Guidance on the Securities Trading Act Chapter 4 – Notification Requirements

10 OCTOBER 2023

APPLIES TO: INVESTORS SECURITIES COMPANIES ASSET MANAGEMENT COMPANIES LISTED COMPANIES

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Guidance on the Securities Trading Act Chapter 4 – Notification Requirements 2 | Finanstilsynet

Table of Contents

1. Introduction...................................................................................................5
2. Scope – STA § 4-1...........................................................................5
3. Background ....................................................................................................6
4. Notification Thresholds.............................................................................................6
5. Notification Requirement for Shares – STA § 4-2.............................................................6 5.1 Main Rule.....................................................................................................................................6 5.2 Notification upon acquisition of shares without or with limited voting rights ..................................................7 5.3 Notification in connection with issuances............................................................................................7 5.4 Notification upon borrowing, lending, return, and receipt of lent shares .......................................8 5.5 Notification upon futures contracts ............................................................................................................8 5.6 Notification upon subscription rights and convertible bonds that only grant the right to demand issued shares ............................................................................................................................................8 5.7 Special on notification requirement upon conditional acquisitions...................................................................................8 5.7.1 Introduction............................................................................................................................8 5.7.2 Conditions outside the acquirer's control, e.g., requirement for consent or corporate law decision...................................................................................................9 5.7.3 “All or nothing” order .........................................................................................................9
6. Notification Requirement for Other Financial Instruments – STA § 4-3..................10 6.1 Introduction....................................................................................................................................10 6.2 Financial instruments covered by STA § 4-3 first paragraph ...............................................11 6.3 Financial instruments that upon maturity give the holder a right to acquire or a right at their own discretion to acquire issued shares to which voting rights are attached.........................................12 6.4 Financial instruments linked to shares with voting rights and which have a similar economic effect as financial instruments that give the holder a right to acquire already issued shares ................................................................................................................12 6.5 Calculation of the notification holding................................................................................................13 6.5.1 Financial instruments that do not exclusively provide for financial settlement .........13 6.5.2 Financial instruments that exclusively provide for financial settlement.................13 6.5.3 Financial instruments linked to a basket of shares or index.....................................15 6.6 Notification anew if the underlying shares are acquired.......................................................16
7. Notification in certain other circumstances giving influence or right to vote for shares owned by others.......................................16 7.1 Introduction....................................................................................................................................16 7.2 The shares are owned by a third party whom the notifier has agreed to pursue a long-term and common strategy with when exercising voting rights ................................................16 7.3 Temporary transfer of voting rights to the notifier for consideration ..............................17 7.4 Shares with voting rights that the notifier receives as security, and where the notifier can exercise voting rights at their own discretion and declares that the notifier intends to vote for the shares ......................................................................................................17 7.5 Shares with voting rights for which the notifier has received perpetual rights....................18 7.6 Shares with voting rights that the notifier receives for deposit, and where the notifier can vote for the shares at their own discretion in the absence of instructions ..................................................18

