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This article is written by Srishti Pareek, pursuing Diploma in M&A, Institutional Finance and Investment Laws (PE and VC transactions) from Lawsikho.


Norway is a first world country, rich in growth and development and has a small but strong economy. Norway is a high-income nation with a vibrant private sector. The per capita income is the highest amount amongst the other developed countries. The discovery of oil and gas in the 1960s gave an edge to the country in terms of economic growth and today Norway is one of the world’s leading suppliers of petroleum. Norway GDP is greatly accentuated by its strong presence in the oil and gas sector and other advanced industries like shipping, shipbuilding, paper and pulp and aquaculture. These industries are supported by highly intellectual, qualified and hard-working professional industries which include information technology, finance, legal, R&D, which are also backed by fintech, biotech, medtech industries, thereby creating a separate area of growth. Norway is the perfect country for the expansion and establishment of the business as the government welcomes foreign investment. In 2020, Norway Secured an 82.6 score in ease of doing business. The ease of doing business in Norway increased from 81.8 scores in 2016 to 82.6 scores in 2020 growing at an average annual rate of 0.24%. Norway is ranked 9th place in the index of World Bank doing business. Norway’s economic freedom is having 73.4 scores making it the 28th freest economy as per the 2021 index. Norway comes under the world’s least corrupt nation as per Transparency International’s 2019 Corruption Perceptions Index. The highest rate of income tax is 47.8 percent as well as the corporate tax rate is 22 percent. 

Legal regime for foreign investment

Generally, the investment regime in Norway is more flexible and liberal as compared to other nations and the government of Norway encourages foreign investment in the nation. To ensure maximum flexibility in terms of foreign investment and to give legal colour to the same, on 1st January, 2019 a National Securities Act was enacted. The main aim for the introduction of such legislation was to curve the growing concerns related to national security which were raised in relation to the investment and transaction in the companies. Chapter 10 of the act titled Ownership Control provides regulations, rules and approval of investment in and transactions relating to companies that are engaged in activities of crucial importance for the purpose of national security. Norway followed the same investment security route that other nations like Finland, the USA, France, Canada followed to review, regulate and approve mergers and acquisitions for the purpose of national security. The provisions under the Chapter Ownership Control are of non-discriminatory nature, it provides that foreign investment and domestic investment shall be treated equally if the acquisition or investment transaction concerns an undertaking that attracts or comes within the applicability or scope of the Security Act. Each Ministry decides, within their responsibility, which businesses are subject to the Act. 

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The Norwegian Security Act contains a limited form of investment mechanism from foreign players and countries. If a foreign actor desires to acquire a company in Norway in part or in full, the Norwegian government is vested with the power to either approve or reject such an acquisition when national security comes into question. 

If a company has been bought within the scope of the Security Act, an acquirer is obliged to inform the concerned ministry. The purpose of the same is to review the acquirer nature when the acquirer had acquired a qualified ownership interest. Qualified Ownership Interest for the purpose of this act means that the acquisition whether directly or indirectly will result in the acquirer achieving:

  • At least one-third of the share capital, shares and voting rights in the business.
  • Right to become the owner of at least one third share capital or shares.
  • Significant control and influence over the management of the company through other means. 

The provisions on the ownership control of the Security Act, have not been made to address any particular sector but have been made as a result of tensions arising from the increased foreign investment, especially in the infrastructure projects. The government recognised these early signs that were posing national security threats in various countries. Thus, for a company to be covered by the provisions of ownership in the Securities Act, the concerned ministry must issue an administrative decision for that effect. Each ministry is responsible for the sector they are assigned with on the basis of this the administrative decision will be taken, for example,  the Ministry of Petroleum and Energy for an electric grid company. 

There are no specific distinctions between the foreign state-owned enterprises (SOE’s) or other specific categories of investors, the provisions of the act relating to ownership are common to both categories regardless of the acquirer nationality and of the fact as to who is the owner. 

