Proposals for new rules to increase transparency around and participation by foreign shareholders

About 40 per cent of holdings (in terms of value)on the Oslo Stock Exchange in 2019 were owned by foreign investors. The majority of these shares were nominee registered . This means that the names of the actual owners of these shares are not included in the company’s shareholder register and that the shareholding is registered via a nominee. A number of companies do not permit such shareholders to participate and vote at their general meetings.

The government is now proposing to amend the Limited Liability Companies Act, the Public Limited Liability Companies Act, and the Central Securities Depository Act which will result in increased transparency regarding who the owners of nominee-registered shares are. These proposals also make provisions allowing the owners of nominee-registered shares to exercise their rights as shareholders to the same extent as other company shareholders. The proposals only apply to public limited liability companies (ASA) and limited liability companies (AS) whose shares are registered with a central securities depository, and will not have any impact on the majority of limited liability companies.

Several of the proposals are based on the EU directive regarding the encouragement of long-term shareholder engagement (EU 2017/828).

Increased transparency around ownership

Nominee registration makes it easier for foreigners to invest in Norwegian companies. This means that foreigner citizens and entitites are not required to open an account with a Norwegian central securities depository and are instead able to receive assistance from a nominee who helps them to deal with local laws and regulations (Nw: forskrift). This is particularly important for non-professional investors, as well as those who invest in markets across several countries.

Members of the public have access to details of registered shareholders in Norwegian companies. When nominee-registration is used, it is the name of the nominee that is entered into the company register of shareholders. This means that the public do not have access to details on who the owners of nominee-registered shares are – they are only able to identify the nominees.

The government is now proposing to grant everyone the right to request details of the owners of nominee-registered shares.

‘Norway has a long tradition of transparency around who owns shares in Norwegian companies. Nevertheless, it has been possible for more than 40 years for foreign citizens and entities to own shares anonymously. The government’s proposal to give the public right of access to identifying who nominee-registered shares are owned by reinforces the principle of transparency around all shareholders in Norwegian companies,’ says Minister of Trade and Industry Iselin Nybø.

When requests are made for disclosure, the company must obtain details about the owners behind nominee-registered shares. In order to reduce the burden on businesses, it has been proposed that the party making the request covers the company’s actual expenses incurred in the course of fulfilling the disclosure request.

The government is also proposing a legal basis to issue regulations governing that companies must periodically publish shareholder data. This proposal would mean that such details were available to the public free of charge.

Participation and voting for owners of nominee-registered shares

It is important for the governance of Norwegian limited liability companies that true shareholder democracy exists and that all shareholders are able to participate and vote at general meetings. Many companies do not permit the owners of nominee-registered shares to participate and vote to the same extent as other shareholders.

The government is proposing rules that will guarantee beneficial owners of nominee-registered shares the same rights and opportunities afforded to other shareholders to participate and vote in company general meetings.

‘Norwegian business will need to make important decisions in the coming years. This means it is important for shareholders to be able to influence the choice of direction in companies through participation in and voting at general meetings. The government’s proposals make it significantly easier for foreign shareholders to get involved in companies through participation and voting at general meetings, says Minister of Trade and Industry Iselin Nybø.

Other amendments

• Only those who are shareholders five working days prior to a general meeting may participate and vote, regardless of whether the shares subsequently change owner. This will make it easier for companies to identify who are entitled to participate and vote. This amendment applies to all public limited liability companies and limited liability companies whose shares are registered in a central securities depository.

• Owners of nominee-registered shares must notify companies no later than two working days prior to a general meeting in order to participate and vote. This proposal makes it easier for owners of nominee-registered shares to participate and vote in company general meetings, while also giving companies opportunity to carry out checks on who their owners are.

• New rules to be introduced for nominees or intermediaries. These parties must convey information between companies and shareholders, notify companies of shareholders’ identities upon request, and facilitate shareholders’ exercise of their rights as shareholders.

• Two-week notice period for limited liability companies with shares registered in a central securities depository. The purpose of this is to increase predictability for shareholders and facilitate increased participation in general meetings. The two-week notice period may be shorter if no shareholder objects.

• The introduction of standardised formats for messages between companies and owners of nominee-registered shares. This will ensure the automated, digital processing of messages, which may reduce costs for all parties. This amendment will be implemented by means of regulations (Nw: forskrift).

• Technology-neutral communication for public limited liability companies: At present, public limited liability companies must receive explicit consent from a shareholder in order to send messages electronically to the shareholder. This proposal will see limited liability companies permitted to choose their own method of communication when communicating with shareholders. Companies listed on the stock exchange must continue to seek explicit consent prior to sending messages to shareholders electronically, except for communications via nominees which will now occur electronically.

Facts: Amendments to the Limited Liability Companies Act, the Public Limited Liability Companies Act, and the Central Securities Depository Act

• Simpler rules around shares will result in less bureaucracy. Several of the proposed amendments will provide good, predictable framework conditions for limited liability and public limited liability companies.

• According to the Brønnøysund Register Centre, there were as of 31 December 2020 approximately 350,000 limited liability companies and in excess of 200 public limited liability companies registered in the Register of Business Enterprises. According to figures issued by Verdipapirsentralen ASA, there were as of 31 December 2020 approximately 700 limited liability companies and 200 public limited liability companies registered in central securities depositories.

• Members of the public and press currently have access to details of all shareholders in public and limited liability companies unless these shares are held by a nominee. Anyone can contact a company directly to request access to the shareholder register. This right of access does not apply to details of who ownes nominee-registered shares.

• Additionally, details of shareholders are set out in the company's annual accounts, which are available to order from the Register of Company Accounts. Limited liability and public limited liability companies must set out in the notes to their annual accounts details of the company’s 20 biggest shareholders and their respective holdings. Details of shareholders with holdings of less than one per cent may be omitted. Small companies are required to provide details of the company’s 10 biggest shareholders and their respective holdings in their annual accounts. Details of shareholders with holdings of less than five per cent may be omitted.