Underwriting arrangements

Types of arrangement

What types of underwriting arrangements are commonly used?

In the Norwegian market, the typical international underwriting arrangement, whereby the underwriter (usually an investment bank or similar) purchases the securities in the offering in order to resell them to potential investors, is not common other than in international IPO processes involving Norwegian issuers (which is seldom).

The most common underwriting arrangement in Norway is that the issuer’s financial adviser or the investment firm assisting the issuer in carrying out the offering establishes an underwriting syndicate among the potential participants in an offering or private placement, most commonly the largest shareholders. The investment firm is not usually part of the syndicate. The syndicate guarantees part or full subscription of the shares to be offered in the event that the offer is not fully subscribed. The underwriting agreements seldom include payment guarantees.

Typical provisions

What does the underwriting agreement typically provide with respect to indemnity, force majeure clauses, success fees and overallotment options?

Underwriting agreements will depend on the type of arrangement. With respect to the typical Norwegian arrangement (being subscription guarantees from certain investors as described in question 12), indemnification of the underwriters, termination in the event of force majeure, success fees and overallotment options will rarely be included in the underwriting agreement. These types of provisions may, however, be included in the transaction manager’s engagement letter or other agreements between the issuer and the manager.

Other regulations

What additional regulations apply to underwriting arrangements?

Typical underwriting arrangements, as described in question 12, are subject to certain regulations with respect to disclosure of information.

In the event of a primary offering, the issuer is required, pursuant to Norwegian company law, to disclose the amount of the underwriting or guarantee commission paid in the general meeting’s resolution to issue the shares.

In addition, for companies listed on Oslo Børs, Oslo Axess and Merkur Market there is an obligation in the Continuing Obligations for Stock Exchange Listed Companies and the Continuing Obligations for Companies Listed on Merkur Market to provide the market with information on any underwriting consortium, including the members of the consortium and their guarantee obligations, as well as information on any advance subscription or allotment.