Norway reduces required capital stock to establish a Limited Liability Company

Submitted by Robert Koch on 8 February, 2012 - 12:05

Country:

Norway

The Norwegian government has reduced the required capital stock which is needed to establish a Limited Liability Company from 100,000 NOK (about 13,000 EUR) to 30,000 NOK (about 4,000 EUR). The purpose of the amendment is to stimulate entrepreneurship, innovation and growth.

The new amendment came into effect on 1st January 2012. The capital stock requirements of 30,000 NOK can be used to cover expenses related to establishing the company. Also, the amendment states that finance institutions and not only authorised accountants can confirm that companies have received the required capital stock.

The amendment is in line with the government’s goals of improving and simplifying the framework conditions for entrepreneurial activity and for SMEs. The government hopes that more people will attempt to pursue their innovative business ideas due to the lower barriers for establishing a company.

In recent years, Norway has received low scores in comparative European innovation studies, such as the European Innovation Scoreboard. The current centre-left government has been heavily criticised by the opposition and private entrepreneurs in this context. Critics argue that Norway’s modest performance in innovation is a result of insufficient public sector budgets and policies in support of R&D and innovation. The new amendment can be seen as a government response to this critique and to earlier promises on stimulating innovation in the private sector.

Grete Faremo, Norwegian Minister of Law, stressed that the amendment was just one of the efforts made in recent years to increase innovation and ease the framework conditions for private enterprises. “All together, these changes will result in significant simplifications and cost savings for Limited Companies”, she said.

The government also aims to make the Norwegian Limited Liability Company model more competitive, and thereby reduce the use of foreign company models registered in Norway. Sweden serves as a model in this respect, as it has already introduced similar changes with a positive outcome.