Corporate Law

The establishment of a limited liability company and the increase of share capital have significant tax implications, particularly in the case of contributions in kind. For the shareholder, the contribution of assets is considered as a realization in exchange for shares, followed by a calculation of gains or losses. The value of the contribution usually becomes the shareholder's initial acquisition cost and is regarded as tax-deductible capital. For the company, contributions are not considered taxable income, and the company receives initial acquisition values corresponding to the market value of the contributed assets. The choice between issuing new shares or increasing the nominal value impacts the allowance base and the subsequent taxation of dividends and gains.

The exemption method is a key scheme in Norwegian tax law that exempts companies from tax liability on dividends and share gains, intended to prevent chain taxation. The scheme encompasses both Norwegian and foreign companies, but with significant exceptions for income from companies in low-tax countries and portfolio investments outside the EEA. Even with the exemption method, companies must recognize three percent of received dividends as income, except for dividends within tax groups. The rules often require consideration of ownership interests, voting rights, and genuine establishment. RetryKA

The authority of company representatives to bind the company through agreements is governed by a dual set of rules. Internally, competence is limited by company law, the articles of association, and instructions, while externally, the authority is often broader. In limited liability companies, the board represents the company externally with unlimited signatory powers, while the managing director can bind the company in matters within the scope of daily management. Exceeding competence will generally not exempt the company from being bound if the counterparty acted in reasonable good faith. This protection of the counterparty is particularly strong for limited liability companies through the EU's Disclosure Directive. For general partnerships, the participants represent the company individually unless otherwise agreed, with similar authority rules as for limited liability companies. Good corporate governance presupposes clear division of competencies and open communication regarding the scope of representational rights.

Responsible companies are characterized by a flexible organizational structure where the company meeting is the only mandatory body. The company meeting constitutes the highest authority of the company, and the basic principle is that all decisions require unanimity among the participants—a principle that directly corresponds with their unlimited and joint liability for company obligations. In companies without a board or managing director, each participant can perform actions that are a natural part of the ongoing operations. The company may also choose to have a board and managing director, who will then be responsible for the general management. The employees' right to representation is primarily safeguarded in the company meeting. The provisions of the Companies Act are largely flexible, allowing the organization of the company to be tailored according to the needs of the business and the desires of the participants.