NORWAY Law and Practice Contributed by: Fredrik Lykke, Christian P. N. Fenner and Magnus Brox, Advokatfirma DLA Piper AS Norway
During 2026, it is expected that the adopted – but not yet implemented – amendments to Chapter 10 of the Security Act will enter into force; however, similar “entry into force” expectations have been expressed since 2024, so timing remains uncertain. If implement - ed, the scope of application of the Security Act will be expanded so that undertakings that are significant for fundamental national functions or security interests can be subject to the provisions of the Act on owner - ship control, and the threshold for the obligation to notify acquisitions can be lowered (10%). The government is also considering amendments to the Security Act that would tighten governmental con - trol. There is an ongoing consultative process con - cerning a new Investment Control Act which explores the establishment of a separate Investment Control Authority to replace Chapter 10 of the Security Act. The new law is expected to be circulated for con - sultation in 2026. The core of the proposal is that the new Investment Control Act should apply to all investments in security-sensitive sectors, ie, compa - nies that are suppliers to important societal functions, companies that produce or possess critical technol - ogy and companies that produce or possess certain critical raw materials. The argument is that a separate Investment Control Act would align better with the EU Foreign Direct Investment Screening Regulation (EU) 2019/452 and similar regulations in various EU mem - ber states. 3. Recent Legal Developments 3.1 Significant Court Decisions or Legal Developments There have not been any significant court decisions in the last three years relating to M&A. Most M&A dis - putes are subject to arbitration and decisions are, as a rule, kept confidential. In February 2024, Oslo City Court rendered a deci - sion concerning the extent of a condition precedent in a transaction agreement entered into in February 2022 between shareholders/sellers of Instabank ASA, a bank listed on Euronext Growth (a multilateral trad - ing facility), and the purchaser, the Danish bank Lunar Bank A/S. Lunar Bank had provided a takeover offer
on the basis of an offer document, which had been accepted by shareholders of Instabank. The offer and transaction agreement included customary conditions precedent, including approval by the NFSA with a drop-dead date of 30 September 2022. Lunar Bank had no financing condition and had stated that it had sufficient funds to close the transaction. Lunar Bank applied for approval on 7 February 2022. Both Danish and Norwegian regulators had provided guidance to Lunar Bank that the bank would have to increase its capital to comply with capital requirements of around DKK650 million in order to obtain approval. At the time that the NFSA considered the application, the capital had not been raised and the NFSA thus decided to withhold approval on 12 May 2022. Lunar Bank there - after continued its efforts to obtain further capital, but this proved impossible. On the drop-dead date, Lunar Bank thus made it clear that the transaction could not be completed, referring to the absence of approval from the NFSA. The shareholders then terminated the transaction agreement and initiated legal proceedings citing material breach by Lunar Bank claiming com - pensation for their losses (which represented the delta between the offer price and the actual share price fol - lowing cancellation of the transaction). In short, the Oslo City Court found that Lunar Bank had breached the transaction agreement and was lia - ble for the sellers’ loss. The Court argued that Lunar Bank could not rely on the NFSA approval condition precedent, because the Court found that it was a rea - sonable and anticipated requirement that Lunar Bank would have to meet the capital requirements in order to obtain the approval, and the Court also found that if Lunar Bank had met the additional capital requirement of DKK650 million, it would have received approval from the NFSA. As regards the loss calculation, the Court found that the delta which best reflected the sellers’ loss was the delta between the offer price and the VWAP the first week after it became known to the market that the transaction would not be completed. Corporate shareholders, who are subject to tax exemptions on capital gains on financial instruments but not on rev - enue derived from damage claims, were also com - pensated for the tax effect (22% corporate income tax in Norway).
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