Norway United States

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1 Norway United States Periodic Reporting and Other Ongoing Obligations An Overview for Companies listed Primarily on NYSE or NASDAQ and Secondarily on Oslo Børs January

2 Author and Contact Information Camilla Rykke Merrick Attorney at Law Telephone: (312) Facsimile: (312) Taft Stettinius & Hollister LLP Address: 111 East Wacker - Suite 2800 Chicago, IL USA CAMILLA RYKKE MERRICK is admitted to practice law in the United States (Illinois) and Norway (Cand. Jur.) and currently works in the Corporate and Securities Department of Taft Stettinius & Hollister in Chicago, Illinois. She concentrates her practice in the areas of federal and state regulation of securities, cross-border securities issues and transactions, corporate finance, mergers, complex stock and asset acquisitions, dispositions and general corporate representation. She has counseled both public reporting companies and exchange-listed companies on securities law matters and corporate governance compliance. She represents domestic and international companies that are involved in a wide variety of industries, and functions as outside general counsel to international clients. Camilla has extensive international legal experience and holds a J.D. from the University of Oslo, Norway, and an L.L.M., with honors, and a J.D. from Chicago-Kent College of Law. She has worked as a Senior Executive Officer with the Financial Supervisory Authority of Norway, and has spent several years in private practice in the US. In addition to her studies in the United States and Norway, Camilla has studied in France and England. She regularly speaks to international audiences on topics relating to U.S. securities laws. Disclaimer This overview should not be relied on as providing definitive advice with respect to any particular situation, proposition or transaction. This presentation is prepared for information purposes only as of the date hereof, and shall not be considered nor construed as legal advice in any respect. No liability or responsibility are accepted as a result of this presentation. This is not a complete or exhaustive description of obligations or other matters that could impact the regulations or application of such regulations to issuers listed primarily on a US exchange and secondarily on the Oslo Børs. Further, both US and Norwegian statutes, rules and regulatory interpretations are subject to change and should be consulted rather than relying on this overview, which is dated January This overview is based on the English translations of applicable Norwegian law, and may not be official translations, nor reflect recent amendments to the law. We have included references to the primary sources and we urge you to consult these sources. 2

3 Table of Contents Introduction 4 Legislation for Ongoing Obligations 5 Overview Ongoing Obligations 6 Annual Reports on Form 10-K vs. Annual Financial Reports 7 Quarterly Reports on Form 10-Q vs. Half-Yearly and Quarterly Interim Reports 9 Material Current Events on Form 8-K vs. Disclosure of Inside Information or Corporate Events 11 Handling of Material Non-Public Information / Inside Information 14 Annual Meeting and Proxy Statement 15 Disclosure Controls and Procedures and Internal Controls Over Financial Reporting 17 Insider Reporting and Trading Restrictions 18 5% Beneficial Owner vs. Large Shareholder Reporting Requirements 20 Other Continuing Obligations 21 Initial Offerings, Follow-On Offerings and Shelf Registrations 24 3

4 Introduction This is an overview of the periodic reporting and other ongoing obligations of issuers listed primarily on a US exchange and secondarily on a Norwegian exchange, specifically the Oslo Børs, so-called dual-listed issuers.[1] The choice of listing venue will impact which securities laws apply and which regulator(s) has jurisdiction.[2] For purposes of this overview, we assume that Norway is the Home State and that Norwegian laws and regulations apply.[3] Norway is the home state for a US issuer if its securities are offered to the public, or if initial admission to quotation on a regulated market is requested, for the first time in Norway. Unless otherwise indicated, Norwegian laws and regulations apply to both Norwegian and foreign issuers.[4] However, the Norwegian Financial Supervisory Authority ( NFSA ) and Oslo Børs assume that companies listed primarily on a US exchange and secondarily on the Oslo Børs are subject to regulations and oversight in the US that is substantially similar to that of Norway, and therefore exempt such companies from certain regulatory requirements imposed by NFSA and Oslo Børs.[5] US and Norwegian regulations of securities markets are quite complex. This overview focus on those aspects of US and Norwegian law that, in our experience, are most relevant to issuers that are listed primarily on a US exchange and secondarily on the Oslo Børs. We do not address specific regulations that may apply to certain issuers such as oil and natural gas companies, or to companies that are engaged in certain regulated areas such as banking or investment. In addition, the US has several categories of filers (issuers), including Large Accelerated Filer, Accelerated Filer, Non-Accelerated Filer, Smaller Reporting Company and Emerging Growth Company with some variations between the filer types in their ongoing obligations, including deadlines and scaled disclosure requirements. Norway, on the other hand, does not differentiate between filers (issuers) with respect to ongoing obligations (but does with respect to the prospectus rules and certain classes of securities) and therefore, for purposes of this overview, we do not address these distinctions. Rather, we assume that the issuer is a Large Accelerated Filer under US regulations issuing equity securities, which issuer is generally subject to the most robust disclosure requirements. Oslo Børs strongly encourages secondarily listed issuers to contact them with any questions, and otherwise to communicate with them regularly to facilitate and ensure compliance with Norwegian ongoing obligations. Also, we would like to point out that the overlap between the Norwegian and US regulations may be sufficient so that the dual-listed issuer may file the same report both in the US and in Norway, but the issuer should take extra care and make sure based on the specific facts and circumstances as applied to the regulations that it complies with both Norwegian and US regulations. 4

