Norwegian financial markets, like markets in Europe and the US, have in the past few years recovered from a post-millennium slump. The Oslo Børs Benchmark Index has since 2003 had a continuous upward trend. The index rose 38.4 per cent in 2004, 40.5 per cent in 2005 and further 32.4 per cent in 2006 to close the year at 440.4. The year 2006 saw 32 new companies admitted to listing. Investment activity has increased in equity and debt offerings, M&As and private equity over the past three years.
This chapter generally deals with the offering and trading of shares and does not concern other transferable securities, unless otherwise stated.
An undertaking seeking to establish a marketplace for regular trading in financial instruments in Norway must apply for permission from the Norwegian Ministry of Finance. Authorisations may, according to the Stock Exchange Act of 17 November 2000 No 80 (the Stock Exchange Act), may be given to operate either a stock exchange or an authorised marketplace. Stock exchanges must comply with the requirements set out in EC directive 2001/34/EC, while the requirements governing authorised marketplaces are slightly less burdensome. Both stock exchanges and authorised marketplaces are supervised by the Norwegian Financial Supervisory Authority (FSA).
Norway currently has one stock exchange and one electricity derivative exchange; Oslo Børs ASA (Oslo Børs) and Nord Pool ASA (Nord Pool). Oslo Børs operates trading in shares, primary capital certificates, warrants, fixed-income securities and derivatives. There is one authorised marketplace for trading of financial freight derivatives, the International Maritime Exchange (IMAREX), and Oslo Børs has also been granted a licence to establish an authorised marketplace for trading shares and primary capital certificates called Oslo Axess. In addition, the Norwegian Ministry of Finance has granted permission to FishEx ASA to operate an authorised market place, however this market place has not opened yet.
Oslo Børs dates back to the opening of the first exchange in Norway in 1819. Oslo Børs Holding ASA is a public limited company owning 100 per cent of the operating public limited company, Oslo Børs ASA. The shares of Oslo Børs holding ASA are currently quoted on the Norwegian Over-The-Counter market. Together with the Nordic and Baltic exchanges, Oslo Børs has created a Nordic integrated infrastructure for trading on the exchanges, the NOREX system.
On 20 December 2006 Oslo Børs received permission from the Norwegian Ministry of Finance to establish an additional authorised marketplace, Oslo Axess, for shares and primary capital certificates. It is contemplated that Oslo Axess will be established in May 2007. The principal intention is to offer a regulated marketplace for companies that do not meet the requirements for a normal stock exchange listing. It is anticipated that the rules applying for shares listed on the Oslo Stock Exchange will apply equally to shares listed on Oslo Axess (with certain minor exceptions).
Nord Pool is a public limited company authorised by the Norwegian Ministry of Finance as an exchange under the Stock Exchange Act and supervised by the FSA. During the 1990s, the Nordic countries created a framework for a common electric power market based on open competition. The Nordic countries are the leaders in deregulating the electric power sector and, in particular, in organising international trade in electricity. In 1996, Nord Pool became the first international commodity exchange for trading electric power derivatives.
IMAREX is the world’s only authorised marketplace for trading and clearing freight derivatives. Volatility in freight rates for both tankers and dry bulk vessels is driving a growing demand for financial tools to manage risks, and attracts speculation on future price movements of freight. IMAREX offers electronic and voice assisted trading of standardised freight futures contracts.
The Norwegian Securities Dealers Association and its subsidiary, the Fondsmeglernes Informasjonstjeneste AS, have established a trading support system for unlisted shares called the Norwegian over-the-counter market (NOTC) for its members. The NOTC is not a stock exchange or an authorised marketplace. The information system works as an electronic bulletin board where the users register their buying and selling interests and completed transactions.
Most financial instruments are settled via the Norwegian Central Securities Depository (VPS). There exists no central counterparty for trading of shares, debentures and other similar transferable financial instruments.
Clearing of the standardised derivative products takes place through NOS Clearing ASA. Clearing on electricity derivatives takes place through Nord Pool Clearing ASA.
2. MAIN REGULATORY STRUCTURE
The Norwegian Securities Trading Act of 19 June 1997 No 79 (the Securities Trading Act) contains rules regarding the licensing of investment firms and clearing houses and their activities. The Securities Trading Act also contains general trading rules such as prohibition of insider dealing and disclosure requirements by primary insiders and rules on mandatory and voluntary bids for shares of Norwegian companies listed on Oslo Børs, in addition to prospectus requirements in connection with public offerings for securities and listing on regulated marketplaces.
