Policies Towards Foreign Direct Investment
Norwegian lawmakers and businesses welcome foreign investment as a matter of policy and the government generally grants national treatment to foreign investors. The Government established “Invest in Norway,” an official investment promotion agency, to help attract and assist foreign investors, including in the key offshore energy sector and in less developed regions such as northern Norway.
While not a member of the European Union, Norway is an EEA signatory and continues to liberalize its foreign investment legislation to conform more closely to EU standards. Current laws, rules, and practices follow below.
Limits on Foreign Control and Right to Private Ownership and Establishment
Norway’s investment policies vis-á-vis third countries, including the United States, will likely continue to be governed by reciprocity principles and by bilateral and international agreements. The European Economic Area (EEA) free trade accord, which came into force for Norway in 1995, requires the country to apply principles of national treatment to EU members and the other EEA members – Iceland and Liechtenstein – in certain areas where foreign investment was prohibited or restricted in the past. Norway’s investment regime is generally based on the national treatment principle, but ownership restrictions exist on some natural resources and on some activities (fishing/ maritime/ road transport). State ownership in companies can be used as a means of ensuring Norwegian ownership and domicile for these firms.
Norway has traditionally barred foreign and domestic investors alike from investing in certain industries, including postal services, railways, and the retail sale of alcohol. In 2004, Norway slightly relaxed the restrictions, allowing foreign companies to bid on certain commercial postal services (e.g., air express services between countries) and railway cargo services (notably between Norway and Sweden). In 2016, the government initiated a reform of the railway sector leading to the first railway line opening for competition in 2018 and contracts being awarded to British and Swedish operators. The government has a mandate to allow foreign investment in hydropower (limited to 20 percent of equity), but rarely does so. However, the government has fully opened the electricity distribution system to foreign participation, making it one of the most liberalized power sectors in the world.
Ownership of Real Property
Foreign investors may generally own real property, though ownership of certain real assets is restricted. Companies must obtain a concession to acquire rights to own or use various kinds of real property, including forests, mines, tilled land, and waterfalls. Foreign companies need not seek concessions to rent real estate, e.g., commercial facilities or office space, provided the rental contract period does not exceed ten years. The two major laws governing concessions are the Act of December 14, 1917, and the Act of May 31, 1974. The updated 2019 National Security Act includes authority for the government to block foreign investments on national security grounds.
The Petroleum Act of November 1996 (superseding the 1985 Petroleum Act) sets forth the legal basis for Norwegian authorities’ awards of petroleum exploration rights, production blocks and follow-up activity. The Act covers governmental control over exploration, production, and transportation of petroleum.
Foreign oil companies report no discrimination in the award of petroleum exploration and development blocks in recent licensing rounds. The Norwegian government has implemented EU directives requiring equal treatment of EEA oil and gas companies. The Norwegian offshore concession system complies with EU directive 94/33/EU of May 30, 1994, which governs conditions for awards and hydrocarbon development. Norway’s concession process operates on a discretionary basis, with the Ministry of Petroleum and Energy awarding licenses based on which company or group of companies it views will be the best overall operator for a particular field, rather than purely competitive bids. Recent years have seen a shift in the composition of license holders and operators on the Norwegian Continental Shelf (NCS) as the shelf matures. Although several leading global energy companies, including U.S. ones, have left Norway as they rearrange their global asset portfolios, several U.S. companies remain active on the NCS.
The Norwegian government has dismantled former tight controls over the gas pipeline transit network that carries gas to the European market. All gas producers and operators on the NCS are free to negotiate gas sales contracts on an individual basis, with access to the gas export pipeline network guaranteed.
Norwegian authorities encourage the use of Norwegian goods and services in the offshore petroleum sector, but do not require it. The Norwegian share of the total supply of goods and services on the NCS has remained at approximately 50 percent over the last decade.
Norwegian legislation granting national treatment to foreign investors in the manufacturing sector dates from 1995. Legislation was repealed in July 2002 that formerly required both foreign and Norwegian investors to notify and, in some cases, file burdensome reports to the Ministry of Industry and Trade if their holdings of a company’s equity exceeded certain threshold levels. Foreign investors are not currently required to obtain government authorization before buying shares of Norwegian corporations.
Financial and Other Services
In 2004, the Norwegian government liberalized restrictions on acquisitions of equity in Norwegian financial institutions. Current regulations delegate responsibility for acquisitions to
the Norwegian Financial Supervisory Authority and streamline the process. Financial Supervisory Authority permission is required for acquisitions of Norwegian financial institutions that exceed defined threshold levels (20, 25, 33 or 50 percent). The Authority assesses the acquisitions to ensure that prospective buyers are financially stable and that the acquisition does not unduly limit competition.
The Authority applies national treatment to foreign financial groups and institutions, but nationality restrictions still apply to banks. At least half the members of the board and half the members of the corporate assembly of a bank must be nationals and permanent residents of Norway or another EEA nation. Effective January 1, 2005, there is no ceiling on foreign equity in a Norwegian financial institution if the Authority has granted permission for the acquisition.
The Finance Ministry has abolished remaining restrictions on the establishment of branches by foreign financial institutions, including banks, mutual funds and others. Under the liberalized regime, Norway grants branches of U.S. and other foreign financial institutions the same treatment as domestic institutions.
Media ownership is regulated by the Media Ownership Act of 1997 and the Norwegian Media Authority. No individual party, domestic or foreign, may control more than 1/3 of the national newspaper, radio and/or television markets without a concession. National treatment is granted in line with Norway’s obligations under the EEA accord. The introduction and growing importance of new media forms (including those emerging from the internet and wireless industries) has raised concerns that the existing domestic legal regime (which largely focuses on printed media) is becoming outmoded.
A new National Security Act that entered into force January 1, 2019, provides the legal foundations for enhanced government screening of foreign investments. Implementing regulations for the Act are under development, including a comprehensive list of the critical infrastructure, entities, and products to be covered by the legislation and by subsequent investment screening procedures. The government used the Act in March 2021 to block the sale of a marine engine manufacturer to a foreign investor on national security grounds.
Altinn.no is a web portal that serves as a one-stop shop for establishing a company and contains the necessary forms; it also provides an electronic platform for dialogue between the business/industry sector, citizens and other stakeholders, and government agencies. The business registration processes are straight-forward, complete, and open to foreign companies. Please note, however, that registration of Norwegian Registered Foreign Business Enterprises (NUF) cannot be done electronically. A guide for establishing a business is available at the following address: https://www.altinn.no/en/start-and-run-business/
The government does not directly incentivize outward investment. However, the Government of Norway (GON) acknowledges that for Norwegian companies to be successful, they need to grow in markets and economies that are larger than Norway, so the trade and investment promotion agency Innovation Norway has offices in key foreign markets, including four offices in the United States, in Houston, New York City, San Francisco and Washington D.C.. Norway’s Government Pension Fund Global, the largest sovereign wealth fund in the world, owns 1.4 percent of all listed companies in the world.