Grants received from the grant period November 2021 onwards must be repaid before the enterprise approves or pays dividends, distributions or other appropriations as set out in Section 3a-3, second paragraph of the Regulation. The repayment demand will apply to resolutions or payments made from 28 January 2022 through to 31 December 2023 inclusive. If a resolution or payment takes place on or after 28 January 2022, but before an application is submitted, the enterprise will not be able to apply for grants; see Section 3a-3 of the Regulation.
This rule applies to private limited companies, public limited companies, co-operatives and partnerships covered by the Partnerships Act, as well as foreign enterprises engaged in commercial activity registered either in Norway or on the Norwegian continental shelf. The rule does not apply to sole proprietorships.
Which dividends/distributions are covered by the rule:
The following appropriations are covered by the rule:
a. resolutions concerning or the disbursement of dividends, or resolutions or distribution of other appropriations which fall within the framework of the funds that the company can use for the distribution of dividends under the Companies Act or the Public Limited Liability Companies Act, Section 8-1,
b. resolutions concerning or the implementation of distributions under Section 2-26 third paragraph of the Partnerships Act,
c. resolutions concerning or implementation of appropriations under Sections 27 to 30 of the Co-operatives Act; see Section 26 of the Co-operatives Act,
d. implementation of other appropriations which are to be regarded as dividends pursuant to Section 10-11 of the Tax Act, or
e. distributions pursuant to the Companies Act or the Public Limited Liability Companies Act, Section 16-9; distributions after an estate has been returned pursuant to the Companies Act or the Public Limited Liability Companies Act, Section 16-18, or distributions pursuant to Section 135 of the Co-operatives Act.
The above points could for example cover:
- Ordinary and extraordinary dividends
- Unlawful dividends
- Loans to personal shareholders
- Collateral for personal shareholders
- Group contributions
- Buy-back of the company’s own shares
- Liquidation dividends (but not liquidation considerations)
- Write-down of the nominal value of shares, in respect of the components that are not considered to constitute the repayment of paid-up share capital
- Bonuses, when they are used to circumvent the dividend limit
The above list is not exhaustive.
For groups in particular:
In the case of enterprises in a group which has collectively applied for a grant as if the group were a single enterprise (see Section 3-4 fourth paragraph of the Regulation), the repayment obligation shall apply to the individual enterprise that has received a share of the group’s profit in accordance with the final overview that must be submitted to the grant authority.
The enterprise’s repayment obligation is limited to the amount that is distributed. The repayment obligation arises and applies to the individual enterprise, and is independent of any repayment obligation incumbent on other enterprises in the group.
Compensation for lost stock
Repayment demands do not apply to compensation that is received for lost stock. An enterprise that has been awarded compensation for lost stock will be entitled to retain the compensation even if it has approved or made distributions.
Examples of how the timing of distributions can affect applications for grants and the repayment obligation:
- An enterprise approved a distribution in October 2021 and payment took place before the Regulation entered into force (before 28 January 2022)
- This does not entail a repayment obligation
- An enterprise approved a distribution in October 2021, but payment did not take place until after the Regulation entered into force (after 28 January 2022), but before the grant application was submitted.
- The enterprise cannot apply for grants for any of the periods
- An enterprise approved a distribution in October 2021, but payment did not take place until after the grant application had been submitted.
- The enterprise must repay the grant before payment takes place
- An enterprise approves a distribution after the deadline for receipt of applications and payment takes place before 31 December 2023.
- The enterprise must repay the grant before a decision is made
- An enterprise approves a distribution in December 2023, but payment takes place in January 2024.
- The enterprise must repay the grant before a decision is made
- An enterprise approves a distribution in January 2024
- The enterprise is not subject to any repayment obligation.
Circumvention
If an enterprise or its owners, members or participants executes appropriations which result in circumvention pursuant to Section 3a-4 of the Regulation, the grant must be repaid. A single appropriation or several consecutive appropriations will entail circumvention if the circumstances suggest that the main aim was to avoid a repayment demand pursuant to Section 3a-2 or 3a-3.