The Securities Trading Act implements the EC Investment Services Directive (1993/22/EEC), the EC Insider Dealing Directive (89/592/EEC), the EC Disclosure Directive (88/627/EEC), the Market Abuse Directive (2003/6/EC) and the EC Prospectus Directive (2003/71/EC).
The Stock Exchange Act and the Norwegian Stock Exchange Regulation of 17 January 1994 No 30 (the Stock Exchange Regulation) implement rules that have been consolidated in the EC Codified Securities Exchange Directive (2001/34/EC).
The Norwegian Securities Register Act of 5 July 2002 No 64 (the Securities Register Act) provides rules regarding the authorisation requirements for central securities depositories. VPS is the only central securities depository in Norway.
The Norwegian Public Limited Companies Act of 13 June 1997 No 45 (the Public Companies Act) regulates the formation and organisation of Norwegian public limited companies, which are titled ‘ASA’, as opposed to Norwegian private limited companies regulated by the Norwegian Private Limited Companies Act of 13 June 1997 No 44 and entitled ‘AS’. The most significant distinction between ASAs and ASs is that ASAs may offer shares to the general public, while ASs may only offer shares to a limited number of named investors. An AS is required to have a fully paid share capital of at least NOK 100,000, whereas an ASA may not have a share capital of less than NOK1 million. The share capital may be paid by cash or contribution in kind.
Pursuant to the Stock Exchange Act, Oslo Børs has adopted rules for admission of shares and primary capital certificates etc to listing on Oslo Børs (the Listing Rules), rules for companies with stock exchange listed shares and primary capital certificates (the Continuing Obligations), and rules for admission of fixed-income financial instruments to listing on Oslo Børs, including the continuing obligations of issuers (the Bond Rules).
There are several ongoing proposed amendments to the legislation and regulations regarding securities trading in Norway. Some of the significant proposed amendments in relation to listing and trading of shares are inter alia the proposed amendments to the Securities Trading Act and a proposed new Act on Regulated Markets. These two acts will replace the present Securities Trading Act and the Stock Exchange Act, and will most likely be adopted by the Parliament within the summer of 2007 and enter into force during the second half of 2007. The proposed new acts transpose the Markets in Financial Instruments Directive (MiFID) and the Transparency Directive into Norwegian law. MiFID will entail significant changes to the regulation of the financial markets in Norway.
The rules on mandatory and voluntary bids in the Securities Trading Act will be amended pursuant to the implementation of the EC Directive (2004/25/EC) on takeover bids.
Oslo Børs has proposed to merge the Main List and the SMB List, in addition to establish a new authorised marketplace for shares and primary capital certificates to be named Oslo Axess. Oslo Børs has also proposed to make certain amendments to the Listing Rules and Continuing Obligations.
As the legislation and regulations are not yet approved or adopted, they are not described in further detail herein unless otherwise stated.
The FSA’s activities are based on legislation and decisions deriving from the Norwegian Parliament, the Norwegian Government and the Norwegian Ministry of Finance. Its main functions are set out in the Norwegian Financial Supervision Act of 7 December 1956 No 1 which reads:
‘FSA shall ensure that the institutions it supervises operate in an appropriate manner in accordance with law and provisions issued pursuant to law and with the intention underlying the establishment of the institution, its purpose and articles of association.’
FSA’s tasks embrace the financial sector – including banking, insurance, pensions and securities activities – along with real estate agency, debt collection, auditing and external accounting.
Self-regulatory organisations in the Norwegian securities market include the Norwegian Securities Dealers Association, the Norwegian Mutual Fund Association and Norwegian Society of Financial Analysts, which influence the securities market by issuing rules and recommendations and handle ethical questions relating to their members.
3. REGISTRATION OF THE ISSUER AND SECURITIES
The Securities Register Act facilitates safe, orderly and efficient registration of financial instruments and rights to such instruments. The VPS is the only securities register established in Norway in accordance with the provisions of this Act. The shares recorded in the VPS are recorded electronically, which facilitates the transfer of shares through book entry.
Norwegian public limited companies are obliged to have their shares recorded in the VPS. Norwegian private limited companies may voluntarily register their shares in the VPS, if stipulated in the articles of association. Private limited companies not having their shares recorded in the VPS shall keep the share registry. All companies primary listed on Oslo Børs, whether Norwegian or foreign, shall have their shares recorded in the VPS. All Norwegian bearer bonds shall also be registered in the VPS. Other financial instruments may also be registered with a securities register, according to the Securities Register Act.
