Lending and taking security in Norway: overview

A Q&A guide to lending and taking security in Norway. The Q&A gives a high level overview of the lending market, forms of security over assets, special purpose vehicles in secured lending, quasi-security and guarantees. It covers creation and registration requirements for security interests; problem assets over which security is difficult to grant; risk areas for lenders; structuring the priority of debt; debt trading and transfer mechanisms; agent and trust concepts; enforcement of security interests and borrower insolvency; cross-border issues on loans; taxes; and proposals for reform.

To compare answers across multiple jurisdictions, visit the Lending and taking security in country Q&A tool.

This article is part of the global guide to finance. For a full list of contents visit www.practicallaw.com/finance-guide.

Richard Sjøqvist and Daniel Storrvik, Advokatfirmaet BA-HR DA

Overview of the lending market

1. What have been the main trends and important developments in the lending market in your jurisdiction in the last 12 months?

During the last months Norway is continuing to be hit by the downturn within the oil and gas industry, which has impacted the surrounding industries such as oil services. The downturn led to the abandonment of several lending projects since the end of 2014 and has led to a multitude of amendments relating to covenant breaches. Outside of this industry sector the market is still strong. However, the bond market is still very slow within the high yield market.


Forms of security over assets

Real estate

2. What is considered real estate in your jurisdiction? What are the most common forms of security granted over it? How are they created and perfected (that is, made valid and enforceable)?

Real estate

Under the Pledge Act of 8 February 1980 (Pledge Act) (Panteloven), real estate is land, houses and other buildings and plants. For a construction to be covered by the terms "house, building or plants" it needs to be somehow permanently affixed to the land for a period of time.

Common forms of security

Security interests over real estate are created by a mortgage. Security granted over real estate is mainly regulated by the Pledge Act, which provides rules concerning security over immovable and movable property, operating assets, inventory, receivables and other liens.


Security over real estate must be registered against the relevant property number in the Norwegian Land Register (No.: Grunnboken), which is a centralised land registry for all land in Norway. If the formalities are not complied with, the security interest is generally valid between the parties but is not effective against third parties, acting in good faith, with an interest in the property or a bankruptcy estate.

Tangible movable property

3. What is considered tangible movable property in your jurisdiction? What are the most common forms of security granted over it? How are they created and perfected?

Tangible movable property

Under Norwegian law, tangible objects that are not real estate will be considered as movable property and security may be taken over them subject to the relevant law.

Common forms of security

Charges are the most common form of security over movable property in Norway. Charges over certain classes of assets require registration in the Register of Mortgaged Movable Property (No.: Løsøreregisteret) and takes the form of a floating charge over such class of assets (see below, Formalities).

Security granted over movable property is mainly regulated by the Pledge Act. Special legislation applies to security over particular assets such as ships and aircraft, which are considered to be separate asset classes for the purposes of granting security. Security in aircraft and ships are created by a mortgage.

Property (Norwegian Land Register), ships (The Norwegian International Ship Register and The Norwegian Ordinary Ship Register) and aircraft (Norwegian Civil Aircraft Register) have separate registries and security is granted through grant of a mortgage which is registered in such registry.


Formalities depend on the type of asset concerned.

Classes of assets requiring registration in the Register of Mortgaged Movable Property include, among others:

  • Machinery and plant.

  • Cars.

  • Construction machines and railway material.

  • Agricultural and farm machinery.

  • Current and future monetary claims against debtors concerning commodities sold or services provided in trade.

  • Inventory.

The charge is created by providing a standardised charge document relevant for the asset class. The charge is perfected when it is registered against the name of the asset's owners in the Register of Mortgaged Movable Property. The charge takes the form of a floating charge over the class of assets in question.

For aircraft and ships (including movable drilling units), perfection is obtained by registering a mortgage against the relevant vehicle in the respective register. Fixed petroleum installations can be pledged together with a pledge over the relevant production.

