Structure and process, legal regulation and consentsStructure
How are acquisitions and disposals of privately owned companies, businesses or assets structured in your jurisdiction? What might a typical transaction process involve and how long does it usually take?
Acquisitions and disposals of privately owned target companies, businesses or assets in Norway are normally agreed by negotiating a sale and purchase agreement (SPA) between the relevant parties. If a non-listed target company is controlled by multiple owners each holding small ownership stakes in such target, the acquisition could also be carried out by a contractual offer to the owners followed by a minority squeeze-out, or through a statutory merger.
Small to medium-sized deals where the contact is initiated by a potential buyer will often follow a traditional pattern in which the buyer, after initial discussions to establish the owner’s interest, starts by proposing a term sheet or letter of intent. Such documents are aimed at creating a consensus on the main terms of the deal and to grant the potential buyer due diligence access to the target’s books and records, and to potentially grant the buyer exclusivity for a limited time period to negotiate a final SPA. During the due diligence, the buyer will normally want to take control of the drafting process and will produce a draft SPA for the seller to review. After due diligence, the parties will seek to finally negotiate the SPA, and if the parties reach an agreement the SPA will be signed. After this the parties will, depending on the deal size, have to notify the relevant competition authorities and ensure that any other agreed conditions to closing are fulfilled prior to completion. Sometimes the parties may want to negotiate slight variations and introduce various other heads of terms, process agreements and such like, before reaching a final agreement. Typically, the seller may also insist on taking control of the drafting, even if this has been considered less common for deals negotiated on a bilateral basis.
Medium-sized to large transactions involving non-listed companies are often conducted through an auction (structured sales) process in which interest from several potential buyers is solicited. Such a process will typically involve:
- drafting an information memorandum as the basis of marketing the company, business or assets, completion of vendor due diligence and drafting of a SPA and other sale documents (approximately six to eight weeks);
- ‘round one’ expressions of interest from potential buyers who will then be permitted to undertake due diligence (approximately four to eight weeks);
- ‘round two’ offers by potential buyers with mark-ups of the transaction documentation (approximately four to six weeks); and
- negotiation of transaction documentation with one or more buyers until definitive terms are agreed with one party (up to two weeks).
Owners wanting to exit their investment in a non-listed company, business or assets through a structured sales process arranged by an investment banking firm should expect such process to take from four to six months, or even longer. A bilateral transaction may even take longer to complete due to the lack of competitive tension in the process.Legal regulation
Which laws regulate private acquisitions and disposals in your jurisdiction? Must the acquisition of shares in a company, a business or assets be governed by local law?
The key corporate specific legislation governing M&A in the Norwegian market is primarily the Private Limited Liability Companies Act (1997) (LLCA), the Public Limited Liability Companies Act (1997) (PLLCA) and the Partnership Act (1985). Private acquisitions and disposals in Norway will, on a case-by-case basis, also be regulated by various other provisions found in, inter alia, the Contract Act (1918) (pertaining to almost any contract); the Sales of Goods Act (1988); the Income Tax Act (1999) and the Accounting Act (1998) (both pertaining to transactional tax considerations); and the Working Environment Act (2005). The Norwegian Competition Act (2004) provides regulations on, and the procedure to intervene against, anticompetitive concentrations. Companies that are active in the Norwegian market (generally in larger transactions) must also consider and abide by the merger control provisions set out in the EEA Agreement.
Most sales of Norwegian companies will be governed by Norwegian law. However, it is possible to agree that an SPA should be governed by the law of an overseas jurisdiction. Nevertheless, legal formalities applicable to transfers of shares, assets and liabilities that are subject to local law will always have to be complied with.Legal title
What legal title to shares in a company, a business or assets does a buyer acquire? Is this legal title prescribed by law or can the level of assurance be negotiated by a buyer? Does legal title to shares in a company, a business or assets transfer automatically by operation of law? Is there a difference between legal and beneficial title?
There is no statute that explicitly distinguishes between ‘full title guarantee’ or ‘limited title guarantee’ as under English law. A sale of title to shares or assets will, unless otherwise agreed between the parties, be regulated by the Norwegian Sales of Goods Act. Transfer of ownership means that the buyer, from time of completion, has the right to sell such property, and that the seller at its own cost should make reasonable efforts to give the buyer the property that is sold free of charges and other encumbrances.
A buyer of shares in a private company can exercise shareholder rights only when the transfer has been entered in the register of shareholders, or when the transfer has been reported and proved as not prevented by restrictions on trade under the articles of association (articles) or statute.
In connection with a change of ownership to the shares in a private company, shareholder rights can be exercised by the seller, unless the rights have been transferred to the buyer (under the LLCA). For both non-listed and listed public companies, the PLLCA contains more or less the same rule, except that for public companies, the register of shareholders is created in a security registry. In addition, the articles of public companies may provide that the right to attend and vote at the shareholders’ meeting can be exercised only if the transfer has been entered in the register of shareholders five working days before the meeting.
A seller and a buyer may agree that title to the shares or assets sold should remain with the seller, and that the buyer itself only holds a beneficial interest in such shares or assets. Consequently, the seller holds the legal title to the shares or assets in question on behalf of the buyer, while the right to receive the economic benefits of the shares or assets is held by the buyer. Accordingly, the beneficial interest in such shares and assets may be transferred without having to update the shareholders’ register or, if the transferred asset is real estate, without updating the land registry (if relevant) for the target company in question. A transfer solely of the beneficial interest to such assets may, however, expose the beneficial owner to a loss if he or she at a later stage wants to obtain full legal title to the assets in question, and it then turns out that the holder of title is insolvent or has had to file for court composition proceedings, etc.Multiple sellers
Specifically in relation to the acquisition or disposal of shares in a company, where there are multiple sellers, must everyone agree to sell for the buyer to acquire all shares? If not, how can minority sellers that refuse to sell be squeezed out or dragged along by a buyer?
In general, a buyer will prefer all sellers to sign the same SPA, or to agree to be bound by the same terms and conditions through executing some sort of adherence agreement to the SPA. A buyer wanting to acquire all shares in a Norwegian company will, as a principle, have to persuade all shareholders to sell. Minority shareholders refusing to sell may, however, be forced to sell pursuant to drag-along provisions contained in a shareholders’ agreement requiring the transfer of title to shares if specific conditions are satisfied. Drag-along provisions in a company’s articles are not very common in Norway, but such provisions can occasionally be seen.