Screening of foreign investment in Norway

By abandoning its traditional neutrality [European Union (EU)], Norway became a member of the NATO in the year 1949 as well as of the European Economic Area (EEA; including Iceland and Liechtenstein) with admittance to the EU single market’s development of people, merchandise, administrations and capital. The Government of Norway (GON) keeps on changing its foreign investment enactments determined to adjust as per the EU guidelines and has cut administrative guidelines throughout the last decade to make investment simpler. While not a member of the EU, as an EEA signatory, Norway continues to liberalise its foreign investment legislation to conform more closely to EU standards. Foreign direct interest in Norway remained at USD 140 billion toward the finish of 2018 and has dramatically increased in the course of the last decade. There are around 7,395 unfamiliar possessed organizations in Norway, and more than 700 U.S. organizations have a presence in the nation, utilizing in excess of 45,000 individuals. 

The government of Norway in the period 1999 allowed the establishment of foreign banks thereby increasing investment in the country. The Ministry of Finance of Norway on the recommendation of the Norges Bank’s Monetary Policy and Financial Stability Committee decided to reduce the Countercyclical Capital Buffer from 2.5 to 1.0 (in March 2020).  This decision was taken to counter the impact of covid-19 due to which the economy has suffered a huge downfall. The Countercyclical Capital Buffer is as a rule is set between 0 and 2.5 per cent of a bank’s risk-weighted asset, but maybe set at higher per cent under exceptional circumstances. A lower buffer rate reduced the risk of stringent lending standards, which could have amplified the downturn that resulted from the COVID-19 pandemic. The  Ministry has also decided to keep the buffer rate unchanged i.e., 1.0 for the year 2021, the decision to increase the buffer rate shall be taken gradually stepwise in the course of 2021.

Key indicators





Transparency International’s Corporation Perceptions Index


7 out of 180

World Banks Doing Business Report 


9 out of 190

Global Innovation Index 


19 out of 129

U.S. FDI in the partner country ($M USD, historical stock positions)


USD 80,610 indicator/NY.GNP.PCAP.CD

Regulatory efficiency 

Business freedom 


Labour freedom


Monetary freedom 


For the year 2021 Norway’s Business freedom has been at a higher level as compared to other countries that are achieving the standard at a faster pace. The government has provided one year of paid parental leave and the unemployment benefits are expected to extend up to 104 weeks. The government also funds subsidies for electric vehicles, agriculture, and certain other sectors as well.

Open market

Trade freedom 


Investment freedom


Financial freedom 


Norway currently has 30 trade agreements in force. In the year 2020, the French Credit Insurer COFACE entered into an agreement with the Norway government in order to acquire the Norwegian Guarantee Institute for Export Credit (GIEC), a central government body responsible for providing export credit and investment guarantees. This acquisition was planned with an intention to strengthen the market position of COFACE in the Nordic Region. This transaction would combine the broad range of services offered by COFACE and its vast international network to enhance the support to Norwegian exporters and contribute to the economic development of the country. The trade-weighted average of Norway is 3 per cent, Norway’s economy is free and open as a result of this the country is able to attract more foreign investment despite the presence of national ownership restrictions in certain sectors. 

Limits on foreign investment

Norway’s Investment Regime is generally based on the principle of national treatment but is slightly affected by the ownership restrictions present in certain sectors which are specifically related to natural resources but also includes railways, road transport, maritime etc. state ownership on companies is used as a mean of ensuring Norwegian ownership and domicile for these firms. 

Monopolistic sector

Norway welcomes lesser foreign investment in certain sectors which includes postal services, railways, domestic production and retail sale of alcohol, however,  the restriction on postal service was slightly reduced by allowing foreign players to invest in postal service. 

Real estate 

In general, foreign investors are not subject to any limitation on the acquisition of property. The only requirement that is needed to be fulfilled is that the potential purchaser from any nationality, intending to purchase the property must obtain a concession to acquire rights to purchase or use various kinds of real estate property which includes forest, mines, titled land, and waterfalls. This is a formal requirement that allows the purchaser to claim or obtain ownership over the land. Two of the major laws governing concession are the Act of December 14, 1917, and the Act of May 31, 1974. In the year 2019 real estate sector received a foreign direct investment of NOK 15 billion and was ranked amongst the sectors that received the highest FDI in the period.