For non-registrable assets, security is perfected by delivery of the assets to the creditor or another third party, so that the assets are no longer in the owner's possession.

Financial instruments

4. What are the most common types of financial instrument over which security is granted in your jurisdiction? What are the most common forms of security granted over those instruments? How are they created and perfected?

Financial instruments

The most common types of financial instruments over which security are granted are:

  • Shares.

  • Bonds.

  • Negotiable debt instruments.

Common forms of security

The most common forms of security are charges and pledges.


For security over dematerialised financial instruments (such as Norwegian shares in a public limited liability company and bonds) registered in a securities register, security is perfected by registration in that security's register.

For security over shares not registered in a securities register (typically shares in certain private limited liability companies), perfection requires notification to the company. Physical share certificates do not exist.

Security over other physical negotiable debt instruments or beaver instruments is taken in the form of a pledge. It is perfected by delivery of the document to the creditor or another third party so that the assets are no longer in the owner's possession.

Claims and receivables

5. What are the most common types of claims and receivables over which security is granted in your jurisdiction? What are the most common forms of security granted over claims and receivables? How are they created and perfected?

Claims and receivables

The most common types of claims and receivables are:

  • Monetary claims.

  • Negotiable debt instruments.

  • Receivables.

Common forms of security

Security over claims and receivables is taken in the form of a pledge, an assignment or a floating charge.


For monetary claims, the pledge or the assignment is perfected when notice is given to the debtor. For a pledge over a physical negotiable debt instrument, the security is perfected by delivery of the document to the creditor or another third party so that the assets are no longer in the owner's possession. A charge over receivables is perfected by registering the charge against the name of the charger in the Register of Mortgaged Movable Property.

Cash deposits

6. What are the most common forms of security over cash deposits? How are they created and perfected?

Common forms of security

Under Norwegian law a bank account is considered to be a monetary claim of the account holder against the bank. Such a claim can be pledged by way of a declaration of pledge or a pledge agreement.


Legal perfection of a pledge over a bank account is created by serving notice on the account bank. This applies regardless of whether the security document is governed by Norwegian or any other law. The pledge can comprise both existing and future deposits on the account. There is no requirement for the pledged account to be blocked in order for the pledge to be effective and the pledgor may be given the right to make withdrawals from the account until otherwise directed by the pledgee.

It is also possible for the financial institution to take security in the accounts the institution holds.

Intellectual property

7. What are the most common types of intellectual property over which security is granted in your jurisdiction? What are the most common forms of security granted over intellectual property? How are they created and perfected?

Intellectual property

Under Norwegian law, it is only possible to take a separate security over the following types of intellectual property:

  • Patents.

  • Patent applications.

  • Supplementary protection certificates for medicinal products.

  • Supplementary protection certificates for plant protection products.

  • Plant breeder's rights.

Common forms of security

New legislation came in force on 1 July 2015, which now makes it possible to gain separate security over certain types of intellectual property in the form of a charge, under the Pledge Act. A charge can be granted over all patents and plants breeder's rights (national or international) that apply in Norway. For an international patent or patent application to be charged under Norwegian law, the application must be registered in the Norwegian patent register or the Norwegian Industrial Property Office’s (No: Patentstyret) register of European patent application.

For pledges over business equipment the company's intellectual property will be included under the security (patents, designs, copyrights and trade marks), provided that they are used in the pledgees' business.


A charge over a patent, patent application or supplementary protection certificate must be registered in the patent register and a patent application under the European Patent Convention (EPC) must be registered in the Norwegian Industrial Property Office's register of European patent application to be perfected. Charges over plant breeder's rights and applications are perfected when registered in the plant variety register or the plant variety board register of plant variety applications (as applicable).

A pledge over business equipment must be registered in the Register of Movable Property to be perfected. The pledge must be comprehensive and include all of the rights of the pledgor to the business equipment.