Minority shareholders may, under Norwegian law, be subject to a squeeze-out following an acquisition of shares by an existing or new shareholder. The LLCA and PLLCA provide that, if a parent company, either solely or jointly with a subsidiary, owns or controls more than 90 per cent of another company’s shares and voting rights, the board of directors of the parent company may by resolution decide to squeeze out the remaining minority shareholders through a forced purchase at a redemption price. Minority shareholders have a corresponding right to demand the acquisition of their shares by a shareholder with a stake of more than 90 per cent of the company’s shares. A resolution to carry out a legal merger will also bind all minority shareholders, provided a majority of two-thirds (both in votes and in capital) of those shareholders attending the companies’ shareholders’ meetings approves the merger.Exclusion of assets or liabilities
Specifically in relation to the acquisition or disposal of a business, are there any assets or liabilities that cannot be excluded from the transaction by agreement between the parties? Are there any consents commonly required to be obtained or notifications to be made in order to effect the transfer of assets or liabilities in a business transfer?
If the transaction is structured as an acquisition or disposal of a business (contrary to a share sale and purchase), the parties can in general choose which assets or liabilities they wish the transaction to comprise. In such transactions, there is generally no automatic transfer of assets and liabilities. However, a buyer cannot structure a transaction as a sale or business and thereby avoid responsibility with regard to employees engaged by the target business. In business transfers, the employees, their employment contracts and all related benefits and obligations are, in general, automatically transferred to the buyer as of the date of the transfer (see question 34).
Further, in a business sale (asset transfer), the buyer may also be at risk of inheriting the seller’s liability for contaminated land even if the parties have agreed otherwise among themselves. The Norwegian courts could also hold the seller liable even after the contaminated properties are sold. In some cases, even the seller’s shareholders may be liable for investigation and clean-up costs if a subsidiary formerly owning the properties is liquidated, even if the property was polluted before the shareholders acquired their shares in the company that later took over the contaminated properties.
In a business transfer (asset purchase), third-party consents and approvals are usually required, while in a share purchase, third-party consents are generally not required (subject to consents from public authorities and change of control provisions).Consents
Are there any legal, regulatory or governmental restrictions on the transfer of shares in a company, a business or assets in your jurisdiction? Do transactions in particular industries require consent from specific regulators or a governmental body? Are transactions commonly subject to any public or national interest considerations?
By law, shares in a private limited liability company (AS company) have limited negotiability, in that shares can be acquired only if the company grants its consent to the acquisition, unless otherwise stipulated in the company’s articles. However, in general, consent can be refused only on ‘justifiable grounds’. A transferee who is already a shareholder will need corresponding consent to increase his or her ownership interest in such a company. Other transfer restrictions may also be contained in the articles. If shares in a private company are to be sold or change owner in other ways, the other shareholders have a pre-emption right to purchase the relevant shares, unless otherwise stipulated in the articles. For limited companies established before 1 January 1999 (that is, before the entry into force of the LLCA) the general rule is the opposite: board approval and right of first refusal apply only if they are explicitly stipulated in the articles. For public limited companies (ASA companies), both listed and non-listed ASA companies, the shares are freely negotiable. However, even such companies have extensive options to limit the assignability of their shares.
Acquisitions of companies and businesses in Norway may also be subject to the merger control regime set out in the Norwegian Competition Act (2004). If the following jurisdictional thresholds are satisfied, a party acquiring lasting control of a company or business must notify the transaction to the Norwegian Competition Authority (NCA): the combined group turnover of the acquirer and the target in Norway is 1 billion Norwegian kroner or more; and at least two of the undertakings concerned each has an annual turnover in Norway exceeding 100 million kroner.
Provided these thresholds are fulfilled, notification is mandatory and must be given prior to completing an acquisition of a business combination in Norway. The NCA will also be empowered to issue decrees ordering that business combinations falling below these thresholds still have to be notified, provided it has reasonable cause to believe that competition is affected or if other special reasons call for investigation. Such a decree must be issued no later than three months from the date of the transaction agreement or from the date control is acquired, whichever comes first. If a filing is required under the EU merger control regime, no filing is needed with the NCA.
There is no general legislation that requires notification to or clearance of a governmental agency when a foreign-owned (or foreign-controlled) company makes an acquisition in Norway. However, in certain sectors governing vital national interests, such as the power and energy sector (including oil, gas and hydropower) and the finance sector (including financial, credit, and insurance institutions), certain limitations on ownership and business operations apply. Such rules apply both for foreign and domestic buyers.
Until recently, Norway had not implemented any type of specific national security review of acquisitions such as, for example, the type of review conducted by the US Committee of Foreign Investments, but the state has acquired controlling stakes in many large Norwegian corporations, in particular where those corporations hold investments in sectors considered vital from a security perspective. A new National Security Act has, however, now been adopted by the Norwegian parliament, which grants the government wider powers to intervene and stop acquisitions of shares in a company holding investments in sectors considered vital from a Norwegian national security perspective (see question 36).
Are any other third-party consents commonly required?
In an asset purchase transaction, third-party consents and approvals are usually required, while in a share purchase, third-party consents are generally not required (subject to consents from public authorities and change of control provisions).
An asset transaction involving the sale of all or substantially all of a selling company’s business and assets may be a factual liquidation under Norwegian law. This could trigger requirements for shareholder consent to put the selling company into liquidation or to change its purpose. A liquation is normally less confidential than a share transaction.
An acquisition or business combination structured as a legal merger or demerger will require consent from both the involved companies’ shareholders. Moreover, the merging or demerging companies’ creditors are entitled to demand payment or security for their claims before the transaction can be completed.Regulatory filings
Must regulatory filings be made or registration (or other official) fees paid to acquire shares in a company, a business or assets in your jurisdiction?
Transfer tax or stamp duty does not apply on a share purchase. In an asset purchase, and depending on the assets, transfer tax and various public fees can be triggered. For example, the sale of real estate incurs a 2.5 per cent transfer or registration tax (stamp duty), calculated on the market value of the real estate, and a nominal registration fee of 525 kroner if the transfer is recorded in the Land Register. Registration is in principle necessary to protect the buyer’s title. If shares in a company owning real estate are acquired (and not the property itself), no transfer tax is levied. If a transfer of real estate is due to a legal merger or demerger, registration of the transfer of title in the Land Register is exempt from registration tax. In such cases, a nominal registration fee to the Registry of Business Enterprises has to be paid. Transfer of ownership to motor vehicles in connection with an asset sale has to be registered with a driver and vehicle licensing office. Such registration will incur a registration fee. Transfers of real estate and ownership to motor vehicles owing to a transformation of a legal entity carried out under tax continuity following 1 January 2016 are now exempt from such transfer or registration tax and registration fee.