5 Legislation for Ongoing Obligations The starting place to understand the regulatory scheme governing legislation for continuing obligations is the following statutes: In addition to the above listed statutes, issuers will have to comply with a number of other regulations, including, but not limited to: United States US Securities Act of 1933 (the Securities Act ) US Securities Exchange Act of 1934 (the Exchange Act ) Sarbanes-Oxley Act of 2002 Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 Jumpstart Our Business Startups Act of 2012 NASDAQ Stock Market Rules and Listing Rules NYSE Stock Exchange Rules and Listed Company Manual The US Securities and Exchange Commission (the SEC ) also has issued a comprehensive set of rules and regulations under these acts. Additionally, the SEC and its Staff have provided interpretive guidance on a wide range of matters. Norway Norwegian Act on Securities Trading (Securities Trading Act, the STA ) (Act of 29 June 2007 No. 75. Last amended 14 June 2013 Norwegian Act relating to Regulated Markets (Stock Exchange Act, the SEA ) (Act of 29 June 2007 No. 74) Prospectus Directive 2003/71/EC Regulations to the Securities Trading Act (Securities Trading Regulations) FOR No. 876 Regulation on Regulated Markets (Stock Exchange Regulations) FOR No. 875 Oslo Børs Stock Exchange Rules Listing Rules for Oslo Børs, January 2015 Oslo Børs Stock Exchange Rules Continuing Obligations of stock exchange listed companies, July 2013 These acts and regulations are supplemented by various circulars issued by the Oslo Børs and the NFSA, among others. In the event of any conflict between the NFSA s or Oslo Børs rules, circulars and legislation or regulations, the legislation or regulations shall govern. 5

6 US vs. Norway Overview Ongoing Obligations Once an issuer has a class of securities registered under Section 12(b) of the Exchange Act, it must make certain ongoing filings with the SEC under the Exchange Act.[6] These ongoing filings include the following periodic reports: Annual Report on Form 10-K; Quarterly Report on Form 10-Q; and Current Events Report on Form 8-K. In addition to the periodic reporting, the issuer and its directors, executive officers and significant shareholders are subject to, among others, the following requirements: Proxy Rules; Section 16 Reporting Obligations and Short-Swing Profit Liability; Beneficial Ownership Reporting on Schedules 13D and 13G; Books and Records, and Internal Accounting Controls; Tender Offer Rules; and Listing Standards of NASDAQ or NYSE, as applicable. The issuer also becomes subject to various other provisions of the US federal securities laws. Similar ongoing disclosure obligations apply to issuers that have securities listed on the Oslo Børs. In this overview, we will compare certain US and Norwegian ongoing disclosure obligations. To the extent Norway has additional obligations, we will identify and describe some of these in further detail. While the Norwegian regulatory requirements are generally not as extensive as the US requirements, certain provisions of the Norwegian regulations may impose additional, broader or other requirements than the comparable US provisions and therefore it is important for the issuer to be aware of both US and Norwegian ongoing obligations and to consult applicable regulations. 6

7 Annual Reports on Form 10-K vs. Annual Financial Reports United States Norway Comments for Dual-Listed Issuers Content An issuer must file an Annual Report on Form 10-K following the end of each fiscal year.[7] It provides a comprehensive overview of the issuer s business and financial condition.[8] Required information includes, among others: (1) Description of the issuer s properties and business, including developments during the fiscal year; (2) Management s discussion and analysis of financial condition and result of operations (MD&A); (3) Qualitative and quantitative disclosure about market risks; (4) Description of material legal proceedings; (5) Audited Financial Statements, including independent auditor s opinion; (6) Management s conclusion regarding effectiveness of disclosure controls and procedures; and (7) Management s report on internal control over financial reporting and related independent auditor s attestation.[9] In addition, the following information is required (but may be filed with the Proxy Statement (addressed below) if the Proxy Statement is filed within 120 days of the end of the fiscal year, and incorporated by reference into the Form 10-K): (1) Information regarding directors, executive officers and more than 5% beneficial owners, including compensation, transactions with related parties and security ownership; (2) Identification of the Audit Committees financial expert(s) (or if the issuer doesn t have one, an explanation of why not); (3) Identification of independent directors and committee members; (4) Report of the compensation committee; (5) Information on any ethics code for certain principal officers; (6) Textual and tabular information regarding equity compensation plans; and (7) Disclosure of certain audit fees.[10] As a general rule, issuers listed on Oslo Børs must file Annual Financial Reports.[11] The Annual Financial Report shall include (1) Audited Financial Statements, and Consolidated Accounts if applicable; (2) Management Report; and (3) a Certificate of persons responsible within the issuer. [12] The Management Report includes, among others, the following information relating to shareholders: (1) share trade restrictions; (2) who exercises the rights attached to certain employee shares where the employees do not exercise such rights themselves; (3) shareholder agreements which restrict trading or voting rights attached to such shares; and (4) any material agreement with change of control provisions.[13] The NFSA may exempt issuers from certain of these disclosure requirements.[14] Specifically, NFSA may exempt issuers from the Management Report and the Certificate of persons responsible within the issuer where the issuer is required under US law to provide disclosures equivalent to those required under Norwegian Law.[15] Further, the Financial Statements and Consolidated Accounts may be drafted in accordance with corresponding rules in the US, including Generally Accepted Accounting Principles ( GAAP ).[16] The basic rule in Norway is that an issuer must provide an Annual Financial Report, including an Audited Financial Statement, a Management Report and a Certificate.[17] However, the NFSA has concluded that annual periodic reporting requirements in the US related to Forms 10-K and 20-F are functionally equivalent to Norwegian periodic requirements.[18] Therefore, the issuer can apply for an exemption that will allow the issuer to file their US filings prepared in accordance with US disclosure rules and that will satisfy each of the requirements of the Norwegian Annual Financial Reporting obligation, including the Audited Financial Statements, Management Report, and Certificate of Persons responsible.[19] The NFSA has granted several dual-listed issuers exemptions from the Annual Financial Report. 7

