Stein Ove Solberg
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During the Spring of 2018 the Norwegian Parliament is expected to pass a new Act on National Security (“the Act”). As a consequence, Norwegian businesses will need to prepare for a new set of rules involving e.g. control of foreign ownership, as the new Act will provide the Norwegian Government with authority to stop foreign investments that may threaten security interests of national importance.
The Act will apply to businesses of vital importance relating to e.g. communications (telecom, transportation, media etc.), energy, banking and financing. In short, the proposed legislative changes mean that anyone wishing to acquire at least 1/3 of any business of vital security interest will be required to notify the relevant ministry. The ministry will then have sixty business days to decide whether to approve or prohibit the relevant transaction.
Historically, Norway has had a reputation of going far in granting politicians (too) wide powers of authority to interfere in the trade and industries. However, over the last 15-20 years the trend has gone towards limiting the possibility of political interference in individual cases. As the pendulum now seems to be swinging back this corresponds with a general international trend on increased political interference. Countries such as the USA, France and Great Britain have all national regulations facilitating political intervention in acquisitions affecting national security interests. An example of a new development is the EU, an otherwise strong opponent of restrictions on “free movement” which is currently in the process of drafting control of ownership regulations for the protection of vital European interests.
The threshold for intervention under the new Act is however high, and according to the bill (which is likely to be passed) the authorities may only intervene where the acquisition involves a not insignificant threat to Norwegian security interests. It is therefore unlikely that we will see a significant increase in political intervention in the future as a consequence. The Act will nonetheless result in an increase in workload for the affected Norwegian businesses in terms of notifications, assessments and dialogue with the authorities. The Act may furthermore impair the competitiveness of and reduce the investment risk appetite for Norwegian companies that are made subject to the new regime.
Norwegian businesses and their counsels will need to prepare for yet another potential obstacle on the way to closing and implementation of transactions involving businesses of vital strategic importance within the affected sectors. The new control of ownership regime comes in addition to other structural control regimes such as the general competition law and various sector specific regulations. In other words, this is not an ideal start for the newly appointed Minister of Industry, who has been tasked with easing up on applicable rules and regulations in order to reduce the financial burden on Norwegian businesses by NOK 10 billion.
The chronicle is written by Stein Ove Solberg, partner in Arntzen de Besche, and the chronicle was published in Finansavisen (The Nowegian Financial Daily) 20 February 2018.