Advisers, negotiation and documentationAppointed advisers
In addition to external lawyers, which advisers might a buyer or a seller customarily appoint to assist with a transaction? Are there any typical terms of appointment of such advisers?
In addition to external lawyers, depending on the transactional complexity and status of the target company (large, mid or small cap), the parties will often appoint a financial adviser and a firm of accountants to assist with the transaction. Financial advisers typically consult on the appropriate valuation or consideration and transaction structure. Accountants are engaged to assist with accounting issues, financial and tax due diligence and tax structuring work. Strategy and business consultants may also be engaged to conduct a commercial and operational due diligence. In addition, public relations advisers may be engaged to coordinate announcements to the market, in particular if a party to the transaction has securities listed on a stock exchange.
These advisers will, in most cases, have standard terms of engagement that they will agree with their clients. The level of fees may depend on such factors as the value of the deal, its complexity, the timetable, time spent on the project and the nature of the work to be performed. The advisory fees (financial, legal, accounting and those of various consultants) may in total amount to several percentage points of the transaction value.Duty of good faith
Is there a duty to negotiate in good faith? Are the parties subject to any other duties when negotiating a transaction?
Traditionally, general principles such as the principle of good faith and fair dealing have been assumed to play a prominent role under Norwegian law. However, the legal status of any form of ‘good faith’ obligations or other pre-contractual liabilities could in many situations be rather unclear, and will depend upon individual circumstances. If negotiations have been conducted for some time and there exists more than just an outline of an agreement, some have assumed that parties may have an obligation to continue such negotiations in good faith, while some have assumed that the parties do not have an obligation to complete the negotiations with the purpose of reaching an agreement. In such situations, it cannot be ruled out that if one of the parties is acting unfairly, that party may become liable for the expenses incurred by the other party in connection with the negotiations. Still, it must always be assumed that each party is permitted to pursue its own self-interest during any form of negotiations, at least provided a party does not act in an unreasonable, fraudulent or disloyal manner during negotiations, or alternatively attempt to exploit a weaker party.
Directors of a Norwegian company are subject to fiduciary and statutory duties, which include the duty to act in a way that a director considers, in good faith, promotes the success of the company for the benefit of its members as a whole. Financial advisers are also subject to certain standards of professional conduct monitored by the Norwegian Financial Supervisory Authority.Documentation
What documentation do buyers and sellers customarily enter into when acquiring shares or a business or assets? Are there differences between the documents used for acquiring shares as opposed to a business or assets?
When acquiring shares in a Norwegian company, the parties to the transaction will normally enter into:
- a non-disclosure (confidentiality) agreement that governs the exchange of confidential information relating to the transaction;
- in a bilateral discussion, the parties may also enter into a number of preliminary agreements prior to executing a final SPA. Such preliminary agreements and documents typically comprise various forms of term sheets, heads of terms, memoranda of understanding, exclusivity agreements, letters of intent, among others;
- an SPA. Unlike, for example, in the UK, it is not usual to prepare a separate tax indemnity or separate disclosure letter qualifying the seller’s warranties. These provisions are usually included in the SPA or a schedule to it. However, in large deals where the buyer is a foreign entity or controlled by a foreign entity, and the sale is not by auction, disclosure letters may also be used in Norway;
- if the target company is part of a large group owned by the seller, it is often necessary to enter into a transitional services agreement to ensure the target is able to continue its business uninterrupted after closing on a standalone basis; and
- if a buyer acquires less than 100 per cent of the shares in a target, or in a private equity transaction where the target’s management is invited to invest with the private equity sponsor, it is common to enter a shareholders’ agreement (sometimes called an investment and shareholders’ agreement) with the buyer and the target’s other shareholders.
When acquiring a business or assets (instead of shares), the SPA (in such cases often called an asset purchase agreement (APA)) will (contrary to a share transaction) typically contain detailed provisions defining the scope of assets and liabilities to be transferred together with clauses regulating any misallocation of assets and liabilities between seller and buyer (wrong pocket clauses). Except for this, an APA and an SPA will often look fairly similar whether shares, a business or assets are being acquired, but for some assets, additional transfer documents or notices may be necessary to transfer the title to the assets; see question 12.
Are there formalities for executing documents? Are digital signatures enforceable?
A share sale agreement could, in principle, be executed without observing any particular form under Norwegian law. However, for an APA, the formalities may depend on the type of assets being sold. For some assets, additional transfer documents or notices to creditors or third parties may be required to transfer title to the assets. Certain documents must be executed in front of witnesses, including transfers of interests in land where a deed of conveyance is needed for mortgages and charges. The failure to observe any applicable formalities for the execution of such documents could cause a document to be unenforceable or ineffective, meaning the buyer is not adequately protected towards the seller’s other creditors, etc.
Electronic signatures are enforceable under Norwegian law pursuant to the Act on Electronic Signatures. An authenticated electronic signature based on an authenticated certificate issued by a provider of certification services is also admissible as evidence in legal proceedings. It will satisfy the legal requirement of a signature in relation to data in electronic form in the same way as a handwritten signature, subject to any statutory or contractual provisions to the contrary.
Due diligence and disclosureScope of due diligence
What is the typical scope of due diligence in your jurisdiction? Do sellers usually provide due diligence reports to prospective buyers? Can buyers usually rely on due diligence reports produced for the seller?
The scope of a due diligence investigation may vary substantially depending on a number of factors. However, most bidders desire to conduct a comprehensive financial and tax due diligence review of the potential target. The scope of the legal due diligence may be more limited in nature, but typically focuses on corporate governance, change of control issues, risks related to material contracts, real estate issues, including potential environmental liability, related parties and separation issues, licences and the need for public approvals, employees and pension law issues, intellectual property rights, disputes, non-competition and competition law issues. Specialist consultants may also be engaged to carry out environmental due diligence investigations or commercial due diligence investigations. A commercial due diligence frequently includes a review of the market (including any trends that might threaten the target’s position), in addition to the threat of new technologies, the risk of new entrants, the competitive environment, etc. For private equity funds, it has become common to retain legal advisers to prepare separate anti-bribery reports to supplement the regular diligence report, often also accompanied by a separate environmental, social and governance report.
