6 Comments on the various provisions

Re section 1:

The purpose of the Act is stated in the proposal for section 1. The Act provides a framework for the establishment and operation of a company to manage a state scheme for financial services for Norwegian export of capital and services in its name, cf. the first sentence. Further provisions concerning the company’s activities are provided in section 3, cf. the comments to that section, below.

The second sentence provides that the company’s name is to be Eksportkreditt Norge AS. It follows from this that the company is to be organised as a limited liability company, cf. 4.1, above, as well as sections 6 and 7, below, and the comments to these sections.

Re section 2:

Section 2 establishes that the state is to own all shares in the company. This will also be established in the company’s bylaws.

The provision entails, inter alia, that the state shall not transfer shares in the company to others. Nor will it be possible to decide an increase in share capital involving others than the state.

Re section 3

Section 3 contains proposals for provisions concerning the instruments to be at the company’s disposal for promotion of the purposes stated in section 1.

The point of departure is that the company in its own name at the expense of the state is to be able to prepare and disburse state-subsidised loans (export credits) within the framework following from international agreements (see the first paragraph (1)). In this connection, the OECD “Arrangement on Officially Supported Export Credits” is of central importance (see 2.2, above). The reason for establishing the company is to succeed administration of state-funded export credits, formerly managed by Eksportfinans ASA (see 2.1, above). This will be further regulated by regulations pursuant to the second paragraph or as otherwise appropriate.

In addition, the company may also provide loans on market terms as an alternative to loans referred to in the first paragraph (1), see the first paragraph (2). It is assumed that this too will be regulated by regulations pursuant to the second paragraph or as otherwise appropriate. For the sake of clarity, we would stress that it would now only be appropriate to provide market loans as an alternative to CIRR loans, referred to as CIRR-qualified loans at market rates. Since the instruments available to the company for promotion of purposes as referred to in section 1 are authorised by the Act, assignment of this right to the company will not be subject to the rules concerning public procurements.

The company will moreover be responsible for securing the state values in cases where the borrower has payment problems and/or defaults on the loan. In such cases, a need may arise for negotiations with the borrower and other involved parties, restructuring of loans, amendment of loan agreements, deferral of payment of loan instalments, change of debtor and/or compulsory sale, etc. In order to ensure that the state’s assets are covered by securities, etc., the loan documentation may make appropriate references to the Act. Further provisions concerning this will be included by regulations or as otherwise appropriate.

In order to ensure a seamless transfer of the administration of the export financing scheme, the company will also have the authority to wholly or partly acquire CIRR-qualified loans due for margin renegotiation at Eksportfinans ASA.

Re section 4

Section 4 contains proposals for provisions concerning financing of the company’s activities.

The first paragraph provides that the lending activities shall in their entirety be financed by funds allocated over the National Budget. It is proposed that the details concerning the provision of funds by the treasury are not to be regulated by the Act. It is required that the funds be provided by the treasury in a manner compliant with the rules concerning state aid.

The company is also required to report disbursements and receipts in its lending activities to the central government accounts, and to keep separate accounts of its lending activities in accordance with further provisions provided by the Ministry.

It will not be appropriate to obtain funding from the market.

The second paragraph contains a proposal for a provision that the company’s operations be financed by state grants.

The third paragraph contains a proposal for a provision stating that the company may not raise loans or furnish security without the consent of the Storting.

The fourth paragraph provides that the Office of the Auditor General shall audit the loan account. As in the case of other limited liability companies, the company’s annual accounts shall be audited by the accountant appointed by the company pursuant to the Limited Liability Companies Act.

Re section 5

Formally speaking, the company shall have the role of lender in each loan agreement entered into pursuant to section 3. This entails that the ordinary rules of company law apply to the company’s conclusion of loan agreements. The funds that are lent are allocated over the National Budget. The loans are to be recorded in the government balance sheet, and the state will bear all risk associated with lending activities, cf. 4.4, above.

Pursuant to the first sentence, the state has responsibility for the obligations incurred by the company in connection with lending activities. This entails that the state will be responsible both for fulfilling loan agreements concluded and for covering all other claims that might arise in connection with the lending activities. However, the state shall not have such a responsibility for operation of the company, and it is proposed that this be made clear in the provision.

Pursuant to the second sentence, claims against the state must be addressed to the company.

Re section 6

In section 6 it is proposed that the Limited Liability Companies Act shall apply to the company unless otherwise provided by the present Act. It follows from the provisions of section 204 of the Limited Liability Companies Act that the company will be a state-owned limited liability company since the state owns all of the shares in the company.

Re section 7

Section 7 contains a proposal for a provision concerning the authority of the board. The provision is based on the corresponding provision in section 6 of the Act of 30 August 1991 No. 71 relating to state-owned enterprises with certain adjustments.

The framework for the authority of the board will mainly be defined through the provisions of the Limited Liability Companies Act. In the first paragraph, certain main provisions are laid down, which also follow from the Limited Liability Companies Act.

In the second paragraph, it is proposed that it be provided that the board shall have a duty of consultation in matters assumed to be of substantial significance to the purposes of the company, or which may substantially alter the character of the company or which may have substantial economic or social effects. Such matters are to be submitted to the general meeting. Further rules may be laid down in the bylaws concerning which matters shall be submitted to the general meeting.

Although the board is to have a duty of consultation in certain matters, it is in principle the board that has responsibility for administration of the company. One of the reasons for organising the undertaking as a state-owned limited liability company is that the company and not the Ministry is to deal with individual matters concerning specific loans.

Re section 8

In section 8, it is proposed that certain other Acts shall not apply to the company.

In the same way as for state-owned enterprises, it is proposed that the Public Administration Act, the Civil Service Act and the Civil Service Disputes Act shall not apply to the company. It is also proposed that the Archives Act shall not apply, since the company’s activities will to a great extent be associated with commercial activities.

It is further proposed that the Financial Institutions Act shall not apply to the company. This is because the financing of the company differs essentially from the financing of other financial institutions since operations are financed by the state. The company is not to finance its lending activities by borrowing from the market. Lending activities are to be organised in such a way that commercial risk associated with lending activities, including all foreign exchange and interest rate risk is taken by the state. It is therefore assumed that the company does not have the same capital requirements as other finance institutions.

It may be appropriate to make certain of the provisions of the above-mentioned Acts applicable to the company. These may for example include provisions concerning the legal capacity of the persons who decide on loan applications, provisions concerning remuneration of such persons, provisions concerning the duty of confidentiality, etc. Such provisions are to be laid down in regulations, cf. the proposal for section 9 and the comments to that section below, or as otherwise appropriate.

Re section 9

In section 9, it is proposed that authority be provided by regulations to issue further provisions concerning the processing of loans, the administration of lending funds and the operation of the company, including coverage of the company’s operating costs. It is also proposed that a more general authority be provided to issue regulations concerning compliance with the provisions of the Act.

In some cases, an alternative way of issuing such provisions may be appropriate, for example, in the company’s bylaws, employment contracts, company-internal instructions or letters of assignment. This requires no statutory authority, and is therefore not regulated by section 9.

Re section 10

It is proposed that the Act shall apply from the date decided by the King. The current interim arrangement following reorganisation of the activities of Eksportfinans ASA runs until 1 July 2012. The Ministry intends that the Act should enter into force from this date.