Bankruptcy disqualification and disqualification from holding positions of trust in a private limited company
Disqualification
Disqualification means that, for a period of two years, one cannot establish a private limited company or take on or effectively perform new roles as a member or alternate member of the board or as a General manager (chief executive officer) in such a company.
In the event of bankruptcy in a private limited company, board members, alternate members, or the general manager may be subjected to disqualification. The same applies to individuals who have effectively exercised such roles in practice.
Disqualification can be imposed if there is reason to suspect the individual of a criminal act in connection with the bankruptcy or the business activities that led to the bankruptcy. Also, disqualification may be imposed if the individual is considered unfit to establish a new company or to be a board member or managing director in such a company, due to reckless business conduct.
The district court has the authority to determine whether an individual should be subject to disqualification. The individual is given the opportunity to present their statement prior to the imposition of disqualification.
Disqualification entails, among other things, the inability to establish a private limited company (AS), a Norwegian branch of a foreign company (NUF), or take on or effectively perform new roles as a member or alternate member of the board or managing director in such companies. One can also be removed from such positions already held. Bankruptcy disqualification typically lasts for two years from the opening of bankruptcy or from the imposition and is recorded in the Bankruptcy Register. Breaking the rules of bankruptcy disqualification is a punishable offense.
The court may decide to extend the disqualification until a legally binding judgment is reached in a criminal case where the prosecution has submitted or is considering submitting a claim for the loss of rights under § 56 of the Penal Code.
Disqualification does not prohibit engaging in new business activities in the form of a sole proprietorship or a partnership.
Bankruptcy Act on conditions for bankruptcy quarantine (in Norwegian only)
The Brønnøysund Register Centre on Disqualification
Loss of the right to hold positions of trust in a private limited company
Any person who has committed a criminal act that shows that the said person is unfit for or may misuse a position, enterprise or activity, may, when in the public interest,
a. be removed from the position, or
b. be deprived of the right in the future to hold a position or engage in an enterprise or activity.
Such loss of rights may involve restrictions on exercising specific functions related to the position or enterprise, or may require engagement in the enterprise or activity under specific conditions.
An individual deprived of the right to engage in an enterprise is also prohibited from conducting such enterprise on behalf of others or allowing others to conduct it on their behalf.
Loss of rights under this provision may be imposed as the sole penalty if the criminal act does not carry a minimum prison sentence of 1 year or more. Loss of rights is imposed for a specific period, up to 5 years, or indefinitely when special reasons dictate.
The prosecuting authority retains information about individuals who have been deprived of the right to hold a position or engage in an enterprise or activity due to a criminal act. Information about the loss of rights is sent to the Central Coordinating Register for Legal Entities (Enhetsregisteret) and the Register of Business Enterprises (Foretaksregisteret).