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7.7 Shares with voting rights that a third party keeps in their own name on behalf of the notifier ...............................................................................................................................18 7.8 Granting or revoking a proxy without instructions to the notifier ..................................19 8. Circumstances triggering notification requirement.................................................19 8.1 Acquisition, disposal, or other circumstance ...............................................................................19 8.2 Special on passive dilution – corporate events that change the distribution of voting rights ..........19 9. Consolidation ...........................................................................................20 9.1 Consolidation under the Securities Trading Act § 4-6 .........................................................................20 9.2 Consolidation under the Securities Trading Act § 4-4 second paragraph ........................................................20 9.3 Consolidation in case of notification requirement for other financial instruments than shares, cf. STA § 4-3 ......21 10. Aggregation – combining of share of voting rights and share of share capital under STA § 4-6 ....................................................................22 11. Consolidation questions for securities companies providing portfolio management and asset management companies for funds .......................22 12. Exemptions for holdings acquired for certain purposes................................23 12.1 Shares and other financial instruments than shares acquired exclusively for settlement within two trading days ................................................................................................................23 12.2 Shares and other financial instruments than shares acquired or disposed of by a market maker 24 12.3 Shares and other financial instruments than shares in the trading portfolio of a securities company or credit institution ..................................................................................................................25 13. Manager Registration ................................................................................25 14. Implementation of the notification requirement – deadline for notification ...............................26 14.1 Starting point for the deadline ..................................................................................................................26 14.2 Length of the deadline .............................................................................................................................26 15. The Notification......................................................................................27 15.1 Requirements for content ............................................................................................................................27 15.1.1 Name of the issuer of the shares ...............................................................................................27 15.1.2 Date when the share reached, exceeded, or fell below the thresholds set in STA § 4-2 first paragraph ..........................................................................................................................27 15.1.3 Name of the notifier, including the name of the shareholder ................................................28 15.1.4 Number of shares the notification covers .......................................................................................28 15.1.5 The subsequent situation regarding votes, and what percentage of the shares and votes in the company the person concerned holds ...............................................................28 15.1.6 What percentage of the shares and votes in the company the person concerned holds in the form of rights to shares .......................................................................................................29 15.1.7 The circumstance that triggered the notification requirement, and whether this applied to the person concerned themselves or another person covered by the notification requirement ...............................................................................29 15.1.8 The chain of controlled companies through which the shares or rights are owned ....................29 15.1.9 Notification concerning financial instruments mentioned in STA § 4-3 first paragraph ...........29 15.2 Notifications where aggregation of votes is required under STA § 4-6 .................................30 15.3 Joint notification from several notifiers .........................................................................................30 15.4 Joint notification upon granting and revoking a proxy ...........................................................30

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16. Sanctions for violation of the notification requirement .......................................30 16.1 Imposition of administrative penalty ...................................................................................................30 16.2 Suspension of the notifier's right to vote for shares....................................................31
17. Form for submission of notification ..............................................32 Appendix...........................................................................................................33 I. Chapter 4 of the Act on Securities Trading............................................................................................33 II. Chapter 4 of the Securities Regulations..................................................................................................37

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1 Introduction

This guidance explains the Financial Supervisory Authority's understanding of the rules on notification requirements in the Act of 29 June 2007 No. 75 on Securities Trading (STA) §§ 4-2 to 4-8 with regulations.

The guidance replaces the Financial Supervisory Authority's "Guidance on the Securities Trading Act Chapter 4 – Notification Requirements," dated 19 October 2021.

The guidance has been updated and significantly changed following the implementation of EU Directive 2013/50 (amending directive to the Reporting Directive) into Norwegian law by Act of 22 June 2022 No. 80 on amendments to the Securities Trading Act.

The Financial Supervisory Authority will base its supervisory activities on the interpretations and assessments presented here.

2 Scope – STA § 4-1

The notification rules apply to "shares admitted to trading on a regulated market in an issuer with Norway as its home state," cf. STA § 4-1 first sentence. The rules also apply to other financial instruments mentioned in STA § 4-3 that are linked to such shares. Which issuers will have Norway as their home state is set out in STA § 5-4 second to fourth paragraphs. This means that Norway will be the home state in relation to notification requirements for the following companies:

1. Norwegian company with shares listed on a Norwegian regulated market.
2. Norwegian company with shares listed on a foreign regulated market within the EEA.
3. Company from a country outside the EEA if Norwegian authorities are the prospectus authority.

It follows from the Prospectus Directive that this will be the case where such issuers have made a public offer or sought listing in Norway as the first market within the EEA area after 1 July 2005. In addition, there are issuers who chose Norway as their home state before this time. The provisions on this are difficult to access in the Securities Trading Act.

By "regulated market" in STA § 4-1 first paragraph is meant a regulated market as defined in STA § 2-7 fourth paragraph or a corresponding regulated market in another EEA country. In Norway, there are currently two regulated markets where shares are admitted to trading: Oslo Børs and Euronext Expand. Oslo Børs has published a list on its website of which issuers have Norway as their home state, see: https://www.euronext.com/en/markets/oslo.

For companies admitted to trading on a Norwegian regulated market but with another EEA country as their home state, notification/notification must be made in accordance with the regulations in the issuer's home state.

