Off Balance Sheet Financing – The Norwegian KS Structure

By Nicolai Heidenreich

Many larger industrial companies who control a sizable fleet are looking to minimize the asset exposure on their balance sheet. Off-balance sheet financing has again become very popular. In a three part series Marine Money will cover three different types of off-balance sheet financing. This first article will look at the Norwegian Limited Partnership (KS) as a structure and briefly explain what benefits the shipowner can have by entering into such an agreement. In the two next articles we will look at the KG and more straightforward capital lease structure. This will include, from an owners point of view, an in-depth comparison of the many different features of the three financing options.

Brief Description
To be considered a single purpose limited partnership (kommandittselskap (KS)) under the Norwegian Companies Act (NCA), the KS must consist of one general partner and several limited partners. The general partner (komplementaren) must hold a minimum share of 10% in the KS and has unlimited liability towards the company’s creditors. The limited partners’ obligations are limited to each partner’s share of the total committed capital, (including bank guarantee) of the KS. However the limited partner’s hold a joint liability towards the KS if one the other limited partners default on their obligations.

This is only an excerpt of Off Balance Sheet Financing – The Norwegian KS Structure

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