China Desk Newsletter - Norwegian Fisheries Industry
The fishery industry is one of the largest industries in Norway, making up a significant part of the total national export. It is also one of the most profitable industries in Norway. Fish farming has from 2013 to 2016 had an operating margin around 20 to 36 %. China has always been an important market for the Norwegian fishery industry.
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The Norwegian fishery industry consists of two main branches; deep sea fishing and fish farming. Traditionally there have been regulations and limitations to both national and foreign ownership in companies operating in the fishing industry. However, in 2015 such regulations were lifted for the fish farming industry. There also seems to be some will within the current government to reduce the regulations for the deep sea fishing industry.
Given the more lenient regulations, and the possibility for profit, the Norwegian fishery industry is an interesting sector for overseas investments – both from financial and industrial sponsors.
Fish farming in Norway is a license based industry. The licenses are issued by different authorities. For commercial fish farming there are a limited number of licenses. The reason for this is that such licenses are in great demand, and there is therefore a corresponding need to control the growth of the industry – i.a. due to environmental considerations and with regard to a healthy market.
The process for being granted a commercial fish farming licence is two-levelled. Firstly, the operator must be approved by the Norwegian Fisheries Directorate. Secondly, the operator must be awarded a locality for its operation. The latter is the most comprehensive part of the process and involves both local and centralised authorities and institutions.
Since the number of available commercial licenses is limited, awarding of a locality is subject to competition between different operators.
According to Section 19 of the Norwegian Act on Aquaculture, there are no restrictions on transfer or sale of commercial fish farming licenses. The same applies for a transfer of shares in a company holding a commercial fish farming license. A purchaser of a commercial fish farming license is free to start its operations forthwith, without any additional applications to the government. However the purchaser will be bound by the prerequisites and conditions of the license, e.g. limits on production, area etc. The purchaser will also be bound by any breaches to the license by the seller. As such, upon investing in a fish farming company the purchaser should investigate whether the seller is in compliance with the license.
Deep sea fishing
In Norway commercial deep sea fishing is subject to rather strict restrictions both with regard to fishing quotas and ownership of the ships (and ship owning companies).
Commercial deep sea fishing is subject to a license issued by the Norwegian government. The license is personal and thus cannot be sold or transferred to another entity than the holder.
According to the Norwegian Act on participation on commercial deep sea fishing (Norwegian: deltakerloven) licenses are only issued to Norwegian citizens and companies. Companies are considered Norwegian when Norwegian citizens own 60 per cent of the shares or more, and hold 60 % of the votes in the general assembly.
Upon a transfer or sale of shares in a company that holds a commercial deep sea fishing license, the parties must apply the Norwegian Directorate of Fisheries for approval of the transaction.
As is apparent from the above, the deep sea fishing industry is significantly more restricted for foreign investments than the fish farming industry. However, there currently seems to be some will within the sitting government to review the restrictions in order to make the fishery industry more competitive. Thus far, such indications have only met the political level. However, it is an interesting development.
Schjødt law firm has broad experience from assisting clients with application for and transfer of commercial fish farming licenses and shares in such companies. We also regularly assist clients in negotiating contracts for purchase of production equipment, construction of buildings etc. Schjødt also holds expertise in contracts relating to construction and purchase of fishing vessels. Schjødt's expertise covers all regulatory issues related to the fishing industry and fish farming industry in Norway. Our experts are frequently in contact with the Norwegian Directorate of Fisheries. Schjødt is also co-organiser of NASF Aquaculture Risk, Insurance & Legal workshop under the North Atlantic Seafood Forum – the world's largest seafood business conference to be held in March 2018 (http://www.nor-seafood.com).
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Erlend W. Holstrøm
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Andreas A. Johansen
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