If the same intellectual property is covered both under a pledge over business equipment and an individual charge, the rights where the application for registration have been received by the relevant register first will rank prior to the other. If the different applications are received on the same day, they will be given parallel ranking (except for enforcing liens which in such cases will be given priority ranking). However, a later established pledge over business equipment will never receive priority over an individual charge, even if the individual charge is not registered and regardless of whether the secured party under the pledge over business equipment is in good faith.

Problem assets

8. Are there types of assets over which security cannot be granted or can only be granted with difficulty? Which assets are difficult or problematic when security is granted over them?

Future assets

Both business equipment pledges and inventory pledges will create security over the business equipment/inventory from time to time and will therefore represent a pledge of future property.

A bank account pledge/pledge of a monetary claim may also comprise future claims against an identified debtor provided that the future claims are related to a specific contractual relationship that can be identified. A factoring pledge will also capture future receivables (see Question 5).

Fungible assets

See above, Future assets.

Other assets

Under Norwegian law, it is only possible to grant security under the provisions of the Pledge Act or other Norwegian law.

It is not, for example, possible to grant security over a contract, only in the cash flow arising under the contract.


Release of security over assets

9. How are common forms of security released? Are any formalities required?

How to release a security depends on the type of security.

If the security is perfected by registration, confirmation from the security holder is required to release it. The security holder needs to sign the original security document, and send it to the register. If it is not possible to retrieve the original document the release can be made with an application to the courts of Norway for a declaration of nullity. The security will automatically be released after 20 years unless it is renewed.

For security types that are perfected by notice to the possessor, the security is released with a notice to the possessor from the security holder.


Special purpose vehicles (SPVs) in secured lending

10. Is it common in your jurisdiction to take security over the shares of an SPV set up to hold certain of the borrower's assets, rather than to take direct security over those assets?

It is more common to take direct security if a negative pledge hinders the granting of security. Assets may however be transferred to an SPV because of a negative pledge; shares in such an SPV can then normally not be given as security.



11. What types of quasi-security structures are common in your jurisdiction? Is there a risk of such structures being recharacterised as a security interest?

Sale and leaseback

Sale and leasebacks are common in Norway and must be properly structured to obtain the desired tax treatment and to avoid re-characterisation as a security interest.


Factoring is considered a security interest according to the Norwegian Pledge Act. This means that a factoring agreement needs to be registered to be perfected. Perfection can also be achieved by notice to the debtors.

The perfection of a factoring agreement does not protect the security holder from a bona fide purchase.

Hire purchase

Under Norwegian law a hire purchase is treated the same way as retention of title (see below, Retention of title).

Retention of title

Security in the form of retention of title (purchase money security interest (salgspant)) can be made in all tangible property that cannot be registered. The security can only cover the purchase amount of the transaction. To be perfected, the retention of title needs to be agreed on before or at the same time the buyer gets the possession over the assets. The agreement also needs to be in put in writing without undue delay after the agreement is made.

The security interest will cease if the asset is rebuilt, upgraded, or in any other way changes the value and/or the character of the asset.

Other structures

Financial leasing is considered a security interest in accordance with the Norwegian Pledge Act (section 3-22) and is treated the same way as retention of title (see above, Retention of title).

Close-out netting is common in derivate transactions agreements, such as the ISDA Master Agreement. The arrangement is regulated in the Norwegian Financial Collateral Act (section 6) and the Securities Trading Act (section 14-2) and is not characterised as a security interest. Close-out netting is enforceable in the event of insolvency and the set-off restrictions for insolvency proceedings in the Norwegian Creditor Recovery Act is not applicable for such close-out netting arrangements.



12. Are guarantees commonly used in your jurisdiction? How are they created?

Guarantees are commonly used in Norway. Although not a legal requirement, guarantees should be made in writing and can be made as a declaration by the guarantor. On demand guarantees are increasingly used. Loan guarantees are regulated in the Finance Agreement Act of 25 June 1995 (Financial Agreement Act) (finansavtaleloven) and may be void if not in compliance. In particular, a maximum monetary amount must be set. It is common practice in Norway to set this maximum monetary amount between 105% and 120% of the total underlying commitment which is to be secured by the guarantee, plus interest and expenses.