A company having its shares registered with the VPS must have an account manager in order to make the registration in its share register. The account manager is usually one of the major Norwegian banks. In addition to maintaining the share register, the account manager normally also assists the companies with distributing dividends, submitting notification to general meetings, distributing annual accounts, prospectus and other shareholder information.
As noted, all companies primarily listed on Oslo Børs shall have their shares registered in the VPS. Foreign companies that apply for secondary listing on Oslo Børs must have a part of its shareholding recorded in the VPS in order to comply with the Listing Rules.
The account manager of the VPS register will consider whether the foreign company’s shares are suitable for registration, and may request the company to deliver a legal opinion on relevant registration issues pursuant to a registrars agreement.
4. OFFERING DOCUMENTATION
A prospectus is required if certain criteria are met when offering financial instruments in the Norwegian financial market. Companies may also be required to prepare and issue offer documents in terms of mandatory and voluntary offers for shares when making offers to acquire shares of Norwegian companies listed on Oslo Børs. Offer documents for such mandatory and tender offers are described in section 11.
The prospectus requirements are governed by the Securities Trading Act, and statutory regulations based on this Act. Such legislation governs when a prospectus must be issued, the approval authority, the disclosure/announcement requirements and registration procedures for such prospectuses and their contents.
The Norwegian legislation regarding prospectuses incorporates Norway’s obligations under the EEA Agreement under the Prospectus Directive 2003 /71/EC (the ‘Directive’) along with the supplementing Commission Regulation (EC) 809/2004.
The Directive was implemented in Norway as of 1 January 2006, and required considerable changes to the prospectus requirements for transferable securities under Norwegian law.
The Securities Trading Act section 5-2 states that where an offer to subscribe for or purchase transferable securities is directed at 100 or more persons in the Norwegian securities market, and involves an amount of at least €100,000 calculated over a 12 month period, a prospectus shall be prepared in accordance with the rules in the Act. The same applies where an offeror residing in Norway makes an offer in another EEA state and the prospectus must be approved pursuant to the provisions of the Act.
There are certain exemptions from this rule. The exemption mostly used is when the offer refers to securities issued in minimum lots of €50,000 per investor, in terms of nominal value or subscription price.
The Securities Trading Act section 5-3 states that upon admission to trading of transferable securities on a Norwegian stock exchange or authorised market place, including increases of share capital in companies with listed shares, a prospectus shall be prepared pursuant to the rules of the Act. The same applies where an issuer belonging in Norway seeks admission to trading on a regulated market in another EEA state and the prospectus must be approved pursuant to the provisions of the Act.
There are certain exemptions from this rule. For companies listed on Oslo Børs which carry out share capital increase, the exemption mostly used in practice is increases in capital where the number of shares issued in connection with the capital increase amount to less than ten per cent of the number of shares already listed in the same class, calculated over a 12 month period.
Transferable securities are defined in the Securities Trading Act as (i) shares and other securities equivalent to shares; (ii) bonds and other debt instruments that are negotiable on the capital market; and (iii) any other securities normally dealt in and conferring the right to acquire any such transferable security by subscription or exchange, or giving rise to a cash settlement.
According to the Act, EEA prospectuses means prospectuses referring to inter alia admissions to trading on a stock exchange or regulated market, and offers referring to amounts of at least €2,500,000 calculated over a 12 month period. EEA prospectuses shall be approved by Oslo Børs, pursuant to authorisation from the Norwegian Ministry of Finance.
Prospectuses relating to offers of an amount of at least €100,000 and up to €2,500,000 is called registration prospectuses, which shall not be approved by any Norwegian authority, but only registered with the Norwegian Register of Business Enterprises.
According to the Securities Trading Act, a prospectus shall contain such information as, depending on special circumstances of the offeror and the nature of the securities offered, is necessary to enable the investors to make a well-informed assessment of the issuer’s and any guarantor’s financial position and prospects and of rights attached to the securities mentioned. The information in the prospectus shall be described in an easily understandable and analysable form. In addition, there are specific content requirements for registration prospectuses and EEA prospectuses as required by statutory regulations pursuant to the Act.