8 Cont d: Annual Reports on Form 10-K vs. Annual Financial Reports United States Norway Comments for Dual-Listed Issuers Certification In connection with the Form 10-K, issuers must file Section 302 and 906 certifications.[20] In a Section 302 certification, the CEO and CFO each certify that the information contained in the annual report is both accurate and complete. The rules also require these officers to certify in connection with controls and procedures that they (1) are responsible for establishing, maintaining and regularly evaluating the effectiveness of the issuer's internal controls; (2) have made certain disclosures to the issuer's auditors and the board s audit committee about the internal controls; and (3) have included information in the quarterly and annual reports about their evaluation and whether there have been significant changes in the internal controls or in other factors that could significantly affect internal controls subsequent to the evaluation.[21] In a Section 906 certification, which overlaps with the Section 302 certification, the CEO and CFO certify that the financial statements fully comply with the requirements of the Exchange Act and the information in the report fairly presents, in all material respects, the issuer s financial condition and result of operation.[22] Further, the independent auditors shall deliver an attestation report on the management s assessment.[23] As noted above, an issuer shall provide a Certificate of persons responsible within the issuer in connection with the Annual Financial Report, but the issuer may apply for an exemption from the certificate requirement where the issuer is required under US law to fulfill requirements equivalent to those required under Norwegian Law.[24] The NFSA has granted issuers exemptions from the Certificate of persons responsible within the issuer, finding that the US certificates fulfill requirements equivalent to those required under Norwegian law.[25] Accordingly, issuers need not file a separate Norwegian certification in connection with its filing of the Annual Report on Form 10-K provided the issuer secures an exemption. Deadlines and Publication Depending on the classification of the issuer, the annual report on Form 10-K may be filed 60 to 90 days after year-end, with the possibility of obtaining a 15 day extension.[26] The Annual Financial Report is due within 4 months of the financial year-end.[27] The Annual Financial Report must be made available as an attachment to the Oslo Børs exchange notice and should thereafter be posted to the issuer s website.[28] While the issuer has a longer period of time to comply with the Norwegian Annual Financial Report obligation, the issuer must file the Form 10-K with Oslo Børs for public disclosure simultaneous with filing the 10-K with the SEC.[29] 8

