NORWAY Law and Practice Contributed by: Ida Marie Windrup, Kristine Hjertenæs, Markus Nilssen and Daniel Jovanovic, BAHR
Movable Assets While vehicles and construction machinery may be granted as security in the form of a floating charge registered with the Movable Property Register, other registrable movable assets, such as vessels/rigs and aircrafts may be provided as security by way of a mortgage registered with the applicable registry. Bank Accounts Charges over bank accounts, specifically over the amount which is from time to time deposited in the account of the bidding company, will most commonly be granted. Monetary Claims Security may be granted over the chargor’s monetary claims/contract receivables, provided that the claim exists or will arise against a named debtor in a specifically mentioned legal situation. In order to charge future monetary claims, an underlying contractual relationship, specifying the parties, needs to be in place. If the group uses cash-pooling arrangements, it should be noted that most of these prohibit assignments under the cash pool and as such these claims may not be assigned. For acquisition financings, assignment of the claims under the SPA is com- The most common form of security over real property is a mortgage, perfected by registra- tion of a standardised charge form with the Norwegian Property Register ( Statens Kartverk ). If the target company is a real estate company (not holding assets other than real estate not under construction or development and without employees except a general manager), such security may also be granted for acquisition financing incurred by the bidding company. monly granted. Real Property
Limitations With Respect to Security Granted by Target Companies As further explained under 5.5 Financial Assis- tance , all financial assistance (as defined therein) granted by a target company will be subject to restrictions in relation to the acquisition portion of a financing. Financial assistance, including the granting of security, created by a target compa- ny, will therefore occasionally be limited to other facilities under the loan, for example the facility used to refinance debt in the target companies (which can be guaranteed and/or secured not- withstanding the rules on financial assistance). Maximum Liability Requirement The maximum amount to be secured or the amount of the secured obligations must be set out in most Norwegian law security agreements for the security right to be valid. This also applies to Norwegian guarantee documents, unless oth- erwise agreed amongst the parties. Standard market practice is to cap liabilities at 120–125% of the principal amount of the guaranteed or secured obligation, plus interest, default interest, costs and expenses – ie, the total commitments. Release of Security Under Norwegian law, there are no formal requirements when it comes to agreeing the release of security between the parties. The for- mal release procedure depends on the specific asset over which security interest is granted. For instance, with respect to security perfected through submission of originally signed mort- gages or charge forms, the security interest is released/deleted by submitting the respective charge form in original and endorsed “for dele- tion” , signed by an authorised signatory of the existing creditor/beneficiary (alternatively under a power of attorney), to the respective registry, such as the Norwegian land register for real estate, the movable property register, etc. It
332 CHAMBERS.COM
Powered by FlippingBook