This newsletter describes two key changes that are relevant to issuers on the Oslo Stock Exchange, Euronext Expand, and Euronext Growth Oslo, as well as to investment firms and others assisting with the issuance of bond loans.
Amended deadline for issuers to disclose insider transactions
- Primary insiders and their closely associated persons must notify the issuer upon executed transactions in financial instruments related to the issuer in question (MAR article 19). Under the current regulation, the notification shall promptly be submitted to both the Norwegian Financial Supervisory Authority and the issuer, and no later than three business days following the transaction. Within the same deadline, the issuer must disclose the transaction on www.newsweb.no on behalf of the reporting person.
- The three-day deadline is considered by Norwegian authorities as applicable only in situations where particular circumstances prevent immediate reporting. As such, both the notice by the reporting person to the issuer and the Norwegian Financial Supervisory Authority, and the notice by the issuer to the market, shall be made immediately. In both cases, the deadline runs from the time of the transaction. As a consequence, should the reporting person fail to meet the deadline for giving notice to the issuer, it may be difficult for the issuer to meet the deadline for disclosing the transaction on www.newsweb.no.
- As of 1 June 2023, the requirements to the issuer’s deadline for disclosing a notifiable transaction will change. After the amendment, the issuer’s deadline for disclosure will start upon receipt of the notice from the primary insider or the closely associated person regarding the transaction. Following the receipt of such notice, the issuer must disclose the transaction within two business days.
- The amendments as of 1 June only concerns the deadline for the issuer’s disclosure obligations. Primary insiders and their closely associated persons must continue to fulfil their reporting obligations to the Norwegian Financial Supervisory Authority and the issuers, immediately after executing the transaction.
In the preparatory works for the implementation of the amendments, it is emphasized that “it is advantageous for the market that disclosure takes place as soon as possible”. Consequently, we assume that the amendments will have less practical significance where the issuer becomes aware of a notifiable transaction in advance, such as through pre-commitments in share offerings or transactions by primary insiders subject to internal clearing procedures. It is likely that issuers continue to strive to disclose the transaction as soon as practically possible. The key difference is that issuers will cease to be dependent on the reporting person’s compliance with applicable deadlines, in order to be able to meet the deadline for disclosing the reportable transaction.
New exemption from the market soundings regime for certain placements of bond loans
On 1 June 2023, a new exemption from the market soundings regime is introduced in connection with the issuance of bonds, subject to certain criteria. With the new exemption, market soundings that meet the criteria will be considered lawful disseminations of inside information, even if the sounding is not made in accordance with the other requirements of the market soundings regime pursuant to MAR Article 11 (3) and (5). The new “safe harbour” provision may apply if the sounding:
- concerns an issuer with shares or bond loans listed on a regulated market, a multilateral trading facility (MTF), or an organized trading facility (OTF)*,
- involves communication of information exclusively to professional investors,
- is intended to negotiate the terms of the investors’ possible participation in the bond placement, and
- involves obtaining confirmation in writing from each investor that they are aware of the applicable legal obligations upon to receiving inside information, and the sanctions for inside trading and unlawful disclosure of inside information.
The purpose of the new exemption is to alleviate the burden that the requirements for market soundings may entail, and to make placements of bond loans in accordance with the criteria more attractive for both issuers and investors. The inclusion of the new exemption is likely to have similar effect for investment firms that carry out market soundings in practice. Although MAR and the market soundings regime became applicable in Norway in March 2021, investment firms have been subject to the regime since MAR was implemented in the EU in 2016. After seven years of mandatory compliance, it remains to be seen whether the alleviation with the new exemption is sufficient to prompt investment firms to change their practices, or whether investment firms will continue to utilize the “safe harbour” already provided for by the market soundings regime.
*The regulated markets in Norway are Oslo Børs and Euronext Expand, while Euronext Growth Oslo is a multilateral trading facility. There are currently no organized trading facilities in Norway.