in which the relevant undertaking is engaged that is responsible for conducting the review under the Security Act, e.g. the Ministry of Petroleum and Energy for an energy company and the Ministry of Transport for a railway company. If the company does not fall within the sector/field of any ministry, the Norwegian National Security Authority shall conduct the review. The ministries and the Norwegian National Security Authority have the power to approve an acquisition, but they cannot prohibit an acquisition. If an acquisition shall be refused this decision must be taken by the King in Council, i.e. the Government.

See above regarding confidentiality.

The King in Council (i.e. the Government) may refuse to approve an acquisition if the acquisition “may entail a risk that is not insignificant that interests of national security will be threatened”.

No decisions have yet been taken under the Security Act and there are therefore no precedents that demonstrates the fact assessment and legal reasoning of the Government in such cases. The authorities have also not issued any guidance on the application of the Act. Since the criterion for prohibiting a transaction implies that the decision to a great extent will be subject to the discretionary assessment of the Government it is not very meaningful to specify in legal terms whether the acquirer or the government bears the burden of proof, but for practical purposes the burden of proof will most likely rest with the applicant.

There are no administrative fines or criminal liability for not filing a notification regarding an acquisition that requires review under the Security Act. If an acquisition has not been notified and the authorities concludes that the acquisition may cause a significance risk for national security interests, the authorities may however order that the acquisition shall be reversed.

There is no procedure for administrative review available. The Government’s refusal to approve an acquisition can be brought before the ordinary courts pursuant to the general rules regarding review of administrative decisions. The court’s re-examination is limited to whether the authorities have committed procedural errors that may have affected the outcome of the decision, whether the refusal constitutes an abuse of authority and/or whether the refusal is based on an erroneous factual basis. If the court finds that such circumstances exist the court shall invalidate the refusal. The authorities may however issue a new refusal after a new processing of the case provided the grounds for invalidation are repaired in the new processing. A refusal may be brought before the courts by either the acquirer or the seller of shares or other ownership interests, as both will have the necessary standing.

In principle, the acquirer and/or the seller may also present a damages claim against the State for the loss incurred as a result of the acquisition not being implemented or being reversed as a result of an invalid administrative decision.