Fulfilment of obligation to subscribe for shares in a capital increase

Supreme Court judgment of 18 January 2018, HR-2018-111-A (case no. 2017-1573), civil case, appeal against judgment 

Ree Minerals Holding AS (Counsel Knud Jacob Knudsen) v. Norman Finans AS (Counsel Stein Owe)

Justices: Normann, Noer, Høgetveit Berg, Falch, Matningsdal

In a capital increase in a limited liability company, a shareholder had given the chair of the board an irrevocable power of attorney to subscribe for a specific number of shares and undertaken to pay the subscription price within a certain date. Because the subscription price was not paid, no notification of the capital increase was sent to the Register of Business Enterprises within the time limit in the Companies Act section 10-9 subsection 1, with the result that the capital increase could not be registered, see section 10-9 subsection 3.

The Supreme Court concluded unlike the lower instances that the subscriber's payment obligation had not lapsed, since the time limit in section 10-9 subsection 1 had been exceeded due to the subscriber's own default. A mutually binding agreement had been entered into between the company and the subscriber under which the company was to issue 75,000 shares in return for the subscription price. Although it follows from the wording in section 10-9 subsection 3 that the subscription was no longer binding since the subscription price had not been paid within the time limit in section 10-9 subsection 1, this was not decisive as the time limit had been exceeded due to the subscriber's default. If the lawmaker had meant to deviate from such a basic contract law principle and implement a rule allowing the party to evade an obligation by breaching it, this should have been clearly stated. The court of appeal's judgment was set aside.

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