It is further required that the prospectuses shall be prepared in Norwegian, English, Swedish or Danish. The prospectus authority may also require that the prospectus summary is translated into Norwegian.
In significant offerings, it is common practice that the issuer engages an investment firm as financial adviser to assist in drafting the prospectus and market the offering. There is no formal statutory requirement to conduct a due diligence review when drafting a prospectus, but the Securities Trading Act requires the investment firm to act according to the standard of good business conduct, which may imply a requirement of due diligence. The scope of due diligence may vary, and the review may consist of legal, financial and technical due diligence. Where an investment firm has assisted in preparing the prospectus, a statement from the investment firm is commonly included in the prospectus, stating the relationship with the issuer, the nature of services performed and the limitations of such services and liability. The same applies for legal advisers.
According to the Listing Rules, Oslo Børs assumes that a due diligence review is carried out in relation to applications for listing shares on Oslo Børs, and may also require that such investigations are performed.
According to the Securities Trading Act, EEA prospectuses which are approved by the competent authority in another EEA state, shall be deemed to be approved from the time a message stating that the prospectus has been prepared in accordance with the Directive and approved by the home competent authority is available from the EEA state.
Offerors with EEA prospectuses approved by the prospectus authority who are going to direct an offer at markets in another EEA state, may ask the prospectus authority to notify the state in question as mentioned in the first paragraph. The same applies to admissions to trading in another EEA state. Such notification shall be given within three days after the request is received.
This mutual recognition of EEA prospectuses does not apply for bonds and money market instruments with a maturity of less than 12 months.
7. LISTING ON OSLO BØRS
The Stock Exchange Act, the Norwegian Stock Exchange Regulation, the Listing Rules and the Bond Rules set out the requirements and procedure for the listing of shares, primary capital certificates and bonds on Oslo Børs.
Oslo Børs currently operates two lists, the SMB List and the Main List. The SMB List quotes small and medium-sized companies with a market value exceeding NOK 8 million, while the Main List quotes larger corporations with market value exceeding NOK 300 million. The significance of whether a security is on the Main List or the SMB List has diminished since Oslo Børs altered its listing structure to use trading volume/liquidity in the share as the main criteria. Oslo Børs has proposed to merge the SMB List and the Main List in relation to its contemplated establishment of the authorised market place Oslo Axess.
According to the applicable regulations, admission for listing at Oslo Børs requires a listing application from the issuer in question. The main listing requirements are inter alia:
Special requirements may apply to foreign issuers, which must also enter into a standard listing agreement with Oslo Børs. Foreign companies must also present a legal opinion from an independent legal adviser stating that the shares have been validly issued, fully paid, nonassessable, duly recorded in the company’s shareholder register, and that the listing agreement is binding upon the issuer.
The listing requirements apply in principle equally for applications for secondary listing on Oslo Børs.
It is proposed that the listing requirements for admission on Oslo Axess in principle shall be identical as for admission to Oslo Børs, but that certain of the listing requirements shall be less restrictive. For instance Oslo Børs has proposed that admission to Oslo Axess assumes no operating history of the issuer, except for the requirement that at least one annual or interim account is published by the issuer. It is also proposed that listing on Oslo Axess assumes less round lot owners than on Oslo Børs.
The listing procedure is set out in the Listing Rules, which provides for a formal process with Oslo Børs. Applications for listing are submitted to the administration of Oslo Børs, which considers the application and makes recommendations for the approval of the board of directors of Oslo Børs. The board of directors of Oslo Børs normally meets once a month.
The Listing Rules assume the following timetable:
This required procedure assumes a listing process with Oslo Børs of approximately three months. In practice, the listing process normally takes three to five months to complete.
The Norwegian Securities Dealers Association has established and operates an over-thecounter market in Norway (the OTC).
A quotation on the OTC assumes the recommendation by one of its members, in addition to inter alia the issuer having had an operating history of at least one year, minimum market capitalisation of NOK 20 million and at least 50 shareholders not related to the issuer. The shares must also be recorded in the VPS.
Issuers seeking quotation on the OTC is also required to enter into an agreement with the Norwegian Securities Dealers Association, in which it assumes certain disclosure obligations towards the OTC market.