9 Quarterly Reports on Form 10-Q vs. Half-Yearly and Interim Reports United States Norway Comments for Dual-Listed Issuers Content An issuer must file a Quarterly Report on Form 10-Q following the end of each of their first 3 fiscal quarters.[30] Required information includes, among others: (1) Unaudited interim financial statements; (2) Update to the Form 10-K s MD&A; (3) Qualitative and quantitative disclosure about market risks; (3) Management s conclusions regarding the effectiveness of the issuer s disclosure controls and procedures as of the end of the quarter; and (4) Any changes in the issuer s internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, the internal control over financial reporting. The issuer must also disclose, among others, changes to the Form 10-K risk factors, and material legal proceedings and developments from previously reported legal proceedings. As a general rule, issuers listed on Oslo Børs must file Half- Yearly Financial Reports.[31] The Half-Yearly Financial Report shall include (1) Half-Yearly Financial Statements, and Consolidated Accounts if applicable; (2) Interim Management Report; and (3) a Certificate of persons responsible within the issuer. The Interim Management Report shall (1) indicate important events that occurred during the first 6 months of the financial year, and their impact on the Half-Yearly Financial statements; (2) disclose principal risks and uncertainties for the remaining 6 months and (3) inform of major related parties transactions.[32] The NFSA may exempt issuers from certain of these disclosure requirements.[33] Specifically, NFSA may exempt issuers from the content of the Interim Management Report and the Certificate if the issuer is required under US law to provide disclosures and a certificate equivalent to those required under Norwegian Law.[34] Further, the Financial Statements and Consolidated Accounts may be drafted in accordance with corresponding rules in the US, including the US GAAP.[35] In addition to the Half-Yearly Report, issuers must file Quarterly Interim Reports in accordance with requirements for interim reporting in the international accounting standards and consolidated accounts to which the US GAAP corresponds.[36] If the Half-Yearly or Quarterly Interim Financial Report have been audited or reviewed by an auditor, the audit shall be made public.[37] Oslo Børs also requires that issuers publicize a financial calendar no later than by year end, which calendar shall provide the dates for next year s interim reports. Issuers shall immediately announce any subsequent changes to these dates.[38] Dual-listed issuers are not automatically exempt from the Norwegian general requirement that it provide a Half-Yearly Financial Reports and Quarterly Interim Reports.[39] With respect to Half-Yearly Financial Reports, dual-listed issuers may apply for an exemption from the requirement that they file such report and instead file their US filings prepared in accordance with US disclosure rules in Norway, provided such requirements are equivalent to the Norwegian disclosure requirements.[40] The NFSA has concluded that annual periodic reporting requirements in the US related to Forms 10-K and 20-F are functionally equivalent to Norwegian periodic requirements [41] and it appears likely that NFSA would find Form 10-Q equivalent to the Half-Yearly Financial report, and grant issuers an exemption therefrom. With respect to the Quarterly Interim Reports, while there is no general exemption from such reports, those reports are comprised of financial statements prepared in accordance with international accounting standards. Since US GAAP corresponds to the international accounting standards, the issuer should be able to simply file their financial statements prepared in accordance with US GAAP and that will satisfy their obligations under the Quarterly Interim Report requirement.[42] Dual-listed issuers would still need to comply with Oslo Børs requirement for publication of a financial calendar. 9

10 Cont d: Quarterly Reports on Form 10-Q vs. Half-Yearly and Interim Reports United States Norway Comments for Dual-Listed Issuers Certification As with the Form 10-K certification, the CEO and CFO each must file 302 and 906 Certifications.[43] As with Annual Financial Reports certification, issuers must in connection with the Half-Yearly Financial Report provide a Certificate of persons responsible within the issuer. [44] However NFSA may exempt issuers from the Half-Yearly Certificate requirement where the issuer is required under US law to fulfill requirements equivalent to that required under Norwegian Law.[45] The NFSA may grant an exemption from the Certificate of persons responsible within the issuer.[46] The NFSA has granted exemptions from the Annual Financial Report certification requirement to dual-listed issuers, including US issuers based on their Form 10-K certifications. The Form 10-Q certifications are the same as the Form 10-K certifications. Therefore, it appears likely that NFSA would grant issuers an exemption from the Half- Yearly Financial Report s certification requirement.[47] Deadlines and Publication Depending on the classification of the issuer, the quarterly report on Form 10-Q may be filed 40 to 45 days after quarter end, although a 5-day extension is available.[48] The Half-Yearly Financial Report and the Quarterly Interim Reports are due as soon as possible but no later than 2 months after the period end.[49] The Half-Yearly and Interim Financial Reports must be made available as an attachment to the Oslo Børs exchange notice and should thereafter be posted to the issuer s website.[50] While the deadline for filing the Half-Yearly Financial Reports and the Quarterly Interim Reports are longer under Norwegian law than US law, the issuer must file the Form 10-Q with Oslo Børs for public disclosure simultaneous with filing it with the SEC.[51] 10

