[ESTABLISHING A BUSINESS ENTITY IN NORWAY] 373
ESTABLISHING A BUSINESS ENTITY IN NORWAY 1. Different Business Entities 1.1 Introduction and outline Enterprises in Norway may be organized in several ways; the most common are limited liability companies, partnerships, and sole proprietorship. When selecting the appropriate business form in Norway, the choices are mainly between the above mentioned three structures. If the activities are of a non-profit or voluntary nature, a club, association, or foundation may also be an alternative. The key factors to consider when choosing a particular business entity type are volume, risk, earning potential and taxation. Also, the availability of a particular entity type depends on the number of owners. A single owner may operate as a sole proprietor or a limited liability company. If there are two or more owners of the business, by definition it cannot be a sole proprietorship, but it may be an unlimited or limited partnership, or a limited liability company. 1.2 Limited liability company In Norway, limited liability companies are independent legal entities, like limited companies in the U.K. and US. A limited liability company can be organized either as a private or as public company. Public company shares may, in contrast to private company shares, be negotiable on stock markets. The minimum share capital for a private company is NOK 30 000, -. For a public company it is NOK 1 000 000, -. The owners of a limited company have no personal responsibility for the company’s obligations. Their economic risk is limited to the share capital contributions made to the company.
Creditors can only file claims against the company, not the shareholders. If your business operates on a medium to large scale with some risk, we recommend that you organize it as a limited liability company. 1.3 Partnerships Partnerships may be organized as an unlimited liability partnership or a limited liability partnership. Both are an association of two or more partners who are jointly or severally liable for the enterprise's total liabilities. The unlimited liability partnership in Norway is called an "ANS". In an ANS partnership, the partners are personally liable for the enterprise's total debt (joint and several liability). Debt that one partner is unable to pay may be claimed in full from any one of the other partners. The limited partnership is called "DA". The partners jointly are personally liable for the enterprise's total liabilities, but each partner is only liable in proportion to his or her ownership interest in the partnership. Creditors cannot claim coverage for more than 10% of their debt from a partner who has a 10% ownership in the partnership, even if the other partners are unable to settle their part of the debt. Another form of limited partnership is "KS". This type of business is a hybrid of unlimited liability partnerships and limited liability companies. One or two "general partners" have unlimited personal liability covering the partnership's obligations. The "KS" is a legal entity and is itself liable for all its obligations. 1.4 Sole proprietorship Sole proprietorship is a form of enterprise in which a 'physical person' is liable for a business.
ILN Corporate Group – Establishing a Business Entity Series
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