In the year 1995 Norway executed legislation for national treatment to foreign investors in the manufacturing sector. The legislation was repealed in 2002 as it formally required both foreign and domestic investors to notify the government and in some cases, it required them to file lengthy reports to the Ministry of Industry and Trade in case they are holding equity that exceeds the threshold level. This had become burdensome for the authorities. Currently, foreign investors are not required to obtain any government authorization prior to the purchase of shares in the Norwegian corporation. 

Petroleum sector

The petroleum sector is the key contributor to the Norwegian economy; it is the country’s single largest industry. The industry plays a vital role in the growth of the Norwegian economy and the financing of the Norwegian welfare sector. The oil and gas industry is one of the largest in terms of value addition, revenues generation, investments and export. The management and expansion of the industry indicate the long-term perspective of the government which has resulted in the futuristic development of the country. This has been the key factor in enhancing the financial and developing the legal framework of the country. 

The Petroleum Act of November 1996 (superseding the 1985 Petroleum Act) was enacted to create a legal framework for the determination of petroleum exploration rights, production and follow up activity. The act set forth no discrimination standards that are to be adopted at the time of assignment of the award and licensing related to petroleum exploration and production of blocks. While not a member of the EU, as an EEA signatory, Norway continues to liberalise its foreign investment legislation to conform more closely with  EU standards and the same has been followed while deciding the regulatory and legal framework for the petroleum sector. Equal treatment of EEA oil and gas companies has also been implemented by the Norwegian government. The Norwegian offshore concession system follows the EU directives 94/33/EU of May 1994, which governs the mechanism of award and hydrocarbon development. Since 1970’s the petroleum activities have contributed to around NOK 16,000 billion in current NOK to Norway’s GDP. 

There are two kinds of licensing rounds on the NCS; the numbered licensing rounds and the awards in predefined areas (APA). The numbered licensing rounds are normally held every other year and include frontier parts of the NCS.  APA rounds are announced every year and comprise the mature parts of the NCS, with better-known geology and more developed infrastructure.  Companies that want to become an operator or licensee on the NCS must be pre-qualified.

In June 2020, the Norwegian Ministry of Petroleum and Energy announced a new licensing round for APA 2020. The Ministry’s objective is to award new production licenses in the announced areas at the beginning of 2021.  (More information on the APA 2020 announcement can be found on the Norwegian Petroleum Directorate’s website:  APA 2020)

The expected net cash flow from the petroleum activities






Environmental taxes and area fees 



Net cash flow from SDFI



Equinor Dividend



Net government Cash Flow



Green Norway 

In recent years, there has been a great focus on the idea of a green economy. Thus, to achieve the status of a green economy, Norway is trying to make its industries as clean as possible. The country is going forward to use land-based green hydropower in order to electrify its oil and gas industries. This would ultimately help the country to achieve the national climate target and would allow its profitable industries to pump fossil fuel for centuries. But most of the emission comes from the oil and gas sector in the form of burning of fuel, it is to be noted that the process of extraction does not result in any emission of pollutants; it all happens at the consumption or conversion stage. So, the initiative would have a little rein on pollution globally. 

Norway oil and gas industry contributes to 14 million tonnes of greenhouse gases from its facilities as per the data collected by Statistic Norway in 2019, which is almost 28 per cent of the country’s total, thereby making the industry a clear target for the nation to reduce its emission by 40 per cent by the end of the year 2030. 


Norway is the world’s most advanced nation with a good GDP  (the mainland real GDP is projected to grow by 3.4% in 2021 and 3.7% in 2022). The country is prospering in all its sectors and is creating a futuristic path for the entire world by adopting the concept of a green economy. The country attracts foreign direct investment in its various sectors with open hands and is a perfect nation for foreign players to come and expand their business. But with that, the country has also made certain restrictions to safeguard their national security which sometimes is affected by certain cross border deals. The step of the introduction of the Security Act is to curb the predatorial acts of certain countries like China. Foreign direct investment has been carved into the structure of the Norwegian economy in such a manner that it is a  matter of law and is not a policy anymore. 


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