11 Material Current Events on Form 8-K vs. Disclosure of Inside Information or Corporate Events United States Norway Comments for Dual-Listed Issuers Triggers In addition to filing Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, issuers must disclose certain material events on a more current basis on Form 8-K.[52] A material event is an event for which there is a substantial likelihood that a reasonable investor would consider the information important in making an investment decision.[53] The following is a list of events an issuer is required to report on Form 8-K: (1) Entry into or termination of, or material amendment to, material agreements; (2) Significant acquisitions or dispositions; (3) Specified financial information, including earnings releases, creation of direct financial obligations or off-balance sheet arrangements and events that accelerate or increase those obligations or arrangements, costs associated with exit and disposal activities and material impairments; (4) Information regarding the issuer s securities and trading markets, including delisting notices or failure to satisfy listing standards, sales of unregistered securities and material modifications to rights of security holders; (5) Matters relating to accountants and financial statements, including changes in the independent auditor and restatements of financial statements; (6) Bankruptcy or receivership; (7) Information regarding corporate governance and management, including changes in control of the issuer; departures or appointments of directors and executive officers; entry into, adoption of or material amendments or modifications to material compensation agreements; amendments to the issuer s charter documents, amendments or waivers to the issuer s code of ethics and suspension of trading under employee benefit plans; and (8) The results of matters submitted to a vote of the issuer s shareholders. (Cont d.) In addition to the Annual Financial Report and Quarterly Interim Report, an issuer shall without delay and on his own initiative publicly disclose: (1) inside information which concerns the issuer directly; and (2) certain defined corporate events or corporate actions, provided however that the issuer may delay filing if there is a legitimate interest in doing so.[54] Notwithstanding the right to delay, the issuer may not wait with public disclosure if the inside information is known to, or about to be known to, unauthorized parties[55] or if the delay would mislead the market. Inside Information is defined as any information of a precise nature relating to financial instruments, the issuers thereof or other circumstances which has not been made public and is not commonly known in the market and which is likely to have a significant effect on the price of those financial instruments or of related financial instruments. [56] Among corporate events or actions to be publicly disclosed immediately are changes in share capital, shareholders rights, the issuer s charter and new loans.[57] Further, the issuer also shall disclose immediately, subject to the inside information restrictions, the following events: (1) Proposals and decisions by the board of directors to be set forth on the general meeting on a) dividends; b) mergers; c) demergers; d) increases or decreases in share capital; and e) mandates to increase the issuer s share capital; (2) Allocation and payment of dividends, as well on issuance of shares; (3) Decisions on changes to the issuer s board of directors, managing director or financial director, including notice of resignation given by any such person; and (4) Following a general meeting, resolutions passed that differs from the resolutions proposed by the board of directors and made public.[58] (Cont d.) While both the US and Norway require issuers to disclose material events, US and Norwegian regulations define material events differently. For example, some of the corporate events or actions that would require public disclosure under Norwegian regulations as a current event are in the US typically initially disclosed as part of e.g. a registration statement or proxy statement. The registration statements or proxy statements are subject to different disclosure rules and have different timing requirements than a material current event report. Given that the material current event reporting obligations are not necessarily the same as between the US and Norway, and that there is no exemption available under Norwegian regulations from the material event disclosure requirements, dual-listed issues should be aware of and comply with both jurisdictions material current event reporting obligations. 11

12 Cont d: Material Current Events vs. Disclosure of Inside Information or Corporate Events United States Norway Comments for Dual-Listed Issuers Exchange Rules and Triggers Confidential Notifications to the Exchanges In addition to the filings required under federal law, NYSE and NASDAQ require its respective listed issuers to disclose public information that would materially affect the securities or influence investors investment decisions, or other material events in which stockholders or the market have an interest.[59] Material news include, among others, earnings announcements, dividend declarations, major management changes and significant new products or contracts. Additionally, NYSE takes it a step further and provides that [i]f unusual market activity should arise, the company should be prepared to make an immediate public announcement of the matter or dispel any unfounded rumors causing unusual market activity.[60] The exchanges also require that they immediately be notified of and provided with supporting documentation prior to, or at the time of, a number of corporate events or actions.[61] NYSE requires notifications of, among others: (1) The listing of additional shares or new class of securities; (2) Cash dividends or distributions, or stock splits or dividends; (3) A material disposition of assets; (4) Rights offerings or changes relating to existing shareholders. NASDAQ requires notifications of, among others: (1) Establishment or material amendment of stock option plan or repurchase plan; (2) Declaring a dividend or stock distribution; (3) Issuing securities that may potentially result in a change of control; and (4) Changes in dividends, changes to the rights of security holders, or public or private sales of additional securities Many issuers also make optional filings on Form 8-K to ensure maximum public exposure of other material events. For example, when the issuer becomes aware that it probably will not meet the expectations it previously communicated, the issuer typically issues a profit warning several weeks before announcing quarterly earnings, which warning it reports publicly by filing a Form 8-K. In addition to the disclosure rules above, Oslo Børs requires issuers to disclose publicly certain related parties transactions that are not immaterial immediately.[62] Oslo Børs also requires that its Surveillance Department be notified prior to the issuer public disclosing during market hours socalled price-sensitive events, including a take-over bid, a profit warning or other specific matters that must be assumed to have a significant effect on issuer s share price. [63] Further, Oslo Børs requires that it immediately, and no later than the proxy notice, be notified of certain events or intentions, including among others, any intention to amend the issuer s charter and that it be provided with copies thereof.[64] In addition to the current event disclosure rules discussed above, if dual-listed issuers take into consideration NYSE s or NASDAQ s requirements that issuers publicly disclose information that would materially affect the securities or influence investors decisions, or in which stockholders or the market have an interest,[65] issuer s optional disclosures to ensure maximum public disclosures and Regulation FD disclosures (as discussed below), the current event filing requirements may be substantially similar as between the US and Norway. But because there is no exemption available in Norway, dual-listed issuers should be careful to comply with Norwegian reporting regulations for corporate events and insider information regardless of whether they file a Form 8-K or similar filing under exchange rules in the US. For example, Oslo Børs requirement that issuers immediately disclose to the public certain related parties transactions that are not immaterial may require dual-listed issuers to make a current event filing in Norway, whereas in the US it potentially could wait to disclose such transaction until filing its proxy statement. The US and Norwegian exchanges also require issuers to notify them of among others, certain corporate events, actions and price-sensitive events prior to publicly disclosing them. Overall, the US exchanges rules appear to exceed Oslo Børs s requirements, and dual-listed issuers complying with US exchanges rules should have no issue complying with Oslo Børs rules. Nonetheless, dual-listed issuers should be careful to comply with the respective exchanges requirements. 12

