NORWAY Law and Practice Contributed by: Ylva B Gjesdahl Petersen, Marius Holm Rynning and Johan Fredrik Brende, Thommessen
shall be completed, and how the proceeds shall be distributed among the shareholders. Exit triggers are events or conditions that trigger a potential sale or IPO. Common exit triggers include reaching a certain valuation, achieving specific financial milestones, or a specified time period – the latter of which have become more common in order to give the company time to focus on growth and profitability. The definition of exit triggers can vary depending on the spe - cific circumstances and negotiations between shareholders. In terms of transfer restrictions, the provisions commonly seen in venture capital companies are as follows. • Lock-up – lock-up provisions ensure that shareholders (or certain shareholders) do not sell shares for a certain period of time. • Right of first refusal (ROFR)/right of first offer (ROFO) – ROFR provisions give existing shareholders the right to purchase shares that another shareholder intends to sell before those shares can be sold to a third party. If a shareholder receives an offer from a third party to purchase their shares, they must first offer those shares to the existing sharehold - ers at the same price and terms. The exist - ing shareholders then have the option to accept or decline the offer. If they decline, the shareholder is free to sell the shares to the third party on the same terms. Generally, it can be difficult to achieve an offer from a third party on a stake that is subject to a ROFR, so investors often prefer a ROFO instead, where the shareholder wishing to sell would need to offer the shares to other existing sharehold - ers before the shares can be offered to a third party. If the selling shareholder rejects an offer from other existing shareholders, it can only sell to a third party at a higher price.
• Drag-along rights – drag-along rights allow a majority shareholder or a group of sharehold - ers to force minority shareholders to sell their shares in the event of a sale or liquidity event (typically, an IPO). This provision ensures that all shareholders can participate in the trans - action and prevents minority shareholders from blocking a potential exit. • Tag-along rights – tag-along rights protect minority shareholders by allowing them to join in a sale or liquidity event initiated by a major - ity shareholder. This provision ensures that minority shareholders have the opportunity to sell their shares on the same terms as the majority shareholders. 6.2 IPO Exits Although IPOs can be a viable exit strategy for some start-ups, they are not as common in Nor - way as they are in other countries such as the USA. The prevalence of an IPO exit for start- ups in Norway has varied throughout the years, based on the general sentiment and market conditions. In 2020–22, many early-phase and growth companies were able to obtain high valu - ations simply based on expected future earn - ings, and many early-phase and growth compa - nies achieved successful IPO exits around that time due to high investor demand. A record high number of early-phase companies were listed on Oslo Børs’ junior market, Euronext Growth Oslo. Euronext Growth Oslo is the most appro - priate marketplace for less mature companies, with less-strict listing requirements compared to the Oslo Børs’ main list. Many early-phase and growth companies that listed in 2020–22 structured their offering by way of a capital raise through a private placement directed to a hand - ful of institutional investors and high net worth individuals, followed by a listing. Some of the more mature growth companies were listed on Oslo Børs’ main list, following a more classic
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