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Norwegian aid packages to companies affected by the corona-crisis

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calendar 1 May 2020
globus Norway

The Norwegian government has on 27 March 2020 proposed a new aid package of financial measures of nearly NOK 5 billion, which will benefit Norwegian companies that are experiencing economic hardship as a result of the pandemic crisis. Over half of the proposed package will be used to strengthen grants to entrepreneurs and growth companies.

Compensation for fixed costs

On 3 April 2020, the Norwegian government proposed a temporary measure on compensation to companies experiencing loss of revenue to parliament. The compensation scheme will address to companies experiencing a drop in turnover of 30 % or more compared to the same month the previous year. For March, the rate will be 20 %, as the strict anti-infection measures were first introduced on 12 March 2020;

Companies will be compensated for minimum NOK 5000 and maximum NOK 30 million per for month for ordinary payments and a maximum cap on NOK 80 million as the absolute ceiling.

Initially, the scheme will be applicable for March, April and May. Payments will be made in arrears based on actual turnover in months in question;

A two-part model will be used for calculating compensation;

  • Companies that are forced to close due to governmental containment measures will be compensated for up to 90 % of their inevitable fixed costs per month. For such companies, compensation will be calculated as loss of turnover x fixed costs x 90 % adjustment factor;
  • Companies not forced to close by the government, but who are still experiencing a loss of turnover by 30 % (20 % for March) will be compensated for up to 80 % of their inevitable fixed costs per month. For such companies, compensation will be calculated as loss of turnover x (inevitable costs - deductible of NOK 10,000) x 80 % adjustment factor.

The Minister of Finance has reduced the companies deductible to NOK 5000, applicable for applications from and including the month of April. On 30 April 2020, members of the opposition have proposed to remove the deductible all together

The scheme will be available to all taxable enterprises registered in Norway, with some exceptions, including the financial industry, companies that produce, transmit and distribute electricity, water and companies that extract oil and gas, enterprises that are recipients of special support programmes, such as private kindergartens and airlines, enterprises without employees (excluding sole proprietorships for which the enterprise is the proprietor’s main source of income and liable companies where the company is the main source of income for at least one of the participants) and enterprises without activity or which are undergoing bankruptcy proceedings.

From 20 April 2020 it has been possible for Norwegian companies to apply for compensation for fixed expenses through the website kompensajonsordning.no. Companies are advised to apply for the compensation in collaboration with an accountant.

General assemblies and ordinary annual meetings

Subject to the Norwegian Companies Act, general assemblies or ordinary annual meetings must be held maximum 6 months after the fiscal years ending. For many companies, this will mean that general assemblies or ordinary annual meetings must be held on 30 June 2020 at the latest.

On 8 April 2020, the government adopted a temporary exception through the new crisis law, allowing limited companies, public limited companies and cooperatives to derogate from provisions on physical general assemblies or annual meetings.

Interest support fund

Further, it is proposed by the Norwegian government to establish an interest support fund. The purpose is to provide companies affected by the crisis payment relief through instalment deferral and deferral of interest payments for existing or new innovation loans and district-directed risk loans.

Aid to entrepreneurs

Private innovation and entrepreneurial environments that are not supported by Siva are currently facing financial difficulties. In order to help this community maintain their offers to start-up and growth companies, a grant scheme of NOK 50 million has been granted to this sector.

In addition, the government intends to increase the investment capital of Investinor in order to improve access to capital for early stage companies by NOK 1 billion.

Changes to the rules on debt negotiation

On 15 April 2020, the Norwegian government proposed to change the rules on debt negotiation in order to aid viable companies who are experiencing an acute loss of revenue.

The government is proposing a temporary law that will replace the rules of the Bankruptcy Act in relation to debt negotiation. The proposed new law provides rules on what is called reconstruction negotiations and will supply the company with further instruments when negotiating with creditors than the current law allows.

On 28 April 2020, the parliament adopted the proposal. The new act will be applicable until 1 January 2021.

Air travel

The low VAT rate of 7% will also be applicable for passenger transport in the period from 1 April 2020 to 31 October 2020. The Norwegian government will furthermore purchase domestic air routes where there is no basis for commercial operations. An aviation guarantee scheme of NOK 6 billion, with a 90% state guarantee on each loan is furthermore offered by the Norwegian government. Of these NOK 3 billion is directed to Norwegian Air Shuttle, 1.5 billion to SAS and the remaining 1.5 billion to Widerøe and other airlines.

Employment-related measures

Besides for the schemes intended to cover general costs, the Norweigan government has introduced several measures to help companies with covering employment-related costs. You can read more on those schemes here.