13 Cont d: Material Non-Public Information vs. Disclosure of Inside Information or Corporate Events United States Norway Comments for Dual-Listed Issuers Deadlines and publication of Material Non- Public Information Issuers generally are required to make most Form 8-K filings within 4 days of the triggering event, and sometimes earlier.[66] NYSE requires that the issuer be prepared to make immediate public disclosures, whereas NASDAQ requires prompt disclosure of information that would materially affect the securities or influence investors decisions, or in which stockholders or the market have an interest.[67] With respect to issuers optional disclosures, the basic premise is that they should be made promptly absent a legitimate business reason. Nonetheless, it is generally accepted that the actual timing of disclosure of material information within the 4 day timeframe is a matter of the issuer s business judgment. Issuers shall publicly disclose inside information without delay, provided, however, that they may delay disclosure for legitimate reasons, provided that such delay does not mislead the market and the information is treated as confidential inside information.[68] Without delay means as soon as possible during exchange trading hours.[69] If the issuer delays public disclosure, the issuer shall promptly notify Oslo Børs on a confidential basis of, and the reason for, such delay, as well as maintain a list of insiders.[70] Following public disclosure, the issuer must post the disclosure on its website.[71] As mentioned above, given that the material current event reporting obligations, including timing of such disclosures, are not necessarily the same and there is no exemption available in Norway, dual-listed issuers should be careful to comply with Norwegian reporting regulations and Oslo Børs strongly encourages duallisted issuers to contact them to discuss timely disclosure. In any event, Norwegian regulations require that if an issuer makes a securities filing in another jurisdiction, that the issuer also simultaneous submit such filing with Oslo Børs for public disclosure.[72] If material non-public information is known to certain parties (Regulation FD Disclosure) Regulation FD requires that if the issuer or someone acting on its behalf discloses material non-public information to certain persons (including securities analysts, other securities market professionals and holders of the issuer s securities who could reasonably be expected to trade on the basis of the information), it must make simultaneous public disclosure of such information (in the case of intentional disclosure) or prompt public disclosure (in the case of unintentional disclosure).[73] Promptly means by the later of within 24 hours of the disclosure or the next opening of NYSE.[74] This requirement usually is satisfied by reporting the information on Form 8-K. However, there is an exception to the public disclosure requirement where an issuer discloses the information to certain persons (e.g., major investors) and the recipient of the information promises not to trade on the inside information. If the issuer has reason to believe that inside information is known to or about to become known to unauthorized parties, the issuer shall without delay and on its own initiative publish the information.[75] The key here is unauthorized parties. In certain circumstances and subject to the equal treatment requirement, Norway permits an issuer to discloses inside information to certain persons (e.g., major shareholders), provided that the recipient of the information becomes an insider with all the obligations such status entails (e.g. the insider shall not disclose nor trade on the inside information, and the issuer shall include such recipient on its list of insiders).[76] While the US generally limits issuers disclosure obligations to cases where the issuer or somebody acting on its behalf discloses information to others, Norway requires issuers to disclose inside information regardless of how the information became known to a third-party. Accordingly, the duty to disclose material non-public information or insider information appears broader under Norwegian regulations. However, if you take other rules and regulations into consideration, such as e.g. NYSE rules that [i]f unusual market activity should arise, the company should be prepared to make an immediate public announcement of the matter or dispel any unfounded rumors causing unusual market activity,[77] the disclosure requirements may be, if not identical, substantially similar. 13

