When company management lives in the UK or are UK citizens

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As a consequence of Brexit, Norwegian companies with general manager or board members with UK residency or UK citizenship, risk that they from the 1st of January 2021 no longer fulfil the requirements to residence in Norwegian company legislation. The same will apply for Norwegian companies with general manager and board members with UK citizenship.

The UK left the EU on 31st of January 2020. Both the EU and the EEA-countries have for a transition period until the 31st of December 2020 signed a withdrawal agreement which secures that the UK shall be treated as if the country still was a member of the EU and EEA.

From the 1st of January 2020 Norway’s relationship is no longer regulated by the EEA agreement nor the withdrawal agreement. This means that we for a period of time risk not having all the ground rules and predictability that we know from earlier. Even though the governments in Norwegian and UK are negotiating on a trade agreement that will safeguard future trade between the two countries, such agreement will not be ready to come into force by the beginning of 2021. However, Norway, Iceland and the UK have signed a temporarily trade agreement which will be effective from 1st of January 2021 and until a full trade agreement can come into force.

For Norwegian companies with company management who either resides in the UK or are UK citizens, Brexit may result in consequences, as some of the terms in Norwegian company legislation no longer will be fulfilled.

Current rules set requirements of certain connection to Norway or the EEA

According to the governing rules, there is a requirement that the general manager and at least half of the board members in Norwegian private and public limited liability companies and co-operatives are either living in Norway or are citizens of and living in an EEA-state. Det same requirement applies for the corporate assembly of Norwegian private and public limited liability companies which have more than 200 employees. For Norwegian foundations, the requirement is applicable to board members.

Since the UK from 1st of January 2021 no longer is a EEA member Norwegian companies with company management in the UK risk that they no longer fulfill the requirement of having the qualifying connection to Norway and the EEA.

It is anticipated that approximately 800 Norwegian companies could be directly affected by this.

Norwegian companies may apply for exemption from the requirement

Even though the Norwegian government are working on a legal amendment that will give people with connection to the UK the same positions as people connection with the EEA, this will not be ready by end of December 2020. Such legal amendment presupposes that Norway enters into a trade agreement with the UK, as they otherwise would come into conflict with Norway’s other obligations under international law.

Until a complete trade agreement with the UK is on place and legal amendments have been made, the Norwegian government has established a temporarily solution which gives Norwegian companies the chance to apply for exemption from the abovementioned requirements. In such, Norwegian companies are given the responsibility to secure that they fulfill the requirements.

Companies with persons in the company management which does not fulfill the requirements to residency and citizenship from 1st of January 2021, may apply for exemption to the Ministry of Trade, Industry and Fisheries.

The Ministry of Trade, Industry and Fisheries aims to handle all applications received prior to 31st of December 2020.

RSM strongly recommends that companies that will be affected by the above mentioned as soon as possible apply for exemption from the requirements to secure that the company and its business will be influences as little as possible.

Application for exemption from the requirements are to be sent to Ministry of Trade, Industry and Fisheries on e-mail to [email protected]. Application letter can be found here (application in Norwegian only).

Further reading on Brexit

RSM keeps you up to date on the latest news on Brexit and what consequences Brexit may have for Norwegian business life.

You can find our related Brexit articles on Brexit here.

 

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