This article explains the legal personality of companies in Norwegian law, with particular focus on limited liability companies, public limited companies and general partnerships. It covers the legal basis for their status as legal persons, piercing the corporate veil and the practical significance of legal personality. It is written for business owners, shareholders, creditors and their advisers.
Why legal personality matters
A fundamental question in company law is whether the company itself or its participants should be considered the subject of rights, obligations, and competences. This concerns the company’s status as an independent legal person or legal entity. The question has practical significance for a number of matters, such as who can enter into agreements, act as a party in legal proceedings, relate to public authorities, and be subject to taxation.
The Legal Basis for Companies’ Legal Personality
Status Rule on Legal Personality
In Norwegian company law, a clear status rule is established that both limited liability companies, public limited companies, and general partnerships are separate legal entities – independent legal persons. This status rule functions as a starting point when the interpretation of specific legal rules does not provide clear answers.
Legal Foundation for Limited Liability Companies and Public Limited Companies
For limited liability companies and public limited companies, the status rule follows from established unwritten law, confirmed and presumed in a number of Supreme Court judgments. This is also reflected in Section 2-20 of the Private Limited Liability Companies Act and Section 2-20 of the Public Limited Liability Companies Act, which provides that a company cannot “as such” acquire rights or incur obligations before it is registered in the Register of Business Enterprises. After registration, the company has full legal capacity under private law.
This means that a registered limited liability company or public limited company can:
enter into agreements in its own name;
sue and be sued;
act as a party before administrative bodies; and
own assets and be responsible for liabilities.
Legal Foundation for General Partnerships
For general partnerships, the status rule follows from Section 2-1 of the Partnerships Act (selskapsloven), under which such partnerships are, as a general rule, independent legal entities. This means that general partnerships can also take property law and procedural law positions in their own name.
The legal personality of general partnerships is not in conflict with the fact that participants have unlimited personal liability for the company’s obligations. The two aspects – the company’s status as a legal entity and the participants’ liability for the company’s obligations – are separate issues.
The Relativity of Legal Personality
Specific Interpretation Before Application of the Status Rule
Although the main rule is that companies are independent legal entities, it is important to note that this status rule is not absolute. A specific interpretation of the legal rules must be made before relying on the main rule.
This means that companies’ legal personality can be relative – a company can be an independent legal entity in some contexts, but not in others. This is also called the doctrine of relative legal personality.
Examples of Exceptions to the Main Rule
A classic example of the relativity of legal personality is the tax treatment of general partnerships. Although they are independent legal entities in private law, they are not separate taxpayers for income tax purposes. The partnership’s income is taxed in the hands of the partners.
This illustrates that a company’s status as a legal entity can vary depending on the legal context.
Identification and Piercing the Corporate Veil
When Company and Shareholder Can Be Identified
In company law, questions sometimes arise as to whether company and shareholder can be identified, and about piercing the corporate veil. This is particularly relevant when the company form is used in a way that appears to be a misuse or a circumvention of rules.
In such situations, the courts can exceptionally disregard the company as an independent legal entity and instead identify the company with its owners. This is often referred to as “piercing the corporate veil” (ansvarsgjennombrudd).
High Threshold for Piercing the Corporate Veil
Norwegian courts have generally shown restraint in accepting piercing the corporate veil. Case law indicates that the threshold is high, since identification would depart from a fundamental principle of company law: the principle of limited liability.
Factors that have been discussed as relevant include:
improper use of the company form;
significant undercapitalisation of the company;
mixing of the company’s and the owners’ finances; and
other special circumstances suggesting that the company and its owners should be identified.
Practical Significance of Legal Personality
The Company’s Legal Capacity
An immediate consequence of companies being considered independent legal entities is that they have legal capacity in a procedural sense. This means that the company itself, and not its participants, can act as a party in legal proceedings.
For companies with many participants, it would be impractical if all participants had to act as parties in legal proceedings concerning the company. The company form makes it possible for the company to act as a unit externally.
Consequences for the Company’s Property Relations
The status rule that companies are independent legal entities also means that the company has its own assets, separate from the participants’ assets. This has significance for:
the company’s creditors, who can seek recovery from the company’s assets;
the participants’ creditors, who in principle cannot seek recovery from the company’s assets; and
sales and other dispositions of the company’s assets, which must be made by the company (through its bodies) and not by the individual participant.
Company Law Capacity to Act
As an independent legal entity, the company has the capacity to act, but must necessarily act through physical persons. The company’s capacity to act is exercised through its bodies (general meeting, board and general manager) and representatives who act on behalf of the company.
This system of bodies and representation ensures that the company can function in a legal context, even though it is not a physical person.
How we can help
We assist companies, shareholders and creditors with questions of company law, including liability, disputes between owners and the relationship between companies in a group. You can read more about the firm at advokats.no or get in touch through our contact page.
This article provides general information as of 29 October 2026 and is not legal advice for your specific situation.