Vendor due diligence reports are commonly seen in structured sales processes in Norway. It is also quite customary for successful buyers and their lenders to be able to rely on such vendor due diligence reports, although buyers normally also conduct their own due diligence to evaluate a potential transaction.Liability for statements
Can a seller be liable for pre-contractual or misleading statements? Can any such liability be excluded by agreement between the parties?
A seller can be liable for pre-contractual misrepresentations. It is, however, quite common that the SPA attempts to limit a seller’s liability to claim from a breach of contract by excluding liability for pre-contractual and misleading statements. However, under Norwegian law sellers cannot ‘contract out of’ claims relating to fraudulent misrepresentations, wilful misconduct or gross negligence.Publicly available information
What information is publicly available on private companies and their assets? What searches of such information might a buyer customarily carry out before entering into an agreement?
In Norway, a wide range of publicly available information exists on private companies and their assets and can be requested from the Brønnøysund Register Centre (the Norwegian Register of Business Enterprises). Such information includes:
- corporate formation documents, articles and other related corporate documents;
- details of the board of directors and chief executive officer;
- details of changes to the company’s share capital;
- special shareholder resolutions for approving transactions between a company and its shareholders or directors;
- audited accounts and related directors’ and auditors’ reports;
- charges registered over the target’s inventory and fixed assets; and
- information regarding to what extent a company is under liquidation or insolvency proceedings.
If a Norwegian private limited liability company is approached by anyone requesting to review a list of the company’s register of shareholders, the company is obliged to grant such access. The Norwegian parliament has in 2019 adopted a new act that grants the government powers to establish a new central Registry for Rights Holders, which is expected to allow more easy access to the public about which individuals control Norwegian legal entities (see question 36).
Details of ownership of real estate, mortgages and charges to such real estate are available from the Norwegian Land Register. Information on bond loans, including a full set of the bond documentation, for bond loans raised in the Norwegian and Nordic bond markets can also be obtained from Nordic Trustee. Details of registered intellectual property, such as patents and trademarks, can be obtained from the Norwegian Industrial Property Office.
A buyer of a company will normally carry out a search of the information filed with the Brønnøysund Register Centre (the Norwegian register of business enterprises). Searches may also be performed in respect of those registered assets that are regarded as being material to a transaction. Nominal fees are generally payable to carry out such searches.Impact of deemed or actual knowledge
What impact might a buyer’s actual or deemed knowledge have on claims it may seek to bring against a seller relating to a transaction?
A buyer’s knowledge at the time of entering into an acquisition agreement will normally preclude such buyer from bringing a claim against the seller relating to matters the buyer had knowledge about at that time. Therefore, to preserve a buyer’s right to pursue such claims against a seller (irrespective of the buyer’s knowledge), it is common to negotiate a special indemnity clause into the SPA. Under such indemnity clause, the seller will agree to indemnity the buyer with regard to certain specific risks and issues that the buyer was aware of at the time of entering into the SPA. Alternatively, the parties may attempt to agree specifically whether the buyer’s actual, constructive or imputed knowledge will qualify the seller’s warranties.
Pricing, consideration and financingDeterming pricing
How is pricing customarily determined? Is the use of closing accounts or a locked-box structure more common?
Locked-box mechanisms seems to be the structure of choice for private equity sellers as they provide greater certainty for the seller on an exit. Trade sellers in structured sales processes also increasingly use such mechanisms. Nevertheless, closing accounts mechanisms still remain a common feature of the Norwegian private M&A market, in particular if:
- there is an expected delay between the signing and completion of the transaction;
- substantial seasonal fluctuation in the target’s need for working capital is expected;
- a large part of the value of the target’s balance sheet refers to ‘work-in-progress’ items; or
- the business being sold is to be carved out from a larger group.
- If a closing accounts mechanism is used, it is most commonly agreed to adjust for variations in the target’s net debt and working capital, but this can vary from sector to sector.
What form does consideration normally take? Is there any overriding obligation to pay multiple sellers the same consideration?
Cash is the most commonly used consideration in connection with acquisitions of non-listed companies owing to the fact that sellers normally prefer cash and that it can be substantially more difficult for a seller to evaluate the actual value of a non-cash consideration. Buyers will also tend to prefer settlement in cash, as the documentation and negotiations normally become far more complex when offering settlement in shares or other securities.
There is no obligation under Norwegian law to pay multiple sellers in a private company the same consideration in respect of an acquisition by way of an SPA. A bidder may also offer the shareholders in a private company different consideration if the offer is structured as a contractual offer. If, however, the shareholders are offered different consideration in connection with a transaction structured as a legal merger, this will under most circumstances probably require the unanimous approval of all the merging companies’ shareholders to be valid.Earn-outs, deposits and escrows
Are earn-outs, deposits and escrows used?
Earn-outs and deferred consideration arrangements seem to have become used less frequently. Still, within certain sectors, we have observed a rebound in the use of such earn-out structures, in particular within sectors impacted by declining oil and gas prices.
Deposits and escrows are frequently used as security for warranty claims, but are not popular among sellers. A seller will frequently resist such arrangements. Currently, it also seems that warranty and indemnity (W&I) insurance is continuing to gain ground as a method for getting rid of a more traditional escrow account and deposit mechanism.Financing
How are acquisitions financed? How is assurance provided that financing will be available?
Alternative structures that buyers consider for financing acquisitions typically comprise:
- bank financing consisting of:
- a traditional senior secured term Loan A, B and C facility;
- working capital financing in the form of a traditional revolving credit facility;
- capital expenditure or acquisition facilities going forward; and
- a guarantee facility;
- senior and mezzanine financing;
- bank and bond, and bridge to bond;
- bank and institutional term loans;
- an all bond structure or bridge to bond; or
M&A deals in the Norwegian market have mainly been financed in the bank market. In the past three to five years, however, buyers have increasingly borrowed from alternative finance providers such as direct lending funds and institutional investors. In highly leveraged transactions, payment-in-kind instruments could also be included in the financing structure. To date, in 2019, there has also been a revival of high-yield bonds as a financing component increasingly used by buyers for financing acquisitions.
In structured sales processes, the seller may require the various bidders to provide financing on a ‘certain funds’ basis, that is, attempting to mirror the approach taking in public takeovers. However, the documentation, conditionality and flexibility will normally vary significantly from one deal to another.