3 Background

The notification requirement is triggered by changes in the influence structure in the issuer company through the holding of shares or through the holding of certain other financial instruments that provide opportunities to exercise influence. The influence structure can be changed in various ways. This is reflected in the notification rules and makes it complex. Changes in the influence structure can be important information for investors and others.

Influence in the issuer is generally assessed based on what share of the voting shares the holder controls or can control in the issuer. In cases where the issuer has shares without voting rights or with limited voting rights, influence should also be assessed based on what share of the share capital the investor has.

Influence in the issuer through holding of shares, holding of other financial instruments, and through circumstances that give influence over the voting rights of others' shares, must be summed up and assessed together when determining whether a notification threshold is crossed, see STA § 4-6.

4 Notification Thresholds

Both when holding shares, holding other financial instruments, and holding voting rights to shares owned by others, the notification requirement arises if the notifier's share of shares with attached voting rights reaches, exceeds, or falls below 5%, 10%, 15%, 20%, 25%, 1/3, 50%, 2/3, or 90% of the votes in the issuer, see STA § 4-2 (1).

When holding shares, notification must also be made for a corresponding share of the share capital, see point 5.2. Deviations between the share of votes and the share of share capital will occur in issuers where some shares either have limited voting rights or no voting rights.

5 Notification Requirement for Shares – STA § 4-2

5.1 Main Rule

The notification requirement arises if the holder's share of shares with attached voting rights reaches, exceeds, or falls below the notification thresholds mentioned in point 4.

Notification must be made if the share related to shares alone (votes or capital) crosses a notification threshold, or if the share of shares together with the share of votes from other financial instruments and circumstances that give influence to vote for others' shares (cf. STA § 4-4) crosses a notification threshold.

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5.2 Notification upon acquisition of shares without or with limited voting rights

Notification must also be made based on the share of share capital.

Notification must be made based on the share of share capital only when notifying for shares, and not when notifying for other financial instruments under STA § 4-3 or notifying for the right to vote for others' shares under STA § 4-4.

5.3 Notification in connection with issuances

It has been assumed that investors who subscribe in public or directed issuances and receive newly issued shares must notify this as an acquisition of shares if a notification threshold is reached or passed.

When acquiring shares through subscription, the starting point is that the notification requirement arises when a binding and final agreement on subscription is entered into. However, when issuing new shares in a public or directed issuance, it may be unclear at the time of subscription how many shares each individual subscriber will be allocated, among other things due to the risk of oversubscription. The Financial Supervisory Authority assumes that in a public or directed issuance, provided the subscriber receives new shares, it is not necessary to notify until the allocation time, i.e., at the time when it is clear to the subscriber how many shares they receive in the issuance.

At the time of allocation, the acquisition must be notified based on the new number of votes/the new increased share capital that will then be clarified, even if the registered share capital/number of shares has not yet been increased/changed correspondingly. This applies only to shares that will be issued by the issuer upon registration of the capital increase in the Business Register, and not to borrowed shares that were issued before the registration of the capital increase, see below.

For the notification requirement for newly issued shares acquired in issuances to be considered to arise at the time of allocation, the allocation – i.e., the acquisition – must be final and unconditional. If there are unfulfilled conditions for the allocation of newly issued shares at the time of allocation, the allocation will not be fulfilled until the condition ceases to exist.

Shareholders who do not participate in the issuance must be aware that the capital increase may trigger a notification requirement due to passive dilution. See further on this under point 8.2.

In some issuance processes, investors participating in the issuance will be settled in borrowed existing shares before the new shares have been issued. In these cases, the notification requirement must be assessed based on the number of voting shares/share capital registered in the Business Register at the time of subscription, and not the new increased number of voting shares/the increased share capital.

A shareholder who has received settlement in shares that exist at the time of subscription must reassess whether a notification requirement arises due to dilution when the new shares/new share capital are registered – a so-called passive dilution. See further on this in section 8.2.

