The EFTA Court declares Norwegian ownership restrictions incompatible with EEA law

On 30 September 2025, the EFTA Court declared that Norway is breaching the EEA Agreement by maintaining in force an administrative practice requiring approval of acquisitions of 25% or more of voting rights or capital in credit institutions and insurance undertakings, and assessing such applications  on the basis of a presumption against granting approval rather than on the basis of the criteria set out in EU/EEA law.

This judgement will have significant impact on the Norwegian financial sector, including by paving the way for increased ownership in Norwegian insurance companies and credit institutions. We expect the development to be of interest to the regulated entities themselves, as well as various private capital players.

This judgement should immediately be reflected in administrative practice. No amendments to national legislation will be necessary to alter the practice. We expect the NFSA to take into account this decision when processing all upcoming applications for approval of acquisitions.

The EFTA Court's judgement

The EFTA Court ruled that Norway has breached EEA law in two key respects. First, by maintaining Section 6-3(2) of the Financial Institutions Act, which permits additional assessment criteria beyond those exhaustively set out in the CRD IV and Solvency II directives. The Court found that the phrase "in particular" in the Norwegian legislation suggests non-exhaustive criteria, undermining the legal certainty these directives aim to provide. Norway has already amended the relevant provision, with effect from 1 July 2024. 

Second, as regards the administrative practice, the Court found that the Norwegian authorities’ requirement of prior approval for acquisitions exceeding 25% and assessing them on the basis of a presumption against granting approval was incompatible with EEA law. 

The conclusion is twofold: 

• An administrative practice of imposing additional notification and approval thresholds other than those set out in the CRD IV and Solvency II (10%, 20%, 30% and 50%) is in breach of CRD IV and Solvency II. An administrative practice requiring prior approval for acquisitions exceeding 25% can therefore not be upheld.
• The Court observes that the competent authority usually rejects acquisitions exceeding 25 per cent, despite the absence of any such presumption in the directives. Further the EFTA Courts states that Norway has not provided any evidence that case-by-case assessments are carried out based on the required criteria. Assessing applications on the basis of a presumption against granting approval is incompatible with EEA law

Background: Supervisor-mandated dispersed ownership in banks

In Norway, established administrative practice under the Financial Institutions Act (the FIA) generally restricts a single shareholder from owning more than 20-25 % of the shares in any Norwegian bank or life insurance company. This administrative practice has restricted potential consolidation efforts in Norwegian banks and insurance companies. 

The administrative practice is based on Section 3-3, first paragraph, of the FIA, which states that "The Ministry shall know the identity of the owners of the institution and be satisfied that owners of qualifying holdings are capable of holding such holdings and exercising such influence in the institution as the holdings provide a basis for." 

This requirement applies directly to the establishment of new financial institutions, but it is also understood as a condition that must be met throughout the life of the institution. At the time of establishment, Section 3-3 (2) also provides that a broad-based offering shall be carried out. This shall lead to three quarters of the share capital having been raised through an offering without preferential rights for shareholders or others. 

The acquisition of shareholdings of 10% or more in financial institutions requires prior authorisation from the Norwegian Financial Supervisory Authority (NFSA). In administrative practice, the NFSA and the Ministry of Finance (with certain limited exceptions, including for instance for cooperative entities and for banks engaged in niche financial activities) have refused to authorise any acquisition that could result in an ownership interest in a financial institution of more than 25%. The reasoning from the Ministry and the NFSA have varied somewhat over time, but the Ministry's current position is that such acquisitions are not in line with the requirement for a prudent ownership structure in the financial undertaking, as expressed in Section 3-3.

EEA conflict: The dispersed ownership practice violates the EEA Agreement

The Norwegian government's administrative practice, which prevents individual owners from owning more than 25% of a bank or insurance company, has been criticised and held to be in conflict with the EEA Agreement's fundamental principles of freedom of establishment, free movement of capital and freedom to provide services. 

The practice has held to be in conflict with key EEA directives such as CRD in the banking area and Solvency II in the insurance area. EEA law stipulates that a suitability assessment must be carried out of qualified owners, and that the acquisition of ownership interests that result in crossing the 10, 20, 30 and 50 per cent thresholds triggers such a suitability assessment. The criteria for such suitability assessments are fully harmonised by CRD and Solvency II. These directives do not include any criteria enabling the authority to decline an application based on the size of the holding, provided the acquirer is considered suitable.