Private equity bidders will often be required to provide an equity commitment letter to the seller or sellers. This letter will typically contain an unconditional and irrevocable undertaking on the part of the equity funders of the buying entity to fund the equity in the buyer to effect completion or to pay any damages pursuant to the SPA before completion, and for the buyer to undertake to draw down any debt funding. The funded equity must, together with the sums agreed to be borrowed, be sufficient for the payment of the purchase price and any bank pay-off amounts required to be paid in order to release any encumbrances on the target company’s assets.Limitations on financing structure
Are there any limitations that impact the financing structure? Is a seller restricted from giving financial assistance to a buyer in connection with a transaction?
Norwegian ASA and AS companies are prohibited from providing upstream financial assistance in connection with the acquisition of shares in such company itself (or its parent company). This prohibition prevents any Norwegian target company participating as co-borrower or guarantor of any acquisition financing facilities. However, the above general rule will not in itself restrict a selling company from giving financial assistance to a buyer in connection with an asset sale and purchase transaction, provided such financial assistance is granted on arm’s-length terms and conditions.
In June 2013, the Norwegian parliament approved amending the limited liability companies legislation with the aim of easing Norwegian companies’ ability to provide financial assistance in relation to the acquisition of shares in a company or its parent company by introducing a type of ‘whitewash’ procedure. The rule came into force on 1 July 2013. Under these rules, both private and public target companies can, subject to certain conditions, provide financial assistance to a potential buyer of shares in the target. The financial assistance must be granted under normal commercial terms and policies, and the buyer must also deposit adequate security for his or her obligation to repay any financial assistance received from a target. Further, the financial assistance must be approved by the target’s shareholders’ meeting by a special resolution. The requirement for depositing ‘adequate security’ for the target’s borrower’s obligation to repay any upstream financial assistance provided by a target in connection with M&A transactions means that it is quite impractical to obtain direct financial assistance from the target company in most leveraged buyout (LBO) transactions, owing to the senior financing banks’ collateral requirements in connection with such deals. Consequently, in practice, the new rules have little impact on how LBO financing is structured under Norwegian law, at least in private equity LBO transactions. In most cases, the parties therefore continue to pursue debt pushdowns by refinancing the target company’s existing debt in the same way as was previously adopted. It should be noted that in early 2019, the Ministry of Trade, Industry and Fisheries issued a revised proposal for amending the current requirement for adequate security. However, it is still too early to say if (at all) this proposal will be put forward to the Norwegian parliament in its current form (see question 36).
From 1 July 2014, private equity sponsors must also observe the new anti-asset stripping regime that is set out in the new Act on Alternative Investment Fund Managers. These rules may limit the sponsor’s ability to conduct debt pushdowns depending on the status of the target company (listed or non-listed), the number of employees in the target company and the size of such target company’s revenues or balance sheet.
Conditions, pre-closing covenants and termination rightsClosing conditions
Are transactions normally subject to closing conditions? Describe those closing conditions that are customarily acceptable to a seller and any other conditions a buyer may seek to include in the agreement.
The extent to which transactions are made subject to closing conditions is normally tailored to the specific target and the buyer’s individual need. In a seller’s market, it is normal for sellers seeking deal certainty to insist on reducing the list of such closing conditions to an absolute minimum. Provided the buying group’s and the target’s combined turnover are less than the relevant turnover thresholds for merger control filing, it is not uncommon that a seller will want to insist on signing and completing the transactions simultaneously. Normally, however, sellers accept conditions relating to governmental approvals, such as competition clearance or approval from other regulatory authorities, if relevant.
A buyer may seek conditions regarding third-party consents, waiver of pre-emptive rights, financing, accuracy of representations and warranties at completion, board approvals and the absence of any material adverse changes. Often sellers will accept conditionality only regarding the accuracy of fundamental warranties, such as the seller’s title to shares, capacity and authority. In most cases, a seller will resist that the transaction is to be subject to board approval. In today’s market, it is also highly unusual for a seller to accept a transaction becoming subject to any financing conditions.
What typical obligations are placed on a buyer or a seller to satisfy closing conditions? Does the strength of these obligations customarily vary depending on the subject matter of the condition?
At the least, the parties are expected to exert their reasonable efforts to satisfy the various closing conditions. However, it is not uncommon that the parties agree on a best effort standard to ensure that the various closing conditions are fulfilled. A best effort standard could require the expenditure of money, but without an absolute obligation to achieve the specified outcome. Sometimes the parties may agree that the best effort standard shall not comprise the expenditure of any money to achieve the specified outcome.
In structured sales processes, the sellers may often also attempt to impose a ‘hell or high water’ standard, meaning that the buyer shall be required to take whatever steps necessary, for example, to ensure approval from the applicable regulatory authorities. Such steps could include disposing of parts of the target business or alternatively parts of the seller’s own business, the commencement of litigation, or both.Pre-closing covenants
Are pre-closing covenants normally agreed by parties? If so, what is the usual scope of those covenants and the remedy for any breach?
The parties will normally agree to certain pre-closing covenants under which the sellers agree that the target company will conduct its business in the ordinary course and consistently with past practices. It is quite common that the pre-closing covenants will include such obligations as:
- not amending its organisational documents;
- not altering the share capital, making distributions to shareholders or entering into any form of dissolution or winding-up proceedings;
- not entering into agreements to acquire or divest any businesses or material assets prior to closing;
- not entering into material agreements or committing to capital expenditures in excess of an agreed limit;
- not making any loans to third parties or creating any encumbrances;
- not amending the terms of employment or benefit entitlements or hiring new employees on salaries in excess of an agreed amount;
- not waiving any claims or commencing litigation;
- maintaining existing insurance policies without alterations;
- conducting the business in accordance with existing laws and regulations; and
- granting the buyer access to the target’s records, books and premises as far as this does not conflict with obligations under the relevant antitrust legislation.
The parties could also agree not to solicit senior employees, to maintain confidentiality of the transaction and not to make any public announcements about the transaction without the other party’s consent.
A breach of covenant by one party will result in a claim for damages, provided it is possible to document that such breach has resulted in an economic loss for the non-breaching party. A seller may attempt capping its liability for breach of covenant by including such breaches in the same limitation of liability regime as for warranty claims. However, buyers normally insist that a seller’s liability for breach of such covenants shall be uncapped.Termination rights
Can the parties typically terminate the transaction after signing? If so, in what circumstances?
