Changes in company law legislation in 2023
Overview of changes in company law legislation in 2023 of significance for the holding of general meetings in 2024 and changes that set requirements for the gender composition of boards of directors in limited liability companies.
In 2023, there were two major changes in the company law legislation. The first is changes in the rules for attendance at general meetings, i.e. registration data, pre-registration, notice and registration of custodian-registered shares. These rules came into force on 1 July 2023. These rules are of particular importance to listed companies and companies with shares registered in VPS.
The second change that was adopted is the rules on the requirement for gender composition of boards of directors of limited liability companies. New rules on the gender composition of boards of directors of limited liability companies came into force on 1 January 2024. Until that date, such rules had only applied to public limited liability companies. The new rules will also apply to certain partnerships, cooperative societies and foundations. A step-by-step introduction of the requirements has been proposed, summarised below.
It is also worth noting that there are new requirements for the gender composition of employee-elected board members in public limited liability companies.
Registration date
- Only those who are shareholders 5 business days before the general meeting (the registration date) are entitled to attend and vote at the general meeting.
- The provision applies to public and private limited liability companies with shares registered in the Norwegian Central Securities Depository (VPS).
- For listed shares, the last day the shares are traded, including the right to attend the general meeting, will be 2 business days before the registration date if the trading takes place on the marketplace.
- The registration date should be stated in the notice of the general meeting.
- Companies with deviating regulations in their articles of association in respect of the registration date must change these and must also prior to the change follow the new rule.
Shareholders with custodian-registered shares
- Owners of custodian-registered shares who want to attend general meetings, must notify the company of this no later than 2 business days prior to the general meeting date. There is no longer a requirement that the shares must be moved out of the custodian account and into a temporary account in the name of the shareholder.
- The provision applies to public and private limited liability companies with shares registered in VPS.
- VPS has established a system to ensure that the underlying shareholder may notify the company in a manner that provides the company with sufficient verification of identity and holdings. Notices of general meetings should mention the new rules for custodian-registered shares.
Requirement of pre-registration for other shareholders
- The articles of association may stipulate that also other shareholders who wish to attend general meetings must notify the company of this no later than 2 business days prior to the general meeting. Unlike before, the board of directors will not be entitled to accept attendance by shareholders who have failed to meet the deadline.
- The deadline may not be set earlier and companies with deviating provisions in their articles of association must change these.
- The provision applies to public and private limited liability companies with shares registered in VPS.
Notices of general meetings in companies with custodian-registered shares
- Notices of general meetings in companies with custodian-registered shares shall be sent to the underlying shareholders through the custodian chain using SWIFT, unless the notice has been sent directly the underlying shareholder. The same applies to information about other “corporate actions”.
- VPS has established a procedure to comply with this requirement which will entail an additional cost for the companies.
New deadline for notices of general meetings in limited liability companies with shares registered in VPS
- The deadline for notices of general meetings in limited liability companies with shares registered in VPS has been increased from 1 to 2 weeks (for listed and unlisted companies)
Identification of owners of custodian-registered shares
- Rules have been introduced to make it easier for the issuer to identify underlying owners of custodian-registered shares. A system has been established in VPS in which the information may be obtained through the registrar, but it will still take a few weeks to gather such information. The registrar will be able to provide more information about this.
- The SRD II rules providing the right of access to such information for others than the issuer have not yet come into force.
New requirements for the gender composition of board members elected by and among the employees in public limited liability companies
- For companies with more than 200 employees, the gender composition shall meet the requirements that apply to shareholder-elected board members, however, if 2 board members are to be elected among the employees, they cannot be of the same gender.
- The provision came into force on 1 January 2024, but until 1 January 2025 a transitional rule applies which states that the provision does not apply until after the next ordinary election.
- Companies with fewer employees must meet the requirement that when two or more employee-elected board members are to be elected, they cannot all be of the same gender. This also previously applied to companies with more than 200 employees.
Brief overview of the rules on requirements for the gender composition of boards of directors in limited liability companies
New rules on the gender composition of boards of directors in limited liability companies came into force on 1 January 2024. Until that date, such rules only applied to public limited liability companies. The new rules will also apply to certain partnerships, cooperative societies and foundations.
The new rules apply to boards of directors of limited liability companies that either have an operating income and a financial income that together exceeds NOK 50 million or more than 30 employees and a board of directors with 3 or more board members. The rules are implemented in 5 steps and the following deadlines apply for compliance with the gender composition requirements:
(i) 31 December 2024: Companies that have a total operating and financial income that exceeds NOK 100 million.
(ii) 30 June 2025: Companies that have more than 50 employees and are not covered by (i)
(iii) 30 June 2026: Companies that have more than 30 employees and are not covered by (i) or (ii).
(iv) 30 June 2027: Companies that have a total operating and financial income that exceeds NOK 70 million and are
not covered by (i)-(iii).
(v) 1 July 2028: Companies that have a total operating and financial income that exceeds NOK 50 million and are not covered by (i)-(iv).
When a company incurs the obligation to meet the gender composition requirements, the board of directors shall meet the gender composition requirements no later than one month after the first subsequent ordinary general meeting.
If the board of directors has three or more members, the gender composition of the board of directors shall meet the following requirements within the deadline specified above:
- 3 or 4 board members: A maximum of 2 board members may be of the same gender.
- 5 or 6 board members: A maximum of 3 board members may be of the same gender.
- 7 board members: A maximum of 4 board members may be of the same gender.
- 8 board members: A maximum of 5 board members may be of the same gender.
- 9 or more board members: A maximum of 60% of the board members may be of the same gender.
- Corresponding requirements apply to deputy board members.
If three or more board members are to be elected among the employees, they cannot all be of the same gender. This requirement does not apply if more than 80% of the total number of employees at the time of the election are of the same gender. For companies with more than 200 employees, the gender compositions shall meet the requirements that apply to shareholder-elected board members. The requirements apply as of the first ordinary election after the dates specified in items (i) – (v) above.
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