Wikborg Rein newsletter: Amendments to the issuer rules for companies listed on Oslo Børs and Oslo Axess

On 15 June 2011 the Board of Oslo Børs approved a number of amendments to the issuer rules for companies listed on Oslo Børs and Oslo Axess. The amendments refers to the Continuing Obligations for Stock Exchange Listed Companies (the “Continuing Obligations”) and the listing rules for Oslo Børs and Oslo Axess respectively (jointly referred to as the “Listing Rules”).

We have focused on the most important changes to the Continuing Obligations, as many of our clients are listed either on Oslo Børs or Oslo Axess. We have also included a reference to relevant amendments to the Listing Rules for already listed companies. The amendments are explained in Oslo Børs Circular 5/2011, and came into force on 14 July 2011.

Amendments to the minimum market value requirement
According to the Continuing Obligations section 2.4, the market value of the company’s shares shall not be lower than NOK 1. If the market value has been continuously lower than NOK 1 throughout a six-month period, the board of the issuer is required to implement measures to satisfy the requirement.

The Board of Oslo Børs has approved two important changes to this requirement. The first amendment involves removal of the requirement for a continuously lower market value than the minimum requirement. The requirement now simply states that the board will be required to implement measures if the market value has been lower than NOK 1 for a six month period. According to the comments to section 2.4 this implies that if the market value during the six month period has satisfied the minimum market value on occasional days, this will not be sufficient to trigger the start of a new six month period. Accordingly, if the market value on a general basis (although not continuously) has been lower than NOK 1 during a six month period, this may trigger the duty to for the board to implement measures. Oslo Børs will resolve and inform the Company whether it has triggered a duty to implement measures under section 2.4.

The second amendment to section 2.4 concern the deadline for implementation of measures after expiration of the six month period. Section 2.4 now clearly states that the board of the issuer will be required to implement measures within four months after expiry of the six month period. According to the guidelines, the duty implies that the board, if unable to satisfy the requirement otherwise, within the deadline will be required to summon a general meeting to consider a reverse split of the Company’s shares. The deadline will expire four months from receipt of notice from Oslo Børs that the company has triggered a duty to implement measures.

Immediate disclosure of certain corporate actions
Section 3.2 of the Continuing Obligations requires an issuer to immediately disclose certain corporate actions, including proposals and decisions by relevant corporate bodies regarding changes to the capital of the company, mergers, demergers etc. This obligation has now been extended to also include changes to the company’s board of directors, the managing director (CEO) and financial director (CFO) of the company. According to Circular no. 5/2011 the rationale behind this amendment is that this constitutes information which Oslo Børs believes that the marked would find interesting. Oslo Børs further emphasize that if such information also constitute inside information, the obligations pertaining to inside information will apply side by side.

Corporate governance report
According to section 7 of the Continuing Obligations, an issuer is required to provide a report on the company’s corporate governance in the annual report. The amended Continuing Obligations now allows for such report to be provided either in the annual report, or in a document that is referred to in the annual report. In the latter case, the document referred to in the annual report must be disclosed in full no later than at the same time as the annual report is publicly disclosed. According to Circular 5/2011, such document may be a report provided electronically on the issuers website.

The Continuing Obligations section 7 has further been extended to include the requirements to provide information about the issuers principles and practices in respect of corporate governance, in accordance with the Norwegian Act on Accounting (the “Accounting Act”) section 3-3 b. This obligation is applicable to both domestic issuers and foreign issuers listed on Oslo Børs and Oslo Axess if Norway is the homestate for the issuer. The requirement as per the provision in the Accounting Act is to state which principles and practices the issuer do not follow. Oslo Børs has however resolved to extend this duty to also provide an explanation of why the issuer deviates from the same.

Oslo Børs may upon application grant a formal exemption from the applicability of this requirement for issuers established outside the EEA (third country issuers). Such exemption may be available if Oslo Børs is satisfied that the issuer is subject to equivalent reporting requirements in the country of which it is registered or through its listing on another exchange. According to Circular 5/2011, such exemption will not be applicable if the relevant equivalent reporting requirement do not include consistency check with the annual accounts by an authorized auditor.

Pre-listing report required for listing of preferential rights
Oslo Børs has made amendments to the Listing Rules implying that listing of preferential rights in connection with share offerings will now be subject to a requirement for a pre-listing report. Oslo Børs will prepare a template to be used in connection with such pre-listing report. The pre-listing report shall contain all the information relevant to the preferential rights, such as inter alia information on subscription period, trading period, subscription price, underwriting agreements, conditions for completion etc. The pre-listing report shall be submitted to Oslo Børs no later than the submission of the first draft prospectus to Finanstilsynet (the Norwegian Financial Supervisory Authority) for review and inspection.

According to the amendments to the Listing Rules, listing of other types of rights to shares will now be subject to an application requirement. Oslo Børs will prepare a standard template to be used in accordance with an application for listing of such rights. The rationale behind not including preferential rights to be subject an application requirement, is that Oslo Børs expects that preferential rights normally will be suitable for listing and accordingly will be admitted to listing.

Corporate actions by foreign companies
Oslo Børs has made changes to the requirements pertaining to certain corporate actions by foreign companies in the current section 13.4 of the Continuing Obligations. For issuers established in a jurisdiction where company registration certificates are not issued, the current requirement for a legality and validity statement by the issuer only applies to shares breaching the 1% threshold over a rolling 12 month period. This threshold has now been abolished, which implies that all foreign issuers, including those established in jurisdiction where documentation equivalent to the company certificate is issued, will be required to immediately publish any changes to the share capital and state the size of the new share capital and the total number of shares issued. Before the new shares will be admitted to listing, the company will also be required to publicly disclose that the shares are validly and legally issued and fully paid- up. This requirement applies to all foreign issuers, whether established in a jurisdiction that issues corporate certificates or not.

Further, the requirement for legal opinion by independent external attorney or statement by a competent corporate body that must be provided in connection with the implementation of a merger, demerger or reduction in share capital by distribution must according to the amendments now also confirm that the relevant corporate action is validly and properly carried out.

Certain other amendments to the Continuing Obligations
Above we have outlined the most important changes to the Continuing Obligations which entered into force on 14 July 2011. The following additional amendments should however also be noted:

The arrangement for the information symbol and the English symbol has been discontinued;

• The requirement for all issuers to have an audit committee as per the Stock Exchange Regulation section 1 (2) has been included in the Continuing Obligations;
• The commentaries to the Continuing Obligations section 9 now states the practice of Oslo Børs with respect to the requirement to obtain an independent statement regarding a take-over bid;
• The requirement for Norwegian issuers and foreign issuers with Norway as its home member state in the Securities Trading Act section 5-8 (a) to provide information about certain shareholder matters in its annual report has been included in the Continuing Obligations section 4.2 (2). Such information includes description of any provisions in the articles of association that restrict the right to trade and any such arrangements between shareholders as well as significant agreements to which the company is party which includes “change of control” clauses in relation to takeover bids.
  

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