Typically, the parties will in the SPA agree that they cannot terminate the transaction after signing, except to the extent that any condition is, or becomes, incapable of satisfaction or unless all conditions have not been satisfied within a long-stop (drop-dead) date. It is also common that the parties explicitly agree to waive all rights of termination following the completion date for the transaction. However, if no such provisions have been included in the SPA, either party may according to Norwegian law terminate the transaction if it can show that the other party is in material breach of its obligations under the agreement. Depending on individual circumstances, a breach of warranty or covenant could then be regarded as sufficient grounds for termination according to Norwegian law.
Are break-up fees and reverse break-up fees common in your jurisdiction? If so, what are the typical terms? Are there any applicable restrictions on paying break-up fees?
Break-up fees are not common in the acquisition of private companies, businesses and assets, but such fees can be agreed between a buyer and a seller.
However, if the parties attempt to agree that the target company itself shall pay such break-up fees, the members of the board of directors of the target must satisfy themselves that agreeing such a fee is consistent with their fiduciary and statutory duties to promote the success of the company for the benefit of the company itself and its shareholders as a whole.
It must be assumed that if the target agrees to pay such break-up fee, this may, under certain circumstances, also be considered unlawful financial assistance (see question 22).
Representations, warranties, indemnities and post-closing covenantsScope of representations, warranties and indemnities
Does a seller typically give representations, warranties and indemnities to a buyer? If so, what is the usual scope of those representations, warranties and indemnities? Are there legal distinctions between representations, warranties and indemnities?
In general, Norwegian acquisition agreements are far less detailed than they are in most Anglo-Saxon jurisdictions. However, seller representations and warranties are now commonly included in most acquisition agreements in Norway. There may also be substantial differences between the representations and warranties in acquisition agreements where the buyer and seller are both Norwegian, and where the buyer is foreign. A seller will normally give both representations and warranties and, subject to the negotiating position of the parties, specific indemnities may also be given due to specific issues arising from the due diligence.
Warranties given by a seller typically address:
- power and authority;
- no conflicts;
- ownership of shares or assets and no encumbrances;
- ownership of subsidiaries;
- financial statements, management accounts (and locked-box accounts);
- finance and guarantees;
- no leakage;
- books and records;
- accounts receivable;
- intellectual property rights;
- conduct of business;
- customers and suppliers;
- no material changes;
- pensions and employee plans;
- labour disputes and compliance with labour laws;
- no change of control;
- ownership of real property;
- compliance with laws;
- insurance coverage;
- no insolvency or dissolution;
- no corruption or bribery;
- agreements with sellers or sellers’ related parties; and
- disclosed information.
If a company is sold in a structured sales process, the warranties offered by the sellers will normally have a narrow scope. Warranties offered by private equity funds in a structured sales process of their Norwegian portfolio companies could also be influenced by market practices in such fund’s home jurisdiction. A UK sponsor could, for example, attempt to limit its warranties to fundamental warranties (ownership of shares, valid execution of documentation, etc), at the same time requesting the buyer to rely on its own due diligence and, if possible, on business warranties provided by the target’s management team in a separate warranty deed. If, however, the seller is a Norwegian or Nordic private equity fund, such an approach has been less common.
A seller will normally attempt to agree that the sole remedy in cases of breach of warranties is damages, and that the buyer has to prove that it, subject to its duty to mitigate its damages, has suffered loss (that is, the value of the shares or the business acquired has been reduced) caused by the breach of the warranties. Sometimes, but less frequently, the parties may agree that a buyer is entitled to a reduction in the purchase price. Under the Sale of Goods Act, further remedies are available for breach of warranties, including a right to rescind the SPA in the case of a material breach. Normally, the parties will agree to contractually exclude the Sales of Goods Act, including any rights to rescind the SPA.
Subject to the parties’ bargaining position, specific risks revealed during the due diligence or disclosure may be subject to indemnities, since the buyer normally will be precluded from bringing a warranty claim in relation to a matter it is aware of at signing. Risks that a buyer may want to cover by indemnities could include costs of environmental damages, or the outcome of an ongoing or expected tax inspection or an ongoing litigation. It is not customary in Norway for a buyer to require the seller (or for a seller to accept) to give warranties on ‘an indemnity basis’ like in the US.
Claims for misrepresentation can result in damages on a tortious basis under the Norwegian Contract Act 1918, and a seller may attempt to exclude representations from the SPA.Limitations on liability
What are the customary limitations on a seller’s liability under a sale and purchase agreement?
A seller will normally attempt to limit its aggregate liability under an SPA at a percentage of the agreed purchase price. Business warranty claims are typically subject to additional limitations, such as:
- a requirement of notice of a breach of warranty;
- time limits for bringing claims (which expires 12 to 24 months after completion);
- the exclusion of small claims (de minimis) and the prevention of claims until a specified threshold has been met (basket) for all claims exceeding the de minimis threshold; and
- a maximum cap on the seller’s financial liability, often between 15 to 50 per cent of the purchase price.
Fundamental warranties and tax warranties are often carved out of parts of the limitation regime.
In addition, a seller will normally also want to include more general limitations on its liability, such as:
- qualifying warranties by disclosure of all information contained in a data room;
- knowledge qualifications in warranties and materiality qualifications in warranties and covenants;
- recovery from third parties;
- rules on the conduct of claims from third parties; and
- prevention of double recovery: for example, the buyer cannot claim against the seller if the buyer can claim against an insurance company and get full recovery.
Is transaction insurance in respect of representation, warranty and indemnity claims common in your jurisdiction? If so, does a buyer or a seller customarily put the insurance in place and what are the customary terms?
The Norwegian M&A market has witnessed a substantial increase in the use of W&I insurance as a way to agree on liability under an SPA. This type of insurance policy is now very popular among sellers seeking a clean exit, and it has become common for sellers in structured sales processes to arrange ‘stapled’ buy-side W&I insurance to be made available to selected bidders. A seller may also want to propose the use of such insurance as a way to achieve a competitive advantage in a bidding process. This type of policy will not provide the policyholder with protection relating to specific indemnities that the parties agree as a result of any due diligence findings or disclosure by the seller. An insurance provider may, however, be willing to underwrite policies covering known and specific contingent risks relating to, for example, tax and environmental liabilities, but at a higher insurance premium.
W&I insurance policies will contain a set of general and specific exclusions depending on the target and its industry. Examples of general exclusions comprise liability and claims relating to:
- issues known to the policyholder;
- fines and penalties uninsurable by law;
- pension underfunding;
- transfer pricing; and
- fraud by the seller.
