NORWAY Law and Practice Contributed by: Fredrik Lykke, Christian P. N. Fenner and Magnus Brox, Advokatfirma DLA Piper AS Norway
required to draw up a prospectus). Typically, bidders include general information and key financial numbers in offer documents. 7.4 Transaction Documents The transaction agreement and/or other transac - tion documents do not have to be disclosed in full, although the Oslo Stock Exchange prefers that the entire document be attached. If the transaction agree - ment is not attached, a comprehensive summary of the terms and conditions needs to be included in the offer document. In general, the directors of a company have a fiduciary duty towards the company and all of its shareholders while also having a general obligation to take into con - sideration the interests of other stakeholders of the company, such as employees, contractual partners and society at large. However, in a business combination the primary obli - gation of the directors will be to maximise share val - ue for the shareholders. There is a general obligation for the board to treat shareholders equally, and in a business combination this principle is very important. A practical issue in this respect is that an acquiring party often requests that a major shareholder in the target company reinvests a part of its proceeds in the acquirer. This is in most cases acceptable, but will often require that the transaction is structured in a certain way. 8.2 Special or Ad Hoc Committees In listed companies it is quite common to operate with various special subcommittees of the board, for example an audit committee and a remuneration com - mittee. Under Norwegian law, however, the clear start - ing point is that it is the full board as a collegium which is responsible for all actions or omissions by the board (although the liability is on an individual basis). The concept of special or ad hoc committees is therefore less common than in some Anglo-Saxon jurisdictions. When special subcommittees of the board have been 8. Duties of Directors 8.1 Principal Directors’ Duties
appointed, such subcommittees normally function as preparatory committees for the board. In business combinations, it is the full board which makes final decisions (sometimes subject to approv - al by the general meeting), but from a practical per - spective it is not uncommon that certain directors are appointed by the full board to participate with mem - bers of senior management (typically the CEO and CFO) in negotiations and that such a negotiation team thus forms an ad hoc committee. As to conflict of interest, the normal procedure under Norwegian law is that the conflicted directors are excluded from the board’s handling of the matters. A special committee is thus not established. 8.3 Business Judgement Rule In takeover situations, as mentioned, it is in most cas - es the shareholders who have the final decision, while the board’s role in practice often is to negotiate the best possible offer on behalf of the shareholders, and then advise the shareholders whether or not to accept the offer. There is no tradition in Norway for courts to be involved at all in relation to takeover situations. A discontented shareholder may sue the directors personally for its losses, and this could include the delta between a fair price and a price which is too low. However, since it is up to the shareholders to accept the offer, it is very unlikely that such lawsuit will be successful in relation to a public takeover situation. In relation to an asset sale or sale of a significant subsidiary that has not been subject to sharehold - er approval, the test is whether the board has con - ducted a prudent process and assessed the overall considerations in light of relevant circumstances when deciding to transact with a material asset. In such situations, the court is very hesitant to rule that the directors acted negligently and thus are liable to the shareholders. From that perspective, it is fair to conclude that the “business judgement rule” is a very strong principle in takeover situations.
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