Law and policyPolicies and practices
What, in general terms, are your government’s policies and practices regarding oversight and review of foreign investment?
The investment regime in Norway is liberal and open, and the government encourages foreign investments. The government’s general policies and practices regarding oversight and review of foreign investments are limited to the National Security Act. However, the ability to review a transaction is not contingent on the nationality of the acquirer, rather the Norwegian regime is based on assessing a national security impact that applies in all circumstances, including acquisitions by Norwegian companies. Naturally, the identity of the acquirer will be relevant in a substantive assessment of whether the investment generates a risk with regard to national security. In this sense, an assessment will be made of the nature and type of activities of the target with regard to their inherent sensitivity from a national security perspective. This will be reviewed against the identity of the acquirer and whether there are any risks that can be linked to it.
Norway has no currency restrictions. However, there are several other regulatory approval schemes linked to transactions, including merger control by the Competition Authority.Main laws
What are the main laws that directly or indirectly regulate acquisitions and investments by foreign nationals and investors on the basis of the national interest?
The review of acquisitions and investments by foreign nationals and investors on grounds of national security in Norway are governed by the Norwegian National Security Act of 1 June 2018 No. 24 (NSA). The NSA is intended to help prevent, detect and counter activities that present a threat to national security, and ensure that security measures are implemented in accordance with the fundamental legal principles and values of a democratic society. The NSA is meant to exist as a dynamic framework for the most critical security interests in our society, without detailed safety regulations.
The key provisions of the NSA are:
- section 13, which allows a government ministry to adopt a decision to apply the NSA to undertakings within its field of responsibility;
- chapter 10 on ownership control, which requires the notification of an acquisition of a ‘qualified ownership interest’ in a company made subject to the NSA by way of decision under section 1-3; and
- section 2-5, which allows the government to prohibit any activity (including transactions) that can lead to a not insignificant risk to national security.
Outline the scope of application of these laws, including what kinds of investments or transactions are caught. Are minority interests caught? Are there specific sectors over which the authorities have a power to oversee and prevent foreign investment or sectors that are the subject of special scrutiny?
The NSA does not distinguish between foreign and domestic investments. The rules of ownership control in the NSA are applicable regardless of the acquirer’s nationality, namely, the rules apply to both foreign and domestic acquirers without discrimination.
There are two facets to the Norwegian regime. This includes, on the one hand, the mandatory notification of investments in companies that have explicitly been made subject to the NSA, and, on the other, a broad general provision to order the notification of investments of concern.
First, as regards mandatory notification, investments must always be notified when the target is a company that has been made subject to the NSA by way of decision issued by a government ministry under section 1-3 NSA. Each ministry has a delegated authority, within its field of competence, to issue administrative decisions rendering a company subject to the NSA. This authority is discretionary, but limited to situations where a company:
- handles classified information;
- handles information, information systems, objects or infrastructure of vital importance for fundamental national functions; or
- is engaged in activities of vital importance for fundamental national functions.
Prior to issuing a decision, a ministry must first give notice to the company in question. The company is given the opportunity to present its comments to the ministry.
Examples of undertakings that are covered by the provisions on ownership control are companies in the defence, telecommunications, transport and energy sectors, food and water supply and health services. However, there is no public list or record of which companies have been made subject to the NSA.
Second, as regards the general prohibition, section 2-5 NSA allows the government to adopt decisions necessary to prevent ‘activities’ that present a not insignificant threat to national security. This provision is purposefully broad and is designed as a ‘safety valve’ to ensure a means of reviewing and, possibly, blocking transactions that raise national security concerns. However, the preparatory works to the NSA clearly state that it should only be used in ‘limited and serious’ situations. To date, the provision is only publicly known to have been applied once.Definitions
How is a foreign investor or foreign investment defined in the applicable law?
The provisions on ownership control in the NSA are not directed specifically towards foreign investors or foreign investment as such, and apply both to foreign and domestic acquirers without discrimination. As a result, the NSA does not define terms such as ‘foreign investor’ or ‘foreign investment’. Rather, the objective of the NSA is to guard against investments that raise a national security concern.Special rules for SOEs and SWFs
Are there special rules for investments made by foreign state-owned enterprises (SOEs) and sovereign wealth funds (SWFs)? How is an SOE or SWF defined?
There are no specific rules for investments made by foreign SOEs or SWFs. The provisions on ownership control are applicable regardless of the acquirer’s nationality.Relevant authorities
Which officials or bodies are the competent authorities to review mergers or acquisitions on national interest grounds?
The competent authority to review mergers or acquisitions on national interest grounds is the individual ministry with competence for the sector in which the relevant undertaking is engaged. If the company does not fall within the sector of any ministry, the Norwegian National Security Authority has competence to conduct the review.
The ministries and the Norwegian National Security Authority have the power to approve an acquisition, but they cannot prohibit an acquisition. If an acquisition is to be prohibited, the decision must be taken by the government.
Notwithstanding the above-mentioned laws and policies, how much discretion do the authorities have to approve or reject transactions on national interest grounds?
The NSA is intended to provide a dynamic framework to address the most critical security interests in Norway, and although there is a not insignificant margin of discretion, any prohibition decision must still be adopted according to general principles of administrative law.