What is the Companies Act?
The Companies Act is the rules that tell you how to start and run companies with shares in Norway. The law covers everything from how to set up a company, to how much money you need to start, how the company should be organized, and what rights and obligations those who own shares have.
What does the Companies Act regulate?
The Companies Act does not apply to public limited companies, cooperatives or companies that do not have an economic purpose and that are not designated as limited companies. The Act focuses specifically on limited companies (AS) and regulates:
- Company Formation: Procedures for Starting a Limited Liability Company
- Share capital : Minimum initial capital requirement
- Company organization: How the company should be structured
- Shareholder rights: What rights and obligations do shareholders have?
- Share classes : Rules for different types of shares
The Most Important Thing You Should Know
For those of you who run a small or medium-sized business, or work with accounting , there are some key points in the Companies Act that are important to know:
Start-up capital
The law states how much initial capital you must have to establish a limited liability company . This is directly related to the company's share capital .
Board composition
The Companies Act regulates how to assemble a board of directors for the company, including requirements for board members and their responsibilities.
General meetings
The law specifies how and when you must hold meetings with the shareholders (general meetings), which are the company's supreme body.
Why is it Important to Follow the Companies Act?
It is very important to follow the rules of the Companies Act to avoid legal trouble and avoid losing money. By following the law, you also ensure that your company is fair and open about how it is run, which is good for both you and others in the market.
Consequences of not following the Companies Act: - Legal problems and sanctions - Economic losses - Loss of trust from investors and customers - Problems with the company's legitimacy
Advantages of following the Companies Act: - Legal protection - Increased trust from stakeholders - Clarity of roles and responsibilities - Better access to financing
The Companies Act and Dividends
The Companies Act also regulates how companies can distribute dividends to their shareholders. This includes rules for:
- When dividends can be paid
- Maximum dividend that can be distributed
- Procedures for dividend decisions
- Dividend shares and their special rights
These rules ensure that dividend payments do not jeopardize the company's financial stability.
Related Terms and Articles
To gain a complete understanding of the Companies Act, you should also familiarize yourself with these related terms:
- Limited liability company - The form of company regulated by the Limited Liability Companies Act
- Share classes - Different types of shares with different rights
- Share capital - The company's basic capital
- Shares - Ownership shares in the company
- Shareholder Register - Public register of all shareholders
- Maximum Dividend - Limitations on Dividend Payments
- Dividend - Profit distribution to shareholders
- Dividend shares - Shares with special dividend rights
Practical Advice for Business Owners
If you are planning to start a limited company or are already running one, here is some practical advice:
- Familiarize yourself thoroughly with the Companies Act before starting the company.
- Consult legal expertise on complex issues
- Stay up to date on changes in the law
- Document all decisions according to legal requirements
- Follow deadlines for reporting and meetings
By following the Companies Act, you ensure that your company operates within the framework of the law and builds trust with all stakeholders.