Risk areas for lenders

13. Do any laws affect the validity of a loan, security or guarantee (or the terms on which they are made or agreed)?

Financial assistance

For a guarantee, loan or security provided by a Norwegian company in favour of the purchase of shares in the company or its parent company to be valid and binding, both:

  • The financial exposure of the company must not exceed the amounts that the company has available for distribution of dividends to its shareholders.

  • Adequate security must be deposited for the repayment or recovery claim.

Additional requirements are that:

  • The creditworthiness of the purchaser is evaluated by the board of directors.

  • The assistance is approved by the board of directors.

  • The assistance is approved by a general meeting of the company according to a special procedure.

However, the Ministry of Trade, Industry and Fisheries has released a proposal to soften the restrictions on such financial assistance. The proposal provides that a company will be allowed to grant guarantees or securities in connection with an acquisition of shares by a third party in the company or its parent company, which exceeds the amounts that the company has available for distribution of dividends to its shareholders and without receiving adequate security for the repayment or recovery claim. The proposed changes will also make it possible for a company to grant a loan or credit to the purchaser, which exceeds the amounts that the company has available for distribution, provided that the loan or credit is given on arm's length terms and that the company receives adequate security for the repayment. Even though there may be some adjustments to the proposal, it seems most likely that these proposed changes, in some form or another, will be passed by the Norwegian Parliament. If so, they are scheduled to come into force in July 2016 or January 2017.

The Limited Liability Companies Act also generally restricts the ability for a Norwegian company to give guarantees for the debt of its shareholders or close associates of its shareholders. The company may however give guarantees for the debt of its parent company or other group companies, provided that such guarantees economically benefit at least one company in the group.

Corporate benefit

See above, Financial assistance.

Loans to directors

There are restrictions on loan or guarantees for loans to directors and the managing director, which correspond to the restrictions for loans and guarantees for shareholders (see above, Financial assistance).


There are no specific restrictions for the amount of interest that can be charged. However, the amount of interest can be reduced by the courts if considered unreasonable and an exploitation of a weaker party may be a criminal offence.


See Question 12.

14. Can a lender be liable under environmental laws for the actions of a borrower, security provider or guarantor?

Under Norwegian law a lender, security provider or guarantor will not be liable for the borrowers' breach of environmental laws solely by virtue of receiving or providing security. Liability, as a main principle, requires negligence.


Structuring the priority of debts

15. What methods of subordination are there?

Contractual subordination

Contractual subordination of debt is possible and common. It can be achieved by a declaration from the junior lender not to collect its debt until the senior debt has been paid in full.

Structural subordination

Structural subordination can be achieved by loans being granted to entities in the same group at different levels of the group structure, that is, closer to the source of income.

Inter-creditor arrangements

Inter-creditor arrangements are common between various classes of creditors or between mortgagees. Generally, the junior creditor will not enforce its security without the consent of the senior creditor.


Debt trading and transfer mechanisms

16. Is debt traded in your jurisdiction and what transfer mechanisms are used? How do buyers ensure that they obtain the benefit of the security and guarantees associated with the transferred debt?

Debt can be traded. Notification to the debtor is required. In the case of a syndicated loan buyers will obtain the benefit of securities and guarantees in accordance with the terms of the agreement. In other cases, it is necessary to look to the perfection rules for the relevant security.


Agent and trust concepts

17. Is the agent concept (such as a facility agent under a syndicated loan) recognised in your jurisdiction?

The concept of agency is recognised in Norway. However, under Norwegian law only creditors can have standing before the courts of Norway.

18. Is the trust concept recognised in your jurisdiction?

The concept of trust is not recognised in Norway. A trust created under the laws of another country will, as a general rule, be recognised in Norway. See also Question 17.


