The main rule in the Companies Act is that other shareholders in a company have preemptive rights when a share changes ownership, as stipulated in Section 4-19 of the Companies Act(hereinafter referred to as Asl).

The same applies to Section 4-21 of the Public Limited Companies Act, but the specific rules on this will not be discussed in this article. The main rule is that this applies to all shareholders and that they have the same priority under Section 4-22 of the Public Limited Companies Act. We will take a closer look at what this means, the exceptions and some typical cases. It is important to note that the following are the rules according to the Public Limited Liability Companies Act, but the articles of association may stipulate otherwise. This may apply to all or some of the statutory provisions.

Are there exceptions to the main rule?

According to Asl §4-19, the rule only applies "unless otherwise specified in the articles of association." It follows from Asl §4-19, paragraph 2, that a number of different exceptions may be made in the articles of association, both regarding whether all or only a few shareholders shall have preemptive rights, and whether other non-shareholders may have such rights.

It follows from Section 4-21, second paragraph, of the Public Limited Liability Companies Act that transfers to shareholders' close associates or relatives in the ascending or descending line are also exempt, cf. Section 1-5 of the Public Limited Liability Companies Act. There may also be shareholder agreements (see below).

What about other exceptions, such as mergers?

There has been some question as to whether this right under the law also applies in the event of a merger. The Supreme Court has ruled that a merger does not trigger such a right in a judgment from 2017 (see HR-2017-1664-A).

When do you get the right of first refusal?

According to Asl §4-19, this occurs when a share changes ownership. This means any form of change of ownership, including inheritance and gifts, unless the articles of association state otherwise. The right arises when an agreement has been entered into between the buyer and seller. Pursuant to Section 4-12 of the Public Limited Liability Companies Act, the person acquiring the share(s) must immediately notify the company that they have become the owner of the shareholding. As soon as the company receives notification from one of the parties of the transfer of the shares, it must notify those who have preemptive rights pursuant to Section 4-20 of the Public Limited Liability Companies Act.

When must you notify that you wish to exercise your right of first refusal?

Anyone wishing to exercise this right must notify the company within two months of receiving notification from the company.

How much should you pay for the shares?

Section 4-23, paragraph 2 of the Norwegian Securities Trading Act states that the "redemption price" shall be determined in accordance with Section 4-17, paragraphs 5 and 6 of the Norwegian Securities Trading Act. This is so that it is not the price agreed between the buyer and seller that counts, but the actual value of the shares, which according to case law means the market value. There are several ways to calculate market value.

Who can buy the shares?

In the event that several parties wish to purchase the shares, the shares shall be distributed in the same proportion as the shareholders already hold shares pursuant to Asl§4-22, paragraph 2, or by drawing lots if whole shares cannot be obtained.

What about shareholder agreements?

Shareholder agreements are separate agreements between shareholders, which may be everyone in a company or a smaller group. The shareholders can agree on whatever they wish, but this is only binding on the parties to the agreement and any others who have approved it. To the extent that the agreement deals with preemptive rights, it will only be binding on the shareholders who are party to the agreement. This means that others may claim preemptive rights under the law.

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