8. CORPORATE GOVERNANCE
The Code sets out 15 recommendations for corporate governance. The Code applies primarily to companies listed on Oslo Børs, but may also be taken into account for companies with broadly held share ownership and shares which are subject to regular trading. Compliance with the Code is a requirement for listing on Oslo Børs. The Code also applies to foreign companies with primary listing on Oslo Børs, to the extent that the provisions of the Code do not conflict with the legislation of the national jurisdiction. Foreign companies with a secondary listing on Oslo Børs will be assumed to comply with the guidelines for corporate governance mandatory for the stock exchange in which they are primarily listed. If such guidelines do not exist, the Code will apply as far as it is not in conflict with the company’s domestic legislation.
The Code is established by several private and independent organisations in the securities market in Norway. The Code does not have legally binding obligations, but applies a ‘comply or explain’ principle. However, the recommendations included in it may be obligatory for the issuer in question as far as the recommendations are also mandatory obligations pursuant to applicable legislation.
The Code includes recommendations related to:
The Code has inter alia specific recommendations in relation to the board of directors’ independence of the management, significant business relations and major shareholders. The Code has also inter alia extensive recommendations in relation to the remuneration of the board of directors and the executive management of the issuer. The Code is available at
Further, the Norwegian limited liability companies legislation contains mandatory requirements in relation to the authority, composition and remuneration of the governing bodies of the issuer.
9. MISUSE OF INSIDE INFORMATION AND MARKET ABUSE
The Securities Trading Act governs insider trading, definitions of inside information, the prohibition to misuse inside information, confidentiality obligations of inside information, requirements of the issuer to retain adequate routines for dealing with inside information, obligations for primary insiders of the issuer to conduct investigations before trading in shares, price manipulation, principles of good market conduct, etc.
The Act implements the EC Insider Trading Directive (89/592/EEC) and the EC Market Abuse Directive (2003/6/EEC). The rules on insider trading apply in principle to shares listed, or for which admission to listing has been applied for, on a Norwegian stock exchange market or authorised marketplace.
The Securities Trading Act states that persons possessing inside information shall not directly or indirectly, for own or third party account, subscribe, purchase, sell or exchange financial instruments or incite others to carry out such transactions.
The first paragraph applies only to misuse of inside information, and does not prevent the normal exercise of any option or forward/futures contracts previously entered into upon the expiry of such contracts.
Persons possessing inside information shall not give advice about trading in the financial instruments to which the information relates.
‘Inside information’ means any information of a precise nature relating to financial instruments, the issuers thereof or other circumstances which have not been made public and are not commonly known in the market and which are likely to have a significant effect on the price of those financial instruments or of related financial instruments.
‘Information of a precise nature’ means information which indicates circumstances that exist or may reasonably be expected to come into existence or an event that has occurred or may reasonably be expected to occur and which is specific enough to enable a conclusion to be drawn as to the possible effect of those circumstances or that event on the price of the financial instruments or related financial instruments.
‘Information likely to have a significant effect on the price of financial instruments or of related financial instruments’ means information of the kind which a reasonable investor would be likely to use as part of the basis of his investment decisions.
Persons possessing inside information shall not disclose such information to unauthorised persons. Persons possessing inside information shall handle such information with due care so that the inside information does not come into the possession of unauthorised persons or is misused.
Issuers of financial instruments and other legal entities who are regularly in possession of inside information shall have routines for secure handling of inside information.
Issuers of financial instruments shall ensure that a list is drawn up of persons who are given access to inside information. If a person who is given access to inside information is a legal entity, the list shall include those of the entity’s employees, elected officers, and assistants etc, who are given access to the information. The list shall be continuously updated and shall state the identity of persons with access to inside information, the date and time the persons were given access to such information, the functions of the persons, the reasons why the persons are on the list and the date of entries and changes to the list.
Issuers of financial instruments shall ensure that persons given access to inside information are aware of the duties and responsibilities this involves, as well as the criminal liability associated with misuse or unwarranted distribution of such information.
Before any member of the board, senior employee, member of the control committee or auditor associated with the issuing undertaking may subscribe, or incite anyone to subscribe, purchase, sell or exchange financial instruments issued by the undertaking, the person in question shall properly investigate whether there exists inside information regarding the financial instruments or the issuer of them.
This also applies to any deputy member, observer, board secretary and company secretary to the board in the issuing undertaking, in addition to senior employees and board members of an undertaking in the same group who can normally be expected to have access to inside information.
The duty to investigate also applies to the entering into, purchase, sale or exchange of option or futures/forward contracts or corresponding rights connected with financial instruments issued by the undertaking as well as to the incitement to such transactions.