Enforcement of security interests and borrower insolvency

19. What are the circumstances in which a lender can enforce its loan, guarantee or security interest? What requirements must the lender comply with?

The conditions set out in the underlying agreement will be the starting point for when a lender can enforce a security interest. An event of default of this agreement will make the security enforceable.

Methods of enforcement

20. How are the main types of security interest usually enforced? What requirements must a lender comply with?

Generally, enforcement of a security interest over an asset located in Norway will have to take place within the framework of the Norwegian Enforcement Act, which stipulates the enforcement procedures for different asset classes. Generally, enforcement can take place through an auction or through a sale conducted by a court-appointed official. The Enforcement Act generally prohibits a pledgor and pledgee from entering into an agreement that stipulates alternative enforcement procedures to the obligatory rules of the Enforcement Act, except for certain assets (such as, a pledge over receivables, separate charges over intellectual property, and a pledge of certain types of securities). However, after an enforcement situation arises, a pledgor and pledgee are permitted to agree on other enforcement procedures outside of those provided for under the Enforcement Act.

Financial instruments and bank deposits that are subject to a pledge created by a Norwegian corporate can be enforced in accordance with and subject to the provisions of the Norwegian Financial Collateral Act of 26 March 2004 (Lov om finansiell sikkerhetsstillelse).

Rescue, reorganisation and insolvency

21. Are company rescue or reorganisation procedures (outside of insolvency proceedings) available in your jurisdiction? How do they affect a lender's rights to enforce its loan, guarantee or security?

A company that is unable to fulfil its obligations as they mature can be put under a debt settlement proceeding, according to the Norwegian Bankruptcy Act. The debt settlement proceedings can either be agreed on by all creditors or compulsory if a given majority of the lenders agree to it. The debtor needs to file the debt settlement itself, this cannot be done by the creditors.

The debt settlement can involve:

  • Delay of payment.

  • A percentage reduction of the outstanding debt.

  • A liquidation of the company, with or without a reduction of the debt.

  • Or a combination of the alternatives above.

The debt settlement proceeding does not affect the lenders with perfected security interest, except for the outstanding debt that is not considered to be covered by the security.

22. How does the start of insolvency procedures affect a lender's rights to enforce its loan, guarantee or security?

In the first six months after an insolvency petition has been filed, secured creditors cannot enforce their security without the insolvency estate's consent. However, it is possible to enforce security over assets covered by the Financial Collateral Act of 26 March 2004 (Financial Collateral Act) (for example, shares and other financial instruments) without the insolvency estate's consent. This is achieved by the lender entering into a private sale of the secured assets.

23. What transactions involving loans, guarantees, or security interests can be made void if the borrower, guarantor or security provider becomes insolvent?

Security interests that are created to secure previously unsecure debt in a three-month period before commencement of bankruptcy proceedings will be made void. If the security is granted to benefit a closely related party (such as a parent company), the time period will extend to two years, unless it can be proved that the debtor was in fact solvent when the security was created.

24. In what order are creditors paid on the borrower's insolvency?

On a borrower's insolvency secured creditors can enforce their security. If more than one creditor holds a security interest in the same asset, the creditor that perfected its right first will get full security for his claim. The second creditor will then have the right of the remaining value, if there is any.

If the security interest has not been validly perfected, the security will not be recognised by the bankruptcy estate and the holder will be considered as an unsecured creditor.

This is subject to the following priority payments:

  • Costs of insolvency proceedings. The insolvency estate has a statutory first priority lien, to cover the costs of the proceedings, over assets pledged by the insolvent company and third parties, as security for the insolvent company's obligations. The secured costs of the proceedings are limited to a maximum of 700 times the court fee (Rettsgebyr). Currently, this means a maximum of NOK717,500.

  • Certain ordinary property related taxes and duties. These include, for example, waste tax, and are generally considered to be minimal.

Unsecured debts will rank in the following order:

  • The remaining costs of running the insolvency estate and costs incurred by the insolvency estate (after payment of the statutory lien (see above)).

