NORWAY Trends and Developments Contributed by: Sicilie Tveøy, Thomas Alnæs, Ramborg Elvebakk and Karen Margrethe Bugge, Advokatfirmaet Hjort AS
Consequence of Norwegian law If a person starts a business in Norway and gets mar - ried in Norway without any special arrangements, their spouse will have a legal claim to half the value of the business in the event of a divorce, and significant rights if the owner dies. This is true even if the spouse has no involvement in the company, and even if the businessperson owns all the shares in the company and is the only owner and worker in their company. Norwegian law views marriage as an economic part - nership. Solution: consented marriage contract with separate property The primary way to avoid the default sharing is to sign a marriage contract before or during the marriage, specifying separate property for the owner’s company shares. A valid prenuptial or postnuptial agreement can stipulate that the business is the owner’s separate property not subject to equal division. Both spouses must agree, and it must meet formal requirements (written, witnessed, registered). Only with a consented marriage contract with sepa - rate property can a business owner “take back” full property rights and ensure the company’s value is not halved with the spouse. For this reason, it is best practice for shareholders and co-founders to require all founders to have prenuptial agreements in place to safeguard the company and ensure business con - tinuity. Value of Owner’s Business Following Divorce Marriages frequently end in divorce, which includes business owners’ marriages as they tend to work a lot. Taking care of their spouse might be forgotten. Without a prenuptial agreement establishing separate property, the spouse is entitled to claim half the value of all marital assets, which includes the business. This can be a huge issue for entrepreneurs. • Owner keeps the shares, but “owes” half the value – In a divorce property settlement, the law allows the business owner to retain ownership of the shares (since they may be personally tied to the company). However, the value of those shares must be split 50/50 with the ex-spouse. In other
important to choose the right property from the outset to avoid unnecessary transaction costs. If a business owner is considering moving to Norway or acquiring assets there, it is important to seek local tax advice before structuring any purchases through a company. Marriage in Norway: Matrimonial Property Law and Business Getting married while living in Norway If a business owner getsmarried while living in Norway, Norwegian marriage law will govern the financial rela - tionship between that person and their spouse. This can have direct implications for the business – and must be taken into consideration as soon as a person thinks of starting a family. Community property Norway’s default marital property regime is commu - nity property. This means that all assets acquired dur - ing the marriage – and, in practice, often even assets owned before marriage, with some exceptions – are considered joint marital property and will be divided equally if the marriage ends. While a business owner may be able to keep their business, they would typi - cally need to pay their spouse half of its value. Choice of law Can a couple choose a different law? An international couple moving to Norway may initially believe they can avoid Norwegian marital law by choosing another country’s law to govern their marriage through a for - mal agreement. While it is generally possible to des - ignate a foreign law in a marital contract, Norwegian conflict-of-law rules are complex, and the Norwegian courts may ultimately apply Norwegian law – especial - ly if they settle in Norway long-term and establish their primary residence there. Therefore, it is safest to plan marital and financial arrangements on the assumption that Norwegian marital law will apply, regardless of any choice-of-law agreement one may have made. Getting married before moving to Norway If a person gets married before moving to Norway, the main rule is that Norwegian courts shall apply the law from the county they lived in just after they got married.
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