Buying out a co-owner – how do you do it properly?

It is easy to think the task is just agreeing a price. In practice you have to settle several questions at once: what the shares are worth, who is buying them, whether the whole price is paid now, whether there are shareholder loans or a declared dividend, whether the transfer needs consent – and what the tax will be. The order matters.

Start with the shareholders' agreement and the articles

Before you negotiate a price, dig out the shareholders' agreement and the articles of association. The shareholders' agreement may already contain rules on how an owner can exit, how the shares are to be valued, pre-emption rights, good leaver and bad leaver provisions, or what happens if the owners reach deadlock. In a Norwegian AS the Companies Act's starting point is that acquiring shares requires the company's consent, unless the articles say otherwise. Shareholders also have a pre-emption right when shares change hands. So do not agree a buy-out without first understanding the restrictions that apply to your company.

Then you have to agree what the shares are worth

Where the shareholders' agreement contains a binding pricing mechanism, that is the natural starting point. Otherwise the shares have to be valued: first the value of the whole business, then the value of the equity after deducting debt and adjusting for cash and other agreed items. Then the value of the particular holding being sold has to be assessed. If the departing co-owner holds 30%, that does not automatically mean the shares are worth exactly 30% of the whole company – but nor does it mean a minority discount automatically applies. Control, voting rights, share class, dividend rights, transferability and agreed rights can all affect the value. There is no general Norwegian rule that a minority holding is discounted by, say, 10% or 20%. In an internal buy-out it is therefore usually better to agree and document the valuation principle clearly than to start with an arbitrary percentage. For the methods themselves, see our guide to what a business is worth.

Use a clear valuation date

Agree which date the valuation applies to. If you agree in September but the valuation is based on accounts to 31 December of the previous year, a lot can have happened in between. Updated interim accounts may be necessary. At the same time, settle how profit, debt, cash, investments and any extraordinary events between the valuation date and completion are to be treated.

Keep the share price separate from shareholder loans

A common problem in smaller companies is that ownership and inter-party balances have become mixed up. Suppose a co-owner holds 40% of the shares and has also lent the company NOK 500,000. The shares and the loan are two different assets. If the co-owner sells the shares, the company's debt to them does not automatically disappear. The parties have to agree whether the shareholder loan is repaid at completion, transferred to the buyer, left in place or handled another way. The same applies where the shareholder owes money to the company. Such balances should be reconciled before the price is fixed. Where the general meeting has already declared a dividend before the shares are transferred, the starting point is that it belongs to those who were shareholders when the decision was made, unless the decision says otherwise. Address that expressly in the share purchase agreement.

How will the price be paid?

The simplest solution is for the buyer to pay the whole price at completion. But in a buy-out between founders in particular, the buyer does not always have several million available. Vendor credit can then be an option: the seller receives part at completion and the rest in instalments over the following years. That can make the buy-out possible, but the seller moves from being a shareholder to being a creditor. The agreement should therefore deal with interest, due dates, default and any security. An important tax point for a personal seller is that an instalment arrangement does not necessarily defer the tax until the money is actually received. A gain on a share sale is normally allocated to the period when title passes and the seller acquires an unconditional right to the consideration. A seller can therefore be taxed on the gain before the whole price has been received. Another solution is an earn-out, where part of the price depends on future results. Such agreements need clear definitions of the performance measures and of who controls the business after the sale.

A personal owner and a holding company are taxed differently

Who owns the shares before the sale matters a great deal. Where the shares are owned personally, a gain is as a general rule the consideration less the shares' tax base. Unused shielding can reduce the taxable gain. For the 2026 income year the uplift factor is 1.72, which together with 22% tax on general income gives an effective rate of 37.84%. Where the shares are instead owned by a Norwegian holding company and fall under the participation exemption, the gain will normally be tax-free in the holding company. Equally, no deduction is normally given for a loss. So calculate the tax before deciding the form of settlement – not after the agreement is signed.

A direct purchase between co-owners normally does not touch the company's accounts

This distinction matters. If co-owner A buys co-owner B's shares with their own money, the trade is between A and B. The price does not go through the operating company, the share capital does not change, and the price should not normally be recorded in the company's accounts. What the company has to handle is the change of ownership, the share register and the necessary reporting. That is something entirely different from the company itself buying the shares.

If the company itself is to buy out the co-owner

An AS can acquire its own shares on certain conditions, but that takes you into chapter 9 of the Companies Act. In an ordinary acquisition the company can only use funds within the distributable limit in section 8-1. The general meeting has to authorise the board by the majority required for amending the articles, the authority can last at most two years, and it has to be registered in the Register of Business Enterprises before it is used. So this is not simply an alternative way of paying for an ordinary purchase between two shareholders. Company law, accounting and tax all have to be assessed separately.

Be especially careful if the company is to finance the buyer

Another model is for the remaining co-owner to buy the shares while the company lends the buyer money or provides security for the financing. That is governed by section 8-10 of the Companies Act. The current rules allow financial assistance but impose extensive requirements. The assistance must as a general rule be within the distributable limit in section 8-1 and be given on normal commercial terms. The board has to carry out a credit assessment, prepare a specific statement and issue a declaration, and the general meeting has to approve the board's decision by the majority required for amending the articles. Older articles about section 8-10 may refer to an express requirement for «adequate security». That wording is not in the current provision.

How an ordinary buy-out is carried out

A practical process can be organised like this: review the shareholders' agreement and the articles and settle consent, pre-emption rights and any exit provisions. Agree the valuation date and principle, and prepare updated financial information. Reconcile shareholder loans, declared dividends and other balances. Agree the price, the method of payment and any vendor credit. Draw up and sign the share purchase agreement. Deal with company consent and pre-emption rights where they apply. Complete payment and transfer, notify the company of the acquisition and update the share register. Update the relevant registers and make sure the tax and shareholder reporting is correct. Under the Companies Act the acquirer must notify the company of the acquisition immediately. Once it has been notified and evidenced, the company must without delay enter the new owner in the share register unless the transfer is blocked by transfer restrictions.

Remember the reporting

The change of ownership has to be correctly reflected in the shareholder register statement (Aksjonærregisteroppgaven). The deadline is 31 January in the year after the income year, and from June 2026 all limited companies have to file it through an end-user system. The buy-out can also change the company's beneficial owners. Where the company has new beneficial owners, or registered information changes, the Register of Beneficial Owners has to be updated within 14 days. Where the buy-out follows the end of a relationship between the owners, see the end of a relationship with a shared company. The mechanisms that can be agreed in advance – pre-emption rights, tag-along, drag-along and leaver clauses – are covered in The shareholders' agreement

This is general guidance, not advice on your specific case. Deadlines, rates and amounts change – always check the current rules, or get in touch with us.

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