Capital markets and structured investments

There are restrictions on offering and selling debt securities under both Norwegian and EU law, the latter of which is almost always incorporated into Norwegian law.

Unless certain exclusions or exemptions apply, it is unlawful to offer debt securities to the public in Norway or to request that they are admitted to trading on a regulated market operating in Norway unless an approved prospectus has been made available to the public.

In Norway the most common debt securities are bullet bonds, where the interest is paid at regular intervals until the full amount is due, whereupon the entire par value is payable.

There are several types of debt securities in Norway. Some common forms include:

• different types of bonds with varying repayment and interest rates, such as coupon bonds, zero-coupon bonds, secured bonds, covered bonds, unsecured or senior bonds, government bonds, and convertible and contingent convertible bonds; and
• short-term loan certificates that are tradable debt securities.

The Norwegian prospectus rules do not make a distinction between professional and other investors for the purposes of its disclosure requirements but do include different disclosure regimes by reference to the minimum denomination of a single security.

However, for more information, see Issuing and investing in debt securities – requirement for prospectus. Section 7-4 number 8 of the Securities Trading Act of 2007 states that the provision of section 7-2 does not apply where the offer is addressed to professional investors pursuant to further rules laid down by the ministry in regulations.

Section 7-2 of the Securities Trading Act 2007 states that where an offer to subscribe for or purchase transferable securities is addressed to 150 or more persons in the Norwegian securities market, and involves an amount of at least €1 million calculated over a 12-month period, a prospectus shall be prepared in accordance with the rules of chapter 7 of the Securities Trading Act chapter 7. The same applies where an offeror residing in Norway makes an offer in another European Economic Area (EEA) state and the prospectus requires approval pursuant to section 7-7 of the Securities Trading Act. Chapter 7 implements the EEA directives (EF) 2003/71 and (EF) 2004/809.

It is also necessary to prepare a prospectus upon admission to trading of transferable securities in a Norwegian regulated market place, including increases of capital in companies with quoted shares. The same applies where an issuer residing in Norway seeks admission to trading on a regulated market in another EEA state and the prospectus requires approval pursuant to the provisions of section 7-7 of the Securities Trading Act of 2007.

Section 7-4 number 8 of the Securities Trading Act of 2007 states that the provision of section 7-2 does not apply where the offer is addressed to professional investors pursuant to further rules laid down by the ministry in regulations.

There are two equity markets in Norway. Oslo Børs (Oslo Exchange Market) is the only regulated market for securities trading. For companies that do not meet the requirements of the Oslo Exchange Market, there are is another licensed and regulated market called Oslo Axess. There are also unregulated and multilateral trading facility (MTF) marketplaces such as Merkur Market, Oslo Connect and Nordic ABM.

There is a private placement market in Norway. Private placements are popular where the prospectus rules do not need to be complied with.

Issuing debt securities

Issuers are required to take responsibility for prospectuses for debt securities. Misleading statements in, or omissions from, any applicable offering document may give rise to both civil and criminal liability under Norwegian law. Norway has various investor protection statutory provisions relevant to liability for an inaccurate offering memorandum. There are also general fraud statutes and liability may also arise under common law through a civil action for deceit, negligent misstatement or misrepresentation.

Investing in debt securities

Debt security terms and conditions typically confer significant discretions on the trustee. The trustee will represent the interests of the debt security holders, and will be the only party who can take legal action, whether against the issuer's board of directors or the issuer itself. The conditions also provide for meetings of investors to consider matters affecting the investors' interests. These provisions typically permit defined majorities to bind all investors including investors who did not attend and vote at the relevant meeting and investors who voted against the majority.

Yes.

The units of a fund can be marketed by investment firms, licensed alternative investment fund managers or securities funds as well as banks to a certain extent. Other regulated entities may also be entitled to market units in a fund in cooperation with the manager.

The Securities Fund Act of 2011 and the Alternative Investment Fund Managers Act of 2014 set out the marketing regimes applicable for funds. They also provide exemptions for some of these marketing requirements where marketing is aimed at professional investors. In addition, the laws differentiate between securities' funds and alternative investment funds (AIF). AIFs are more suited for professional investors, therefore there are restrictions in relation to the marketing of such funds to non-professional investors. Where the AIF fund is marketed to professionals and it is below certain set fund thresholds, then a marketing permit from the Norwegian Financial Supervisory Authority is not needed. Where marketing is done towards non-professional investors, then the management is required to apply for a special marketing license.

The Undertakings for Collective Investments in Transferrable Securities (UCITS) directive has been incorporated into Norwegian legislation. This enables fund promoters to create a single product for marketing in all EU member states and on the completion of the appropriate notification procedure, a UCITS established in one member state can be sold in any other. A UCITS intending to market in another member state must complete and submit to its home regulator a notification which must include certain specified information, including copies of key investor documents. The home regulator then completes a notification file which is sent in a regulator-to-regulator transmission, following which the UCITS can be sold in the other member state.

The Securities Funds Act of 2011 and its related regulations set several requirements in relation to management of funds. The Norwegian Financial Supervisory Authority oversees and provides licensing for all securities fund management companies. To receive such authorization, certain statutory requirements must be met, and various restrictions arise on manager structuring, investment limits, organization of the activity, risk management etc. This Act also incorporates specific regulations regarding UCITS, incorporating the UCITS directive. Alternative Investment Fund Managers (AIFMs) are also subject to regulation under the Alternative Investment Fund Managers Directive (as implemented in Norway).

Yes.

Investment services provided on a professional basis must be provided by undertakings authorized to do so by the Ministry of Finance. The authorization shall indicate which investment services and ancillary services the investment firm may provide. An investment firm shall apply to the Norwegian Financial Supervisory Authority for approval before it offers ancillary services beyond those indicated by the authorization. However, the following entities are exempted from the authorization requirement:

• the Central Bank of Norway;
• the National Insurance Scheme Fund;
• public authorities that manage public debt;
• management companies for securities funds;
• insurance companies;
• pension funds;
• depositories of securities funds, pension funds and alternative investment funds;
• undertakings authorized to operate as an options clearing house, clearing house or regulated market; and
• managers of alternative investment funds.

Common types of derivatives include options, futures, swaps, forward rate agreements and any other derivative contracts relating to securities, currencies, interest rates or yields, or other derivative instruments, financial indices or financial measures which may be settled physically or in cash, commodity derivatives, credit derivatives and financial contracts for differences.

In order to ensure close out netting, the derivatives agreements must be in writing and provide for valuations at market prices. In addition the derivatives must be of the kind described in the Norwegian Securities Trading Act 2007.