14 Handling of Material Non-Public Information / Inside Information United States Norway Comments for Dual-Listed Issuers Handling of material nonpublic information or inside information US securities laws do not per se regulate handling of material non-public information prior to public disclosure. Rather, the US requires public disclosure under Regulation FD upon certain events (see above) and also prohibits illegal insider trading, which is generally defined as the participation in securities transactions, in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material nonpublic information regarding the security.[78] Accordingly, no individual, regardless of his or her position within the issuer, should purchase or sell any securities of the issuer while in possession of material information that is not yet publicly disseminated.[79] And any insider who leaks inside information to a tippee may be liable, along with the tippee, to third parties for the profit of the tippee.[80] Therefore, each individual who has access to material information should exercise the utmost caution to keep that information confidential within the issuer. And if anyone becomes aware of a leak of material information, whether inadvertent or otherwise, he or she should report the leak immediately to the person or persons at the issuer charged with responsibility for public disclosures in order to comply with Regulation FD.[81] While US securities laws do not directly address handling of material non-public information, NYSE gives some guidance.[82] It notes with respect to certain material information that [w]here it is possible to confine formal or normal discussions to a small group of the top management of the company or companies involved, and their individual confidential advisors where adequate security can be maintained, premature public announcement may properly be avoided. [ ] If unusual market activity should arise, the company should be prepared to make an immediate public announcement of the matter. [83] Further, it states that [a]t some point it usually becomes necessary to involve other persons [ ] maintaining security at this point is virtually impossible.[84] Accordingly, fairness requires that the company make an immediate public announcement as soon as disclosures relating to such important matters are made to outsiders. Norway requires that persons possessing inside information not disclose such information to unauthorized persons.[85] Persons possessing inside information shall not trade on such information, and handle it with due care so that the inside information does not come into the possession of unauthorized persons and is not misused. Issuers shall have procedures for secure handling of inside information, including maintaining a list of persons, including, without limitation, employees, directors, officers, shareholders, and any other third parties, who are given inside information.[86] The issuer must ensure that persons given access to inside information are aware of the duties and responsibilities insider information involves, as well as the criminal liability associated with misuse or unwarranted distribution of such information.[87] Aside from any difference in the definition of material non-public information and inside information, the handling of material non-public information prior to public disclosure manifests differently in the US as compared to Norway. The US imposes a general duty on fiduciaries not to trade on material non-public information and how to publicly disclose material nonpublic information that has been disclosed intentionally or unintentionally. In comparison, Norway prohibits any person possessing inside information (1) from disclosing the information to unauthorized persons and (2) from trading on the information.[88] In addition, Norway requires issuers to put in place controls and procedures for handling inside information. Overall, it appears that the duty to handle material non-public information or insider information is broader under Norwegian law than under US law. However, taking other rules and regulations into consideration, such as NYSE s, the requirements may be, if not identical, substantially similar. All in all, US issuers may be required under Norwegian law to implement procedures for how to handle inside information beyond what is required under US securities regulations and US listing rules.[89] As a side note, in connection with the prohibition on trading on inside information, US issuers and its insiders may be subject to Norwegian insider trading regulations. Norwegian insider trading regulations apply irrespective of whether or not a transaction is actually performed in the Norwegian market and irrespective of the issuer s, investor s or broker s nationality or place of business/residence. Hence it is not a condition that the transaction itself has been performed [in Norway]. [90] Further, the insider trading rules apply to US issuers, irrespective of whether the financial instrument concerned is listed secondarily on the Oslo Børs.[91] Accordingly, insiders of dual-listed issuers should be aware that they may be subject to Norwegian jurisdiction. 14

15 Annual Meeting and Proxy Statement United States Norway Comments for Dual-Listed Issuers Annual Meeting and Proxy Statement State corporate law generally requires issuers to hold annual meetings.[92] In connection with an annual meeting, or any shareholder meeting for that sake, SEC rules require that the issuer distribute a proxy statement and an annual report, if applicable, with or before solicitation of proxies.[93] The Proxy Statement must contain, among others, information regarding: (1) Meeting date and time; (2) Voting information, including shareholder vote required for approval on matters up for vote and method for counting votes; (3) Board elections; and (4) Executive compensation. In addition, the Proxy Statement also shall include information regarding: (1) Related person transactions; (2) Corporate governance matters; (3) Security ownership of significant stockholders and management and Section 16 reporting compliance; (4) Audit Report and audit committee matters; (5) Qualified stockholder proposals; and (6) Specified information with regard to non-routine matters to be put to a vote of stockholders, such as a charter amendment.[94] The Audit Report includes disclosure that the audit committee, among others, reviewed and discussed the financial statements with management, and recommended to the Board or Directors the inclusion of the audited financial statements in the annual report. In addition, the proxy rules also apply to solicitations of written consents. Further, exchange rules may apply.[95] The issuer shall in the notice convening the general meeting state the number of shares and voting rights, as well as provide information on the shareholders rights.[96] The issuer shall enclose with the notice a proxy voting form, unless such form is made available to the shareholders on the issuer s website and the notice includes all the information needed by the shareholders to gain access to the documents, including the internet address. The issuer shall make public information concerning the allocation and payment of dividends, and issuance of shares, including information on any arrangements for allotment, subscription, cancellation and conversion. Notice of the meeting must take place sufficiently in advance so that shareholders may have the opportunity to attend the meeting in order to exercise their voting rights.[97] US issuers must comply with Norwegian meeting notification rules to shareholders as well as US proxy rules. However, the information provided in the US Proxy Statement appears to cover most of the information required in the Norwegian meeting notice to shareholders. 15

