The New Statutory Scheme
Statutory Reporting Obligations
Timeframe
The Norwegian Parliament recently passed a new act on the registration of financial instruments (the Financial Instruments Registry Act) to replace the Centralized Paperless Securities Registry Act 1985.
Under the former legislation, the Centralized Paperless Securities Registry had a statutory monopoly on the registration of financial instruments. Under the new act, the registry will no longer enjoy this monopoly. The creation and operation of a securities registry will instead be subject to licensing requirements.
The existing registry is organized as a trust. However, pursuant to the new act, a company which is granted a licence to act as a securities registry must be organized as a public limited company. The new act also provides that the existing registry must be converted from a trust to a public limited company within two years of the date on which the act comes into force.
A securities registry may only conduct such activities as are naturally connected to its operation. Other activities subject to licence, such as stock exchange activities, may not be conducted by the same company. The new act further provides that no person may own a shareholding of more than 10% in a company which is licensed to operate a securities registry, with certain exceptions.
The new act also establishes rules concerning the registration of rights to financial instruments, including provisions setting out the legal effects of registration.
A company which is licensed under the new act to operate a securities registry will be subject to supervision by the Norwegian Banking, Insurance and Securities Commission.
Pursuant to the Public Limited Companies Act 1997, shares in a public limited company must be registered in the name of the owner. Alternatively, a custodian which has been approved by the Norwegian regulatory authorities may be registered as a nominee owner, although shares owned by Norwegian shareholders may not be registered as held by a nominee. The new act allows for nominee registration of bonds, derivatives and participations in funds. However, Norwegian owners of shares in Norwegian companies whose shareholdings are registered in the existing registry will remain prohibited from having these shares registered as being held by a custodian as nominee.
Statutory Reporting Obligations
Pursuant to the Securities Trading Act 1997, any acquisition or disposal of shares in a company whose shares are listed on a Norwegian stock exchange must be notified to the stock exchange if certain thresholds are reached. These thresholds are currently 10%, 20%, 33%, 50%, 66% and 90% of the share capital or voting rights. As part of the new act, the statutory reporting obligations in the Securities Trading Act have been amended to include a reporting obligation where a threshold of 5% is reached or exceeded.
The Ministry of Finance has been given the authority to decide when the Financial Instruments Registry Act shall come into force. However, no such decision has yet been made, and it is expected that the new act will come into force on January 1 2003 at the earliest. Changes to the Securities Trading Act will come into force upon decision by the Ministry of Finance.
For further information on this topic please contact Finn Myhre at Bugge, Arentz-Hansen & Rasmussen by telephone (+47 22 83 02 70) or by fax (+47 22 83 07 95) or by email ([email protected]).