IUNO will keep a close eye on the further development of the economic measures that continuously are being proposed by the Swedish government and, perhaps more importantly, what criteria companies must fulfil in order to be able to benefit from these aid packages.

Compensation for fixed costs

On 3 April 2020, the Norwegian government proposed a temporary measure on compensation to companies experiencing loss of revenue to parliament. The compensation scheme will address to companies experiencing a drop in turnover of 30 % or more compared to the same month the previous year. For March, the rate will be 20 %, as the strict anti-infection measures were first introduced on 12 March 2020;

Companies will be compensated for minimum NOK 5000 and maximum NOK 30 million per for month for ordinary payments and a maximum cap on NOK 80 million as the absolute ceiling.

Initially, the scheme will be applicable for March, April and May. Payments will be made in arrears based on actual turnover in months in question;

A two-part model will be used for calculating compensation;

  • Companies that are forced to close due to governmental containment measures will be compensated for up to 90 % of their inevitable fixed costs per month. For such companies, compensation will be calculated as loss of turnover x fixed costs x 90 % adjustment factor;
  • Companies not forced to close by the government, but who are still experiencing a loss of turnover by 30 % (20 % for March) will be compensated for up to 80 % of their inevitable fixed costs per month. For such companies, compensation will be calculated as loss of turnover x (inevitable costs - deductible of NOK 10,000) x 80 % adjustment factor.

The Minister of Finance has reduced the companies deductible to NOK 5000, applicable for applications from and including the month of April. On 30 April 2020, members of the opposition have proposed to remove the deductible all together

The scheme will be available to all taxable enterprises registered in Norway, with some exceptions, including the financial industry, companies that produce, transmit and distribute electricity, water and companies that extract oil and gas, enterprises that are recipients of special support programmes, such as private kindergartens and airlines, enterprises without employees (excluding sole proprietorships for which the enterprise is the proprietor’s main source of income and liable companies where the company is the main source of income for at least one of the participants) and enterprises without activity or which are undergoing bankruptcy proceedings.

From 20 April 2020 it has been possible for Norwegian companies to apply for compensation for fixed expenses through the website kompensajonsordning.no. Companies are advised to apply for the compensation in collaboration with an accountant.

General assemblies and ordinary annual meetings

Subject to the Norwegian Companies Act, general assemblies or ordinary annual meetings must be held maximum 6 months after the fiscal years ending. For many companies, this will mean that general assemblies or ordinary annual meetings must be held on 30 June 2020 at the latest.

On 8 April 2020, the government adopted a temporary exception through the new crisis law, allowing limited companies, public limited companies and cooperatives to derogate from provisions on physical general assemblies or annual meetings.

Interest support fund

Further, it is proposed by the Norwegian government to establish an interest support fund. The purpose is to provide companies affected by the crisis payment relief through instalment deferral and deferral of interest payments for existing or new innovation loans and district-directed risk loans.

Aid to entrepreneurs

Private innovation and entrepreneurial environments that are not supported by Siva are currently facing financial difficulties. In order to help this community maintain their offers to start-up and growth companies, a grant scheme of NOK 50 million has been granted to this sector.

In addition, the government intends to increase the investment capital of Investinor in order to improve access to capital for early stage companies by NOK 1 billion.

Changes to the rules on debt negotiation

On 15 April 2020, the Norwegian government proposed to change the rules on debt negotiation in order to aid viable companies who are experiencing an acute loss of revenue.

The government is proposing a temporary law that will replace the rules of the Bankruptcy Act in relation to debt negotiation. The proposed new law provides rules on what is called reconstruction negotiations and will supply the company with further instruments when negotiating with creditors than the current law allows.

On 28 April 2020, the parliament adopted the proposal. The new act will be applicable until 1 January 2021.

Air travel

The low VAT rate of 7% will also be applicable for passenger transport in the period from 1 April 2020 to 31 October 2020. The Norwegian government will furthermore purchase domestic air routes where there is no basis for commercial operations. An aviation guarantee scheme of NOK 6 billion, with a 90% state guarantee on each loan is furthermore offered by the Norwegian government. Of these NOK 3 billion is directed to Norwegian Air Shuttle, 1.5 billion to SAS and the remaining 1.5 billion to Widerøe and other airlines.

Employment-related measures

Besides for the schemes intended to cover general costs, the Norweigan government has introduced several measures to help companies with covering employment-related costs. You can read more on those schemes here.

IUNO will keep a close eye on the further development of the economic measures that continuously are being proposed by the Swedish government and, perhaps more importantly, what criteria companies must fulfil in order to be able to benefit from these aid packages.

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Krogh

Partner

Anders

Etgen Reitz

Partner

Ida-Elise

Tommerup

Associate

Sofie

Aurora Braut Bache

Associate

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