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5.4 Notification upon borrowing, lending, return, and receipt of lent shares

Borrowing, lending, return, and receipt of lent shares must be counted as acquisition and disposal under the provision in STA § 4-2 on notification for shares, see the provision's third paragraph. The notification requirement must be assessed both in relation to the share of votes and share capital in the issuer. In the notification, however, circumstances that triggered the notification requirement must be reported, cf. the Securities Regulations § 4-1 first paragraph letter g.

5.5 Notification upon futures contracts

Disposal/acquisition of futures is notified according to the rules in STA § 4-3 on other financial instruments, and not as trading in the underlying shares. See further on this below.

5.6 Notification upon subscription rights and convertible bonds that only grant the right to demand issued shares

Acquisition of subscription rights and convertible bonds that only grant the right to demand issued shares is not covered by the provision on shares in STA § 4-2, or the provision on other financial instruments in STA § 4-3. The provision in STA § 4-3 only covers instruments that grant the right to acquire shares that are already issued, cf. first paragraph no. 1, and instruments that have a similar economic effect as these, and which are linked to shares that are issued, cf. no. 2.

5.7 Special on notification requirement upon conditional acquisitions

5.7.1 Introduction

The notification requirement upon acquisition exists when a final, binding agreement has been entered into. If there are unfulfilled conditions for the acquisition at the time of the agreement, the agreement will as a starting point not trigger the notification requirement as an acquisition until the conditions have occurred or been waived. Here, possible piercing considerations are disregarded.

Conditional agreements on purchase, sale, or subscription will in reality imply an option agreement if the option holder controls the entry of all necessary legal conditions for the implementation of the purchase or sale. Such agreements must therefore be notified immediately upon entry into according to the provision on notification for other financial instruments in STA § 4-3 first paragraph no. 1, provided that it concerns shares that exist at the time of acquisition. A typical example of this is an offer to purchase shares that have conditions, for example, related to a certain acceptance rate, but where the conditions can be waived by the offeror. The offeror must then notify this continuously as acceptances come in, provided a notification threshold is reached or passed.

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5.7.2 Conditions outside the acquirer's control, e.g., requirement for consent or corporate law decision

According to the provision in STA § 4-3 first paragraph no. 2, notification must be made for financial instruments that are not linked to rights to acquire shares, but which have a similar economic effect as such rights. Acquisition of shares to which such conditions are attached must be notified according to the provision in STA § 4-3 first paragraph no. 2 when a binding agreement exists, provided it is linked to shares that are issued. See more on this in point 6. If the condition is outside the acquirer's control, for example, conditions regarding consent, corporate law decision, etc., it must, in the view of the Financial Supervisory Authority, be weighed on the nature of the condition and the purpose of the notification rules. This indicates that notification must be made according to the provision where the condition does not appear to be an actual and real obstacle to the implementation of the acquisition.

In the case of an agreement on the acquisition of shares that are not issued, for example, through issuance, the notification requirement must be derived from the provision on notification requirement for shares in STA § 4-2. Whether the notification requirement is triggered under this provision also depends here on the nature of the condition and the purpose of the notification rules. This indicates that agreements on the acquisition of shares that are not issued and are conditional, but where the condition does not appear to be any actual or real obstacle to the acquisition being carried out, must be notified according to the provision on shares in STA § 4-2 already at the time of the agreement.

The condition for the acquisition must normally be said to lie outside the acquirer's control when the issuance depends on approval from the general meeting. The Financial Supervisory Authority's assessment is that the notification requirement for the subscriber for shares must normally be considered to arise at the time the conditions for the allocation are fulfilled, i.e., at the time of the general meeting's approval. At this time, it is considered according to the notification provisions that there is an acquisition of shares in the subscriber's hands. Notification must then be made as described in point 5.3 above.

5.7.3 “All or nothing” order

An "all or nothing" order implies that the customer gives the broker an order to buy or sell a specific number of shares. This type of order is used where there is an assumption that the broker must execute the order in partial transactions. The customer will not be obliged to accept any partial delivery until the entire agreed number of shares can be delivered/sold. Such orders will have a certain lifespan and specify a specific price or price limit (normally calculated as an average price).

When executing this type of order for customers, the securities company will expose itself to risk until the volume and price conditions are...