In addition, deal-specific exclusions are often included, and can comprise a wide variety of issues, for example, liabilities arising from the use of asbestos. Insurance brokers will state that it may take four to five business days to put such insurance in place; however, the parties should calculate between five to 10 business days as more realistic timing. It is common that the buyer wants to take out insurance coverage of only approximately 10 per cent to 20 per cent of the enterprise value of the company or business being acquired. The insurance community offers these insurance policies subject to a deductible in an amount equal to 0.5 to 1 per cent of the target’s enterprise value. The premium to arrange a policy has been decreasing in the past couple of years owing to fierce competition between the insurance companies offering such policies. The premium to arrange a policy will typically be between 1 and 2 per cent of the insured amount, but can in today’s market may also be lower than 1 per cent.Post-closing covenants
Do parties typically agree to post-closing covenants? If so, what is the usual scope of such covenants?
It is quite common that sellers must covenant not to compete with the company or the business to be sold. To be enforceable, any non-competition covenant must apply to a reasonable geographic area for a reasonable time period. Guidance states that a non-compete restriction can be justified for a period of up to three years where both goodwill and know how are transferred, but only two years where it is solely goodwill. Each transaction, and the protections sought, must be considered on a case-by-case basis.
Are transfer taxes payable on the transfers of shares in a company, a business or assets? If so, what is the rate of such transfer tax and which party customarily bears the cost?
There are no stamp duties, share transfer taxes or other governmental fees in connection with a share sale.
An asset transaction is considered to be a sale of each asset that is part of the transaction. An asset sale may trigger various transfer taxes, depending on the assets. For example, a sale of real estate incurs a 2.5 per cent transfer or registration tax (stamp duty) calculated on the market value of the real estate, and a nominal registration fee of 525 kroner if the transfer is recorded in the Land Register. The buyer will customarily bear the cost of such taxes for registering the transfer of title on such assets.Corporate and other taxes
Are corporate taxes or other taxes payable on transactions involving the transfers of shares in a company, a business or assets? If so, what is the rate of such transfer tax and which party customarily bears the cost?Acquisitions of shares
Norwegian shareholders that are limited liability companies, as well as certain similar entities (corporate shareholders), are generally exempt from tax on dividends received from, and capital gains upon the realisation of, shares in domestic or foreign companies domiciled within EU and EEA states, and losses related to such a realisation are not tax-deductible. Consequently, Norwegian corporate shareholders may sell shares in such companies without being taxed on capital gains derived from the sale. Costs incurred in connection with such a sale of shares are not tax-deductible. Certain restrictions exist regarding foreign companies not located in EU or EEA states as well as companies located in low income tax states within the EU and EEA that are not conducting business out of such countries (controlled foreign companies rules).
From 1 January 2019, the government increased the tax rate on capital gains derived from the realisation of shares held by Norwegian private individuals. According to the new rules, the amount derived from such capital gains must be multiplied by 1.44, and such grossed-up amount is thereafter to be taxed as ordinary income for such private individuals at a tax rate of 22 per cent. In effect, this means that such gains are being taxed at a rate of 31.68 per cent. Any losses are tax-deductible against such personal shareholder’s ordinary income.
Capital gains from the realisation of shares in Norwegian limited liability companies by a foreign shareholder are not subject to tax in Norway, unless certain special conditions apply. The extent of the tax liability of such foreign shareholders in their country of residence will depend on the tax rules applicable in such jurisdiction.
A transfer of shares is exempt from value added tax (VAT).Acquisitions of assets
By contrast, the tax treatment of a sale of business assets is quite different to the tax treatment of shares. Capital gains derived on the disposal of business assets or a business as a whole is subject to tax at a rate of 22 per cent. Losses are deductible. A Norwegian seller can defer the taxation by gradually entering the gains as income according to a declining balance method. For most assets, the yearly rate is a minimum of 20 per cent, and this includes goodwill.
The acquirer will have to allocate the purchase price among the assets acquired for the purposes of future depreciation allowances. One should keep in mind that the acquirer will be allowed a stepped-up tax basis of the target’s assets acquired. The part of the purchase price that exceeds the market value of the purchased assets will be regarded as goodwill. Recently, however, the tax authorities have disputed the allocation to goodwill instead of other intangible assets with a considerably longer lifetime.
As gains from the disposal of shares in limited liability companies are generally exempt from tax for corporate shareholders, this will in many instances make sellers favour a share transaction over an asset transaction. However, this will not be the case in transactions that involve a loss for a seller, as a loss will still be admitted for the sale of assets.
A transfer of assets is generally subject to VAT at a rate of 25 per cent. However, if the asset sale is structured as a transfer of an undertaking (a transfer of a business as a going concern), no Norwegian VAT applies.
Employees, pensions and benefitsTransfer of employees
Are the employees of a target company automatically transferred when a buyer acquires the shares in the target company? Is the same true when a buyer acquires a business or assets from the target company?
Share acquisitions do not generally affect an employee’s employment contract with the target since the acquisition in itself does not alter the employment relationship.
Norway has implemented the Transfer of Undertakings Directive, and statutory protection in the Norwegian Workers’ Protection Act is in line with it. This means that where a business in Norway is acquired, the employees, their employment contracts and all related benefits and obligations will automatically be transferred to the buyer as of the day of the transfer, unless the employees exercise their right to object. A new formal offer of employment is not required.Notification and consultation of employees
Are there obligations to notify or consult with employees or employee representatives in connection with an acquisition of shares in a company, a business or assets?
If an asset sale is structured as a transfer of an undertaking (a transfer of a business as a going concern), both the buyer and the current employer (the seller) have certain duties to notify and consult with employees and their representatives in accordance with Chapter 16 in the Workers’ Protection Act.
On the other hand, a sale of shares in a private company will not trigger any duties on the buyer to notify or consult with the target’s employees or employee representatives. However, if the target is bound by a collective bargaining agreement with a trade union or unions, the target itself may (according to such bargaining agreements) be obliged to notify its employees if a shareholder’s (buyer’s) ownership percentage exceeds certain thresholds. In addition, the target may also have to contribute to the buyer informing the target’s employees of its plans for the target following an acquisition of shares. In the case of statutory mergers, the boards of the merging companies must prepare a thorough statement covering the merger and its anticipated effects on the employees. Employee representatives also have a statutory right to receive all relevant information and related reports and statements, and to discuss the merger with the board. If the buyer is a Norwegian entity and is bound by a collective bargaining agreement with trade unions, the buyer may also be required to inform and consult with the relevant unions before making an offer if such planned acquisition would involve a legal reorganisation of the buyer’s existing business.
