Upcoming amendments to the shareholding disclosure obligations in Norway
On 8 April 2022, the Ministry of Finance proposed a long overdue draft bill (Prop. 83 LS) with several amendments to the rules regarding disclosure of large shareholdings (Nw.: flaggeplikt) in the Norwegian Securities Trading Act (STA) and Securities Trading Regulation (STR) to the Norwegian Parliament. The amended rules enter into force on 1 September 2022.
The regime in Norway for disclosing large shareholdings relates to control over or access to shares, and/or voting rights attached to shares. The disclosure obligation applies to investors in issuers whose shares are listed on the Oslo Stock Exchange and Euronext Expand, with Norway as its home state. Investors in issuers with shares admitted to trading on Euronext Growth Oslo continue to be exempted from the obligation to disclose large shareholdings.
The STA amendment does not change the existing thresholds for disclosure obligation, but there are important changes concerning which financial instruments that are in scope, share lending, calculation of shareholdings, exemptions to the disclosure regime, aggregation and the deadline for filing a notification.
The amendments to the STA will implement the Revised Transparency Directive 2013/50/EU (RTD) that was incorporated into the EEA Agreement by the EEA Committee's decision of 12 June 2020. The RTD amends the Directive 2004/109/EC (Transparency Directive).
The amendments to the disclosure rules includes both amendments and new provisions in the STA chapter 4 and STR chapter 4. Generally speaking, the amendments entail that the rules will be harmonized with the EU to a greater extent, with few national gold plating measures.
Below is a brief summary of the key changes to the rules on disclosure of large shareholdings:
- The disclosure obligation is imposed only for holdings of rights to acquire already issued shares under financial instruments (where the underlying equity shares are already in issue). In practice, this means that there will be no obligation to disclose rights to acquire yet unissued shares, such as warrants to subscribe for unissued shares and convertible debt securities where the underlying equity shares are not yet in issue;
- the disclosure obligation applies to derivatives with shares as its underlying asset, regardless of whether they give the right to physical or cash settlement, as well as a disclosure obligation by subsequent delivery of the underlying shares;
- share lending shall be disclosed on the part of both the borrower and the lender;
- Commission Regulation 2015/761/EU regarding calculation of disclosable holdings related to rights to shares and other financial instruments is implemented;
- a provision on aggregation in the STA, i.e. that the holding of shares and other financial instruments shall be aggregated when calculating the disclosable holding;
- more detailed rules regarding the content of the notification, e.g. distinguish between direct and indirect holdings;
- amendments to the exception rule regarding shares acquired for clearing and settlement purposes, where the settlement cycle period is changed from three trading days to two trading days (from T + 3 to T + 2);
- provisions regarding consolidation are set out in a separate provision in the STA (no longer a reference to the general consolidation rule in section 2-5 of the STA). This involves, among other things, that holdings belonging to personal close associates, such as a spouse and/or minor children no longer have to be included in the calculation of disclosable holdings. Furthermore, changes are made to the provision on consolidation as a result of «acting in concert» cf. the current STA section 2-5; consolidation is only required when a disclosing party has undertaken to pursue a long-term, joint strategy with the person in question by coordinated exercise of voting rights;
- the deadline for sending the disclosure notification is changed from "immediately", meaning the time it takes to formulate and send the notification, to "immediately" and at the latest at opening of the second trading day after the transaction (T + 2). The current 'immediate' requirement is strictly enforced by the Norwegian regulator, and the new rules will to a greater extent take into account asset managers' challenges related to both consolidation of positions and system use, as there may be specific factors such as time difference, consolidation, etc. which implies a longer deadline; and
- changes in provisions on administrative measures and sanctions. The authority for imposing infringement fines is being expanded somewhat, and it has been proposed new rules on suspension of voting rights.
Entry into force
The amended STA and STR enter into force on 1 September 2022.