Illustrasjon som viser strukturen og kjennetegnene til et aksjeselskap

What is a Joint Stock Company?

A limited liability company (AS) is a form of company where ownership is divided into shares . This is the most common form of company for larger companies in Norway, and it gives the owners limited liability for the company's obligations.

Illustration showing the structure of a limited liability company

What characterizes a joint stock company?

A limited liability company differs from other forms of company in several important ways:

Limited Liability

The most important feature of a limited liability company is that shareholders have limited liability . This means that you as an owner cannot normally lose more than what you have invested in the company. If the company goes bankrupt, your personal finances are protected.

Own Legal Entity

A limited liability company is a separate legal entity , completely separate from its owners. The company can: - Enter into contracts in your own name - Owning properties and other assets - Sue and be sued - Have your own rights and obligations

Share capital

To start a limited company, you must have a minimum share capital of NOK 30,000 . This capital is divided into shares that represent ownership interests in the company.

Diagram showing the basic structure of a limited liability company

Requirements for Starting a Limited Liability Company

The Companies Act sets several requirements for establishing a limited liability company:

Minimum Share Capital

  • 30,000 kroner in share capital
  • The capital must be fully paid up before registration.
  • Can consist of money or other valuables (deposits in kind)

Founders

  • Minimum one founder (can be a person or company)
  • The founders must subscribe for all shares upon incorporation.
  • Norwegian citizens or EU/EEA citizens can be founders

Statutes

  • The company must have articles of association that serve as the company's "constitution"
  • The articles of association must contain mandatory information such as company name, purpose and share capital.

Board

  • The company must have at least one board member.
  • The board of directors is responsible for the management of the company.
  • Board members are elected by the general meeting.

Overview of the requirements for starting a limited liability company

Organization of a Joint Stock Company

A limited liability company has a clear organizational structure regulated by the Companies Act:

General Assembly

  • Supreme body of the company
  • All shareholders have the right to participate
  • Makes the most important decisions such as the election of the board of directors and approval of annual accounts

Board

  • Management body that manages the company
  • Responsible for the overall strategy and control
  • Can hire a general manager

Managing Director

  • Operations manager (not mandatory)
  • Responsible for the day-to-day operations
  • Reports to the board

Advantages of a Limited Liability Company

Limited Liability

As mentioned, the biggest advantage is that the owners' liability is limited to the share capital.

Access to Capital

  • Easy to raise new capital by issuing new shares
  • Can have many owners without complicated agreements
  • Possibility of different share classes with different rights
  • Attractive for investors seeking returns through dividends and price appreciation

Continuity

  • The company exists independently of its owners
  • Easy to transfer ownership when selling shares
  • The company continues even if owners die or withdraw.

Tax benefits

  • Possibility of dividend tax instead of personal income tax
  • Better tax planning opportunities
  • Possibility of shareholder loans with market terms

Financing options

  • Shareholders can lend money to the company for quick capital injection
  • Flexible financing without diluting ownership interests
  • Alternative to traditional bank financing
  • Modern financing methods such as crowdfunding and crowdlending provide access to capital from many small investors

Disadvantages of a Limited Liability Company

Complexity

  • More complex rules and requirements than simple company forms
  • Accounting and reporting requirements
  • Must follow the provisions of the Companies Act
  • Responsibility for VAT reporting if turnover exceeds thresholds
  • Need for structured procurement processes to manage purchasing and supplier relationships
  • Many limited liability companies therefore choose to use ARS (Authorized Accounting Firm) to ensure correct handling of all accounting and legal requirements.

Costs

  • Higher start-up costs (minimum 30,000 NOK in share capital)
  • Ongoing accounting and auditing costs
  • Registration fees

Publicity

  • Information about the company is publicly available
  • All shareholders are registered in the public shareholder register.
  • Annual accounts must be submitted to the authorities
  • Less flexibility than personal company forms

Limited Liability Company vs. Other Company Forms

Sole proprietorship

  • Limited liability company: Limited liability, separate legal entity
  • Sole proprietorship: Unlimited personal liability, simpler structure

Responsible Company (ANS)

  • Limited liability company: The owners have limited liability
  • ANS: The participants have unlimited joint and several liability

Public limited liability company (ASA)

  • AS: Minimum 30,000 NOK in share capital, not listed on the stock exchange
  • ASA: Minimum NOK 1 million in share capital, may be listed on the stock exchange

Practical Advice for Startups

If you are considering starting a limited company:

  1. Consider the need: Is limited liability and access to capital important to your business?
  2. Plan your capital: Make sure you have more than the minimum of NOK 30,000 available
  3. Get legal help: Consult a lawyer or accountant for articles of association and incorporation
  4. Choose the right name: Check that the desired company name is available
  5. Plan organization: Decide who will be on the board and any general manager

Related Concepts

To fully understand limited liability companies, you should also familiarize yourself with:

A limited liability company is a powerful corporate form that provides flexibility and protection, but also requires thorough planning and understanding of the regulations.

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