NORWAY Law and Practice Contributed by: Ida Marie Windrup, Magnus Tønseth, Markus Nilssen and Daniel Jovanovic, BAHR
5.2 Floating Charges and/or Similar Security Interests All-asset floating charges are not permitted under Nor- wegian law. A similar effect can be achieved, however, through the establishment of asset-specific floating charges over inventory, machinery and receivables, combined with fixed charges over shares, monetary claims and more. 5.3 Downstream, Upstream and Cross- Stream Guarantees A Norwegian company may guarantee the debt of its shareholder or another company in the same group of companies as the Norwegian company, provided that the guarantee economically benefits at least one com- pany within its corporate group. This practical excep- tion means that guarantees are common in Norwegian law financings. However, each Norwegian company, in practice through its board of directors, has an obliga- tion to act in the best interests of the company and ensure there is sufficient corporate benefit. 5.4 Restrictions on the Target A Norwegian target company (and its subsidiaries) may grant security and give a guarantee for the acqui- sition debt if the company acquiring the shares (buyer) is incorporated in an EEA jurisdiction and will control the target company following the acquisition. A certain whitewash procedure must be complied with prior to the security and/or guarantee being granted, which consists of (among other things): • the board of directors of the target considering the creditworthiness of the beneficiary; • approval of the financial assistance by the board of directors; • a declaration by the board of directors that it will be in the interest of the company to grant the security and guarantee and an assessment of the consequences of the financial assistance on the company’s equity and solidity; and • approval by the shareholders of the target (usually by way of shareholder meeting) – the package of documents must be filed with the Norwegian Reg- istry of Business Enterprises before the security and guarantee may be granted.
an exception from the licensing requirements can be relied upon).
5. Guarantees and Security 5.1 Assets and Forms of Security A security package typically consists of:
• a mortgage over any real registered asset being financed, such as real estate, ship, rig, aircraft; • floating charges over trade receivables, inventory and operating assets; • a charge over shares in obligors or other relevant companies; • assignments of intra-group loans, insurances and earnings; and • charge over bank accounts. The costs of registering security in Norwegian regis- tries are nominal. Registrable assets are charged by way of a mortgage form, which is registered against the asset in the rel- evant registry, such as a vessel registered in the Nor- wegian ship registry. Floating charges over trade receivables, inventory and operating assets are established by executing a des- ignated charge form which will then need to be regis- tered against the relevant company in the Norwegian Registry of Movable Property. Registration normally takes one to two weeks. Charges over shares are established by written agree- ment between the security agent and the shareholder, and (for a private limited company) perfection is estab- lished through notice to that company. An updated shareholder registry evidencing the share charge is normally delivered to evidence the share charge and the priority. Assignments of earnings and receivables, such as insurance proceeds, are created by written agreement where the act of perfection is notice to debtor.
456 CHAMBERS.COM
Powered by FlippingBook