Two cases before the EFTA Court

The EFTA Surveillance Authority (ESA) has initiated several infringement proceedings against Norway and on 11 July 2024 announced that it had decided to bring three of its cases against Norway to the EFTA Court in two separate lawsuits.

a) The first lawsuit 

(1) The first lawsuit is the one covered by the EFTA Court's judgement in case E-24/24. ESA sought a declaration that Norway had failed to fulfil its obligations under the EEA Agreement by maintaining in force an administrative practice that requires approval for acquiring 25% or more of voting rights or capital, which generally results in acquisitions exceeding 25% being rejected without any individual suitability assessments.

In addition, ESA sought a declaration that the wording of section 6-3 was not in compliance with CRD. This provision has, however, already been amended by the Parliament with effect from 1 July 2024.

ESA emphasised for the court that the relevant EEA legislation establishes maximum harmonisation of the assessment criteria and procedural rules for acquisitions and increases of qualifying holdings in the financial sector. The assessment criteria in the directives are exhaustive, meaning Norway cannot impose additional criteria or more stringent notification and approval requirements than those stipulated by EEA law. The Commission supports ESA's positions.

The Norwegian government argued that the dispersed ownership policy is justified, relying on two main lines of defence: First, that the administrative practice is based on the assessment criteria in the directives, particularly regarding the ability of financial institutions to comply with prudential requirements and ensure effective supervision. Second, that the notifications and approvals are based on conditions imposed during the institution's initial authorisation or prior approvals, and that the directives do not harmonise the initial authorisation process, allowing national authorities to impose additional conditions. Norway contends that concentrated ownership in financial institutions is linked to excessive risk-taking and that its policy helps ensure sound and prudent management.

As set out above, the court ruled in favour of ESA in both cases. 

b) The second lawsuit

The second lawsuit, which concerns ownership requirements as a condition for obtaining a licence as a financial institution, has not yet been referred to the EFTA Court (despite ESA's decision to do so). 

In this case, ESA argues that Norwegian law and administrative practice preventing shareholders from owning more than 20 to 25 per cent of the shares in a financial institutions, constitute an illegal restriction under Article 31 of the EEA Agreement. ESA argues that the Norwegian rules and administrative practice constitute restrictions on the freedom of establishment and free movement of capital that either do not seem suitable to achieve the identified legitimate objectives or, if suitable, go beyond what is necessary to attain those objectives.

This case comes on the back of the advisory opinion by the EFTA Court in the so-called "Netfonds case"(E-08/16), given as part of a national case between the Norwegian financial group Netfonds and the Government. In that particular case, the EFTA Court advised Oslo District Court on the compatibility of dispersed ownership with the fundamental freedoms guaranteed by the EEA Agreement, particularly in the context of banking and insurance authorisations. The EFTA Court stated that Norway could implement less restrictive measures and still achieve Norway's legitimate objectives just as effectively. While the Borgarting Court of Appeal concluded in March 2021 that the Norwegian rules and practice were proportionate and compatible with EEA law, ESA's decision to proceed with the case is based on its disagreement with the Court of Appeal's assessment of whether there is a breach of Article 31 of the EEA Agreement.

ESA has not published any information as to why the case has not yet been referred to the EFTA Court. We anticipate that ESA is awaiting Norway's response to the EFTA Court's judgement before proceeding with this case. 

Expected impact

Key implications of the judgement include, as well as relevant parallel developments include:

• As ESA has challenged an administrative practice, no legislative change is needed to adapt the application of Norwegian law to the decision of the EFTA Court. A judgement from the EFTA Court can immediately be reflected in practice.
• Existing conditions imposing additional notification and approval thresholds other than those set out in the CRD IV and Solvency II, should be reassessed in light of the judgement.
• A new independent appeals board was established from 1 April 2025. This represents a shift from the Ministry of Finance's policy-driven approach to a more legally focused review process. While the Ministry has historically been a strong advocate for the dispersed ownership practice, the appeals board is expected to apply a strictly legal analysis, increasing the likelihood of successful challenges to NFSA decisions on ownership restrictions.
• The Ministry of Finance has instructed the NFSA to review the current ownership control framework and prepare a consultation paper. The assignment has been put on hold until the EFTA Court delivers its decision. The NFSA must take the judgement into account in the consultation paper. We expect that the NFSA will seek to maintain the considerations underpinning the ownership regime, while also adhering to the ruling from the EFTA Court.
• A committee appointed by the Ministry of Finance (the "Savings Bank Committee") has recently reviewed the regulatory regime for savings banks. The committee delivered its report in November 2024 and proposed among other things to make it easier for savings banks to convert to commercial banks. The committee also proposed changes to the equity certificates that could trigger conversions of savings banks to commercial banks. The report has been subject to public consultation and a government proposition to parliament is now awaited.