The conflict-of-interest rules under the Norwegian Companies Act - the board vs. the general meeting

We are often asked by clients whether the same conflict of interest rules that apply to board members also apply to shareholders who vote at general meetings. A District Court decision (TOSL-2023-04-05) from April 2025 is one of the few rulings in which shareholders' conflict-of -interest issues have been assessed by the courts and thus provides a good starting point for a brief summary of the rules for Norwegian private limited liability companies.

In brief, the facts of the case are that a conflict developed over time among the shareholders of a Norwegian company under financial pressure. After various attempts to find a solution, the company's business was sold to a company ("the buyer company") controlled by one of the shareholders. At a subsequent extraordinary general meeting, a proposal was made to file a lawsuit against the buyer company to reverse the sale. The proposal did not achieve the required majority, with the votes of the shareholder, the parent company of the buyer company, proving decisive. The question before the court was whether that shareholder was disqualified from voting on the decision.

If a shareholder is disqualified, they cannot vote on the decision to file a lawsuit. The decision to file a lawsuit then only requires the majority of the votes actually cast in accordance with section 5-17 of the Companies Act. In practice, this means that the remaining shareholders, even if they represent a minority of the votes represented at the general meeting, can still pass such a resolution.

The question of whether the shareholder was disqualified or not is governed by section 5-3, fourth paragraph, of the Norwegian Companies Act, which reads (our highlight):

4) No one may personally or by proxy or as a a proxy participate in a vote at the general meeting concerning a lawsuit against themselves or regarding their own liability to the company, nor in a vote concerning a lawsuits against another person or another person's liability if they have a significant interest in the matter that may conflict with that of the company.

The provision sets out two alternative grounds for a shareholder’s disqualification. Compared with the conflict-of-interest rules for board members, the main difference is that the provision concerning shareholder conflicts of interest applies only to decisions on pursuing a lawsuit. A shareholder therefore remains qualified in all other decisions, including preliminary proceedings concerning the potential lawsuit etc.

By way of illustration, section 6-27, first paragraph of the Norwegian Companies Act on conflicts of interest for board members sets out that:

1) A board member must not participate in the consideration or decision of any matter that has such particular significance for themselves or for any closely related party that the member must be deemed to have a special and prominent personal or financial interest in the matter. The same applies to the general manager.

As set out above, section 6-27 prevents a board member who is disqualified from taking part in any aspect of the board’s consideration of a matter where the member is disqualified. The threshold for disqualification for board members ("prominent personal or financial interest") is somewhat higher than for shareholders ("significant interest that may conflict with the company’s"). At the same time, section 6-27 requires the actual existence of such a special interest, whereas section 5-3 disqualifies a shareholder if there is an interest that "may conflict with the company’s," meaning it is not necessary to conclude that such a conflicting interest indeed exists. We often see board members refrain from board deliberations "just to be safe," either because they believe they are disqualified or are perceived as such by other board members, even though no substantive assessment has been made to determine whether the statutory definition of disqualification is met. In the absence of actual grounds for disqualification, this may, however, represent a breach of the board member’s fiduciary duty to participate in board deliberations.

In the case in question, Oslo District Court concluded that the two disputed general meeting resolutions on bringing legal action against the buyer company were invalid due to that shareholder controlling the buyer company being disqualified. The ruling of the court resulted in a reversal of the general meeting’s decisions from 2023, in 2025. The passage of time and the challenges associated with potentially reversing a transaction already carried out illustrate the importance of correctly applying the law and highlight the risk for both the company and the different shareholder groups. It may be that several changes in the shareholder composition have taken place in both the company and the buyer company, creating further complications. We therefore recommend that both shareholders and board members seek legal advice in situations where conflict of interest questions arise or have already arisen.

AGP is a law firm specialising in transactions, capital markets and corporate. We regularly assist companies, shareholders and board members in both listed and unlisted companies.

This article is marketing material and does not constitute legal advice.