Military Personnel Participation in Startups and Shareholdings in Norway.

As a starting point, Norwegian law does not impose a general prohibition on military or civilian defence personnel holding shares or ownership interests in private companies.

The Defence Act requires members of the Armed Forces and civilian employees of the Ministry of Defence and its subordinate agencies to disclose, on their own initiative, any paid or unpaid assignments that may conflict with the interests of their principal employer. In principle, this duty concerns active roles rather than passive investments.

Accordingly, a purely passive shareholding, where the individual does not sit on the board, provide advice or otherwise participate in the management or operations of the company, will generally fall outside the concept of an assignment.

However, the position may be different where the individual's involvement extends beyond passive ownership. For example, shareholder agreements conferring strategic influence, board observer rights, advisory arrangements or option structures may blur the distinction between passive investment and active engagement. In such circumstances, disclosure obligations and, in certain cases, consent requirements may arise.

More generally, Norwegian public-sector employees may engage in private business activities in their spare time, subject to important limitations. For example, a passive investment in a publicly listed company with no connection to the defence sector would rarely raise concerns. By contrast, a procurement official holding shares in a startup developing military sensor technology may be subject to disclosure obligations and conflict-of-interest restrictions.

The Defence Act does not establish a general requirement for prior approval before acquiring ordinary shares. Instead, the framework is based on a graduated system of disclosure, registration and, in certain cases, consent.

Under the Defence Act, the primary obligation is self-initiated disclosure. Personnel must inform their employer of paid or unpaid assignments that may conflict with the employer's interests, including the identity of the principal and the nature and scope of the assignment.

The Act also permits the Ministry to require employees in specified positions or units to obtain prior consent before undertaking external assignments. While this requirement may apply to certain categories of personnel, it does not appear to constitute a general rule for passive share ownership.

Separately, the State Employees Act provides a basis for registering directorships and financial interests. The Armed Forces or another public authority may require employees in designated positions to register such interests where this is necessary in light of the authority's responsibilities and the employee's role. Given the defence sector's particular emphasis on impartiality and integrity, such registration requirements may be applied relatively broadly.

In addition, internal regulations, codes of conduct or security-related requirements may impose stricter procedures than those set out in legislation, particularly for personnel in sensitive positions.

In practice, where a company operates in or may interact with the defence sector, whether as a supplier, technology partner or otherwise, the prudent approach is to disclose the interest and seek written clarification from the employer in advance, even where prior approval is not expressly required by law.

In addition to the disclosure and consent framework outlined above, a number of other restrictions may be relevant.

Under the Public Administration Act, personnel may be disqualified from handling matters involving a company in which they hold a financial interest, particularly where their impartiality may reasonably be questioned.

Conflict-of-interest rules are interpreted particularly strictly in the context of public procurement. Depending on the circumstances, a financial interest held by defence personnel may result not only in personal disqualification from the procurement process but, in certain cases, may also affect the company's participation in the procurement procedure.

Additional restrictions may arise under internal defence regulations, security clearance requirements or individual employment terms.

These considerations are especially relevant where the company operates in defence technology, cybersecurity, dual-use technologies or critical infrastructure sectors. In such cases, concerns may arise where the company's activities overlap with information to which the individual has access through their position, or where the investment could affect the integrity, impartiality or reputation of the defence sector.

Conclusion

Norwegian law does not impose a general prohibition on defence personnel holding passive shareholdings in private companies. However, such investments must be assessed in light of applicable disclosure obligations, conflict-of-interest rules, procurement restrictions and any internal defence-sector requirements.

The key consideration is whether the investment remains genuinely passive or whether the individual's involvement or the nature of the company's activities creates a conflict with their official duties or the interests of the defence sector.