If an alternative investment fund (AIF) (typically, a private equity or venture fund) (individually or jointly) acquires control of a company that fulfils certain criteria, the fund’s investment manager will have to notify and disclose the AIF’s intentions with regard to the future business of a target and the likely repercussions on employment, including any material change in the conditions of employment. Such notice must be given to the Financial Supervisory Authority of Norway, to the target and to the target’s shareholders. The AIF’s manager is further obliged to request that the target’s board inform the target’s employees about such information.Transfer of pensions and benefits
Do pensions and other benefits automatically transfer with the employees of a target company? Must filings be made or consent obtained relating to employee benefits where there is the acquisition of a company or business?
Pension and other employee benefit obligations remain the responsibility of a target company following its acquisition since there is no change in the employer-employee relationship.
In principle, the same applies if an employee is transferred as part of a business acquisition. Under such circumstances, the employee’s right to a retirement pension, survivor’s pension and disability pension under a pension scheme is transferred to the new employer (buyer) provided the transfer is a transfer of an undertaking. Still, a new employer (buyer) can generally decide to apply its existing pension scheme to the transferred employees. However, this does not apply if the new employer does not have a pension scheme when the transaction is completed. In these circumstances, the transferred employees are entitled to the same pension rights from their new employer as they had before the transfer.
Update and trendsKey developments
What are the most significant legal, regulatory and market practice developments and trends in private M&A transactions during the past 12 months in your jurisdiction?Key developments36 What are the most significant legal, regulatory and market practice developments and trends in private M&A transactions during the past 12 months in your jurisdiction?
Norwegian transaction volume in 2018 was down 21 per cent compared with 2017. Throughout 2018, industrial players continued to take a large stake of the total M&A volume, and eight out of the largest 10 disclosed Norwegian M&A deals for 2018 had industrial or strategic investors on the buy side, which is one more compared with 2017. In 2017, three out of the 10 largest Norwegian M&A deals involved financial sponsors either on the sell side or on the buy side. Private equity sponsors were increasingly active in 2017. Compared with 2017, the Norwegian market decreased 9.7 per cent in the number of transactions involving private equity sponsors, (either on the buy or sell side), and the average reported deal sizes for deals involving private equity sponsors fell significantly. The market continued to be driven by new investments and add-ons and, in 2018, there was an increase in number of private equity new investments and add-ons compared with 2017, while the number of private equity exits was down.
Entering 2019, the deal activity increased by 13.1 per cent for the first quarter 2019 compared with the same period in 2018. The reported deal values also increased significantly, with the average reported deal value also increasing from €189.5 million for first quarter 2018 to €326.3 million for first quarter 2019. We are quite optimistic for the second quarter 2019, since it seems as if the deal pipeline continues to be quite strong with an increasing numbers of respondents planning divesting parts of their business operations in the next couple of years.Legislative developments New National Security Act
In March 2018, the Norwegian parliament adopted a bill for the new National Security Act. The new act grants the government powers to intervene and stop acquisitions of shares in a company holding investments in sectors considered vital from a Norwegian national security perspective. The new act has now entered into force with effect from 1 January 2019, and this also means that Norway has implemented a national security review of acquisitions fairly similar to the type of review conducted by the US Committee of Foreign Investments.The Norwegian ‘interest deductions’ regime, etc
With effect from 1 January 2019, the Norwegian interest limitation regime has been amended, so that interest payable on bank facilities and other external debt within consolidated group companies has now become subject to the same interest deduction limitation regime as interest paid to ‘related parties’. The new amended rule only applies if the annual net interest expenses exceed 25 million kroner in total for all companies domiciled in Norway within the same group. Further, two revised ‘escape rules’ aimed at ensuring interest payments on loans from third parties do not form part of any tax evasion scheme has been implemented. The previous interest deduction limitation rules will continue to co-exist with the new rules, but so that the scope of the old rules only apply to interest paid by Norwegian enterprises to a related lender outside of the consolidated group (typically where the related lender is an individual).Proposed amendments to the Norwegian Companies legislation
At the beginning of 2019, the Norwegian Ministry of Industry, Trade and Fishery issued certain proposals to amend the rules of the Norwegian Companies Acts in order to implement EU Directive (EU) 2017/828 into Norwegian law. In addition, certain amendments are proposed regarding transactions between a company and its related parties and also in relation to a company’s ability to provide financial assistance to its shareholders, among others. Even though most of these amendments are not aimed at M&A specifically, some could have an impact both on the structuring and the financing (and on the financing structures) of M&A transactions. One such new rule is the Ministry’s revised proposal for abolishing the requirement that a buyer (borrower) must deposit ‘adequate security’ towards the target company if such a buyer receives any form of financial assistance from the target in the form of security for the buyer’s acquisition financing. If this proposal is adopted by the parliament in its current form, it looks as if Norway will also in the near future have implemented a type of ‘whitewash procedure’ that could also work for LBO-transactions.New central registry of rights holders
On 7 February 2019, the Norwegian parliament adopted a new Norwegian statute imposing an obligation on all legal entities and other organisations registered in Norway to submit information to a new Norwegian register about shareholders controlling more than 25 per cent ownership stakes in such entities or other ‘real rights holders’ in such entities. The term ‘real rights holders’ is defined as individual persons that own more than 25 per cent, or controls more than 25 per cent of the votes or holds a right to appoint more than half of the members of the board, among others, with the basis of provisions in shareholders’ agreements or articles of associations. Shareholdings, and suchlike, of closely related persons, typically family members, are to be consolidated. Such information must be updated on a consecutive basis, and when the legal entity in question is made aware of a new ‘real rights holder’ holding such rights in the relevant legal entity, the legal entity shall be obliged to notify the new Registry without undue delay and no later than within 14 days. The new act is expected to enter into force during second quarter 2019 or first quarter 2020.
It is proposed that this new Registry shall be publicly available (searchable) and that it shall be operated by the Brønnøysund Register Centre.The Reorganisation Act
The Ministry of Industry, Trade and Fishery has now also issued a proposal to abolish the Reorganisation Act of 2008, thus removing the obligation on the owner of a business if it is considering conducting a workforce reduction that comprises more than 90 per cent of the company’s workforce or if the business activity may be closed down.