9.5 Unreasonable business methods
No-one may employ unreasonable business methods when trading in financial instruments.
Good business practice shall be observed in approaches which are directed at the general public or at individuals which contain an offer or encouragement to make an offer to purchase, sell or subscribe to financial instruments or which are otherwise intended to promote trade in financial instruments.
These obligations apply regardless of whether the issuer in question is listed on a stock exchange or authorised marketplace, or not.
In addition, the Securities Trading Act also has specific regulations about what is deemed market manipulation, and safe harbour provisions for the issuer’s buy-back programmes of own shares and price stabilisation.
10. DISCLOSURE OBLIGATIONS
10.1 Disclosure obligations of issuers listed on Oslo Børs
Pursuant to the Continuing Obligations of Oslo Børs, issuers listed or which admission has been requested are subject to specific disclosure requirements.
The company must publish inside information that directly concerns the company. See section 9.2 for the definition of inside information. The company may delay the public disclosure of inside information such as not to prejudice its legitimate interests, provided that such delay would not be likely to mislead the public and provided that the company is able to ensure the confidentiality of that information.
Legitimate interests as referred to in the first paragraph may, in particular, relate to:
The company must, on its own initiative, promptly notify Oslo Børs of any delay in disclosing information, including the background for the decision to delay publication. If the company has reason to believe that the delayed inside information is known to or about to become known to unauthorised parties, the company shall on its own initiative immediately disclose such information.
The company must also disclose information in relation to certain corporate resolutions, such as dividends, share capital increase, merger, de-merger, convertible loans, reduction of the share capital etc. Any notice sent to shareholders must be published as a stock exchange announcement.
The company must publicly disclose agreements of material significance for the company that are entered into between the company and another company in the same group by issuing a stock exchange announcement. This also applies to agreements between the company and close associates which by their nature or circumstances are unusual for the company and/or the close associate in question.
In the event of any agreement to acquire or dispose of activities that affects the company’s operating revenue, annual profit or market capitalisation by 15 per cent or more of the similar figure for the company prior to the acquisition or disposal, the company must publicly disclose extended information to the market about the transaction. This also applies to any acquisition or disposal of assets where the consideration represents 15 per cent or more of the book value of the company’s total assets before the acquisition or disposal. Fewer disclosure requirements apply where the acquisition or disposal represents between five per cent and 15 per cent. Oslo Børs has proposed amendments to these rules regarding disclosure of significant transactions.
Companies whose shares are listed on Oslo Børs shall publish annual reports and accounts and interim reports in accordance with the accounting legislation and provisions laid down in the Continuing Obligations. Interim reports shall be prepared for each of the financial year’s four quarters. The interim report for the financial year’s last quarter also constitutes the company’s preliminary annual accounts. The annual accounts must be audited by a state authorised public accountant. A recommendation for the annual accounts shall be adopted by the company’s board of directors within three months of the end of the financial year.
Interim reports, including preliminary annual accounts, shall be adopted by the company’s board of directors within two months of the end of the period in question. Secondary listed companies are granted certain exemptions from these disclosure obligations, as such requirements are assumed to be fulfilled through the obligations of its primary listing.
10.2 Disclosure requirements for primary insiders
According to the Securities Trading Act, the issuer’s primary insiders as mentioned in section 9.4 above are required to publicly disclose any trading in financial instruments issued by the issuer.
These primary insiders, and any closely related party as defined in the Act, shall immediately notify Oslo Børs or the authorised market where the shares are quoted, of any purchase or sale of or subscription for shares issued by the company or by companies within the same group. The notification requirement also applies to convertible loans, agreements on, purchase or sale of subscription rights, options and corresponding rights connected with the shares. The notification requirement also applies to trading by the company’s in its own shares.
An undertaking that owns quoted shares in another undertaking or shares in another undertaking which is listed on an authorised market and which because of such ownership is represented on the board of directors of the other undertaking must report trading in such shares.
Notification shall be sent immediately and no later than at the start of trading on the stock exchange or authorised market on the day following the purchase, sale or subscription.
The notification shall at least include:
10.3 Disclosure of acquisitions of large shareholdings and rights to shares
According to the Securities Trading Act, where an acquisition of shares causes the acquirer’s proportion of shares and/or rights to shares to reach or exceed 1/20, 1/10, 1/5, 1/3, 1/2, 2/3 or 9/10 of the share capital, or of shares representing an equivalent proportion of the voting rights, in a company whose shares are quoted on a Norwegian stock exchange, the acquirer shall immediately notify such acquisition to the stock exchange.