  • Certain employee debts, including:

    • unpaid wages for six months prior to the insolvency (but not the unpaid wages of managing directors or employees that own 20% or more of the company);

    • holiday allowance for employees for 24 months prior to insolvency; and

    • unpaid pension allowance for up to six months prior to insolvency.

  • Various taxes, including income tax and wealth tax (subject to certain time limitations).

  • Ordinary unsecured claims.

  • Interest on claims accrued after the opening of the insolvency proceedings.

  • Subordinated claims.

Shareholders will only retain any residual value left in the insolvency estate after these payments are made (typically disputed claims that the insolvency estate does not wish to pursue). If the shareholder wishes to enforce such claims it must do so on behalf of the insolvency estate.


Cross-border issues on loans

25. Are there restrictions on the making of loans by foreign lenders or granting security (over all forms of property) or guarantees to foreign lenders?

To make loans in Norway a licence from the Financial Supervisory Authority of Norway is needed. A European Passport, which allows firms to conduct business into the European Economic Area as a credit institution under the EU's Banking Directive, is also recognised.

There are no restrictions on granting security or guarantees.

26. Are there exchange controls that restrict payments to a foreign lender under a security document, guarantee or loan agreement?

There are no exchange controls for payments to foreign lenders under security documents, guarantees or loan agreements.


Taxes and fees on loans, guarantees and security interests

27. Are taxes or fees paid on the granting and enforcement of a loan, guarantee or security interest?

Documentary taxes

Not applicable.

Registration fees

Fees for registering a mortgage in:

  • Norwegian Land Registry: NOK525.

  • Register of Mortgaged Movable Property: NOK1,473 (registration by paper) or NOK1,051 (electronic registration).

  • Norwegian International Ship Register: NOK2,258.

  • Norwegian Ordinary Ship Register: NOK2,258.

The fee for public enforcement of a security interest is NOK2,152.

The fee for public enforcement of a forced sale of real estate is NOK11, 377.

Notaries' fees

A notary has no role in the establishment of a loan or security.

28. Are there strategies to minimise the costs of taxes and fees on the granting and enforcement of a loan, guarantee or security interest?

Not applicable.



29. Are there any proposals for reform?

The Ministry of Justice and Public Security has issued a proposition to the Norwegian Parliament that involves new rules regarding cross-border insolvency in the Bankruptcy Act. The proposal is intended to make the Norwegian insolvency rules more in line with the UNCITRAL Model Law on Cross-Border Insolvency 1997 (UNCITRAL Model Insolvency Law) and Regulation (EC) 1346/2000 on insolvency proceedings (Insolvency Regulation). The proposition includes a new type of bankruptcy proceeding where the estate only includes the debtors's assets that are located in Norway. It is also proposed that foreign insolvency proceedings, under certain conditions, will automatically be recognised in Norway.


Online resources


W www.lovdata.no

Description. This is the official website for laws and regulations. It is only available in Norwegian languages. Some unofficial translations (for guidance only) can be found on http://app.uio.no/ub/ujur/oversatte-lover/english.shtml.

Contributor profiles

Richard Sjøqvist, Partner

Advokatfirmaet BA-HR DA

T +47 22 016 803
F +47 21 000 051
E ric@bahr.no
W www.bahr.no

Professional qualifications. Norway, Solicitor; England and Wales, Solicitor

Areas of practice. Restructuring; insolvency; debt finance.

Recent transactions

  • Representing the Norwegian Bond Trustee and bondholders in several bond defaults, restructuring and enforcement proceedings.

  • Representing agents and lenders in connection in several cases relating to defaults, restructuring and enforcement proceedings.

  • Representing the owners, issuers and borrowers in connection with a potential default under a bond indenture.

Daniel Storrvik, Associate

Advokatfirmaet BA-HR DA

T +47 21 016 665
F +47 21 000 051
E dasto@bahr.no
W www.bahr.no

Areas of practice. Restructuring; insolvency; debt finance.

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