NORWAY Law and Practice Contributed by: Ylva B Gjesdahl Petersen, Marius Holm Rynning and Johan Fredrik Brende, Thommessen
• Further, anti-dilution rights are commonly seen, in the event that the company issues new shares at a lower price than the venture capital investors paid. The anti-dilution is facilitated by way of the company issuing a number of additional shares (at nominal value) that are necessary to ensure that the aver - age subscription price of the initial invested shares and the new shares are equal to sub- scription price in the down round. The anti- dilution mechanism can take into account the number of shares issued in the down round, meaning that a small down round would trig - ger the issuance of fewer anti-dilution shares than a large down-round (a so-called volume weighted average anti-dilution right) or be a so-called full ratchet anti-dilution right where the size of the down round is disregarded. • Pre-emption rights and subscription rights – pursuant to the Norwegian Companies Act, existing shareholders have a pre-emptive right to subscribe for new shares issued by the company. The general meeting may, how - ever, through a qualified majority of two-thirds of the votes cast and share capital present at the general meeting, decide to deviate from the pre-emptive rights of existing sharehold - ers. The right for existing shareholders to subscribe for new shares is therefore normally also regulated in the shareholders’ agree - ment. 3.6 Corporate Governance In addition to exercising influence through their ownership rights (voting at the general meeting), a venture capital investor would normally secure the following rights to influence the management and the affairs of the venture in a shareholders’ agreement. • Board representation – investors may have the right to appoint one or more representa -
tives to the company’s board of directors. This allows them to have a say in strategic decision-making and key governance mat - ters. • Consent rights (reserved matters) – inves - tors may have the right to provide consent or approval for certain significant decisions, such as any changes to the articles of asso - ciation, the issuance of new shares or other financial instruments, changes to the capital structure, changes to the business activi - ties, undertaking of debt, the entering into of mergers and demergers, agreements relating to acquisitions and disposals, payment of dividends, the entering into large contracts, any substantial investments, or the hiring of key executives. • Information rights – investors usually have the right to access certain information about the company’s operations, financials, and perfor - mance. 3.7 Contractual Protection The type of representations and warranties com - monly observed in a financing round in a Norwe - gian start-up or growth company relate to: • legal status and corporate power; • no conflict; • the issued shares/equity instruments; • financial statements and sometimes also management accounts; • position since the accounts date; • real property and other assets; • IP rights and IT; • the General Data Protection Regulation (GDPR); • material agreements;
• related party transactions; • employees and pension; • insurance; • tax;
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