This also applies correspondingly to anyone who through disposal changes his proportion of the share capital or votes such that the proportion is reduced to or falls below the thresholds mentioned in the first paragraph.
Loans convertible into shares, subscription rights, options on the purchase of shares and equivalent rights are regarded as rights to shares. Borrowing of shares and return of shares to the lender shall be regarded as acquisition and disposal for the purposes of this section.
Shares held or, in the event, acquired or disposed of by close associates as defined in the Act are considered equal to the acquirer’s or disposer’s own shares or rights to shares.
Notification pursuant to this section shall be given immediately when an agreement on acquisition or disposal has been entered into.
Notification shall be given immediately following a transaction and shall at least include:
11. MANDATORY OFFERS
11.1 General
The Securities Trading Act has provisions governing acquisition of large shareholdings of Norwegian companies listed on Oslo Børs (mandatory and voluntary offers). Foreign companies listed on Oslo Børs, and Norwegian companies that are not listed, are not governed by the Act’s requirements regarding mandatory and voluntary offers.
The rules discussed in this section have been proposed to be altered pursuant to implementation of the EC Directive related to public takeover bids. The proposed changes have not yet been approved.
11.2 Main regulations under the Norwegian mandatory bid rules
A mandatory offer, which is an obligation to offer to acquire all outstanding shares, is required when a person, through an acquisition of shares, becomes the owner of shares representing more than 40 per cent of the voting rights of a Norwegian company having its shares listed on Oslo Børs. Ownership held by close association is taken into account when considering the 40 per cent threshold.
The offeror may instead of completing a mandatory offer choose to sell shares in order to reduce its shareholding underneath the 40 per cent threshold. Such sale must be completed within four weeks.
Options to buy shares will not in principle trigger the mandatory bid rules. However, Oslo Børs may determine otherwise, should there be any suspicion that the options are a de facto acquisition of shares. A mandatory offer may also be required upon a consolidation of the offeror with any related party as determined by Oslo Børs pursuant to specific requirements.
The duty to make a mandatory bid applies to all offerors, whether foreign or domestic.
The mandatory bid must be unconditional and must always include a guaranteed cash alternative. The offer must be made to all shareholders and for all shares of the company, including owners of non-voting shares or other classes of shares.
The offer price must equal or exceed the highest price that the offeror has paid or agreed for shares of the company during the six months preceding the application of the mandatory bid rules, or at any time during the offer period. Under no circumstances may the share price be lower than the market price at the date on which the mandatory bid was triggered.
The offeror must comply with the requirement of equal treatment of shareholders.
The offer period is minimum four weeks and maximum six weeks. Following the offer, an offer document prepared by the offeror that gives fair and complete information on all the circumstances relevant to the evaluation of the offer must be issued, and shall at least include the following information:
When an offer is made in accordance with the rules on mandatory offers, the target company’s board of directors shall issue a statement on the offer including information on the employees’ views and other factors of significance for assessing whether the offer should be accepted by the shareholders. Information shall also be given about the board members’ and the managing director’s opinion of the offer, if any, in their capacity as shareholders in the company. The Code has recommendations for the board of directors of the target company, which may require that an independent valuation (‘fairness opinion’) is made.
When a mandatory offer obligation is triggered, the person subject to such obligation shall immediately notify the stock exchange and the company accordingly. The notification shall state whether an offer will be made to buy the remaining shares in the company or whether a sale of shares will take place in order to have the mandatory offer requirement to lapse pursuant to the requirements of the Act.
The Securities Trading Act also contains provisions governing voluntary offers for shares in Norwegian companies listed on Oslo Børs. These provisions apply when the offeror, as a result of the bid, may acquire shares to an extent that will trigger the mandatory bid rules if the voluntary offer is accepted by those shareholders to whom the offer is addressed.
When such an offer is made, certain provisions in the Securities Trading Act governing mandatory offers also apply to the voluntary offer, inter alia the requirement to issue an offer document approved by Oslo Børs as well as the duty of the board of directors of the target company to give a statement on the offer in question.
The voluntary offer may be structured according to terms and conditions that the offeror finds suitable. Such terms and conditions may include, for instance, receiving a certain percentage of the outstanding shares, a longer or shorter offering period, and consideration for the offer to be other than in cash.
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