16 Cont d: Annual Meeting and Proxy Statement United States Norway Comments for Dual-Listed Issuers Public disclosure and Electronic Delivery An issuer must file its proxy statement or annual report with the SEC. Such statement or report is posted to the SEC s Internet site and is publicly available. In addition, issuers must furnish proxy materials to shareholders through a notice and access model using the Internet. Issuers must post proxy materials, including the proxy statement on a specified, publicly-accessible Internet website (other than the SEC s website) and provide shareholders with notice of the availability of such materials and directions for how to access them.[98] Oslo Børs requires that any meeting notice to shareholders be made public.[99] The issuer may use electronic means to communicate notices, warnings, information, documents, notifications and the like to shareholders, provided the shareholder concerned has given his or her explicit approval. Where an issuer conveys information, to a shareholder, he or she may do so by electronic means to the shareholder s address or by such other means as the shareholder has specified for the purpose.[100] The US and Norway each require issuers proxy statements and shareholder notices, respectively, be disclosed publicly. With respect to documents to be given to shareholders, Norwegian legislation requires that the shareholder consent to electronic delivery. Absent any jurisdictional provisions, the assumption is that Norwegian laws and regulations apply to Norwegian and foreign issuers equally.[101] Accordingly, it appears that dual-listed issuers must comply with Norwegian rules and seek Norwegian shareholders consent prior to any electronic delivery. 16

17 Disclosure Controls and Procedures and Internal Controls Over Financial Reporting United States Norway Comments for Dual- Listed Issuers Books and Records, and Internal Accounting Controls An issuer must maintain and keep books, records and accounts that accurately and fairly reflect the transactions and dispositions of assets of the issuer, and design and maintain a system of adequate internal accounting controls. [102] Annual reports on Form 10-K must include a separate management report stating that management conducted a comprehensive review and evaluation of the issuer s internal controls over financial reporting as of the end of the fiscal year and include management s assessment of such internal controls.[103] Further, the issuer s independent auditors shall deliver an attestation report on the management s assessment.[104] Management may not determine that the internal control over financial reporting is effective if it identifies one or more material weaknesses in the issuer s internal control.[105] A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the issuer s annual or interim financial statements will not be prevented or detected on a timely basis. The Accounting Act requires that issuers listed on Oslo Børs with Norway as Home State disclose their policies, compliance and practices regarding issuer s controls and procedures in the annual report.[106] Oslo Børs may exempt issuers from this requirement where the issuer is subject to (1) an equivalent requirement under US law or listing requirement,(2) a consistency check by the issuer s auditor, and (3) provided it states where such disclosure is otherwise available.[107] Under the consistency check, the auditor assesses, among others, whether the annual financial statements are in compliance with applicable laws and regulations. In addition, the issuer must have organized its financial management to ensure that financial reporting is produced with sufficient quality and speed.[108] Oslo Børs may grant an exemption from the Norwegian requirement that an issuer disclose policies, compliance and practices regarding issuer s controls and procedures in the annual report. Oslo Børs has confirmed that it has granted such exemptions to issuers primarily listed on a US exchange. Disclosure Controls and Procedures In addition to the internal accounting controls over financial reporting, the issuer must design and maintain and periodically evaluate controls and procedures that assure timely, accurate and reliable disclosure of information.[109] The CEO and CFO are required to certify that they have in fact established such disclosure controls and procedures, and have recently evaluated their effectiveness.[110] The issuer must have sufficient expertise to satisfy the requirements for the correct and proper management and distribution of information. Further, the issuer must have procedures in place and be organized to ensure that the Issuer s management and the officers responsible for disclosing information to the market become aware of essential information without undue delay.[111] While stated differently, the US and Norwegian compliance requirements with respect to disclosure procedures appear to overlap. 17

18 Insider Reporting and Trading Restrictions United States Norway Comments for Dual-Listed Issuers Insiders Directors, executive officers and 10% beneficial shareholders must report their ownership of and transactions in the Issuer s securities to the SEC and the public.[112] These insiders report shares or derivative securities in which they have a direct or indirect pecuniary interest whether: (1) beneficially owned; (2) held by household members; or (3) controlled by way of trust, partnership or corporation.[113] Primary Insiders, which includes directors, senior employees, member of the control committee or the auditor associated with the issuance, shall immediately notify the NFSA or its designee of any of their (including those by Related Parties ) purchase, sale, exchange or subscription of shares or of certain loans. This also applies to the issuer s trading in its own shares.[114] Related Parties include a party with whom the insider must be assumed to be acting in concert with in the exercise of shareholders rights.[115] The list of insiders is different as between Norway and the US. Further, the Norwegian insider trading rules appl[y] irrespective of whether or not a transaction is actually performed in the Norwegian market and irrespective of the issuer s, investor s or broker s nationality or place of residence. Hence it is not a condition that the transaction itself has been performed on [Oslo Børs]. Accordingly, the insider trading rules apply to US issuers, irrespective of whether the financial instrument concerned is listed secondarily on the Oslo Børs.[116] With no exemption from the Primary Insider filing obligation, and with different definitions of insiders, triggers events and Deadlines, it appears that dual-listed issuers must comply with both US and Norwegian insider regulations.[117] Insiders Reports An insider files a Form 3 with the SEC within 10 days upon becoming an insider, in which he discloses his status as insider and lists any securities or derivative securities in which he has a direct or indirect pecuniary interest. The insider files a Form 4 reporting any changes in the pecuniary interest within 2 days, with certain exceptions, of such change. The insider files a Form 5 within 45 days after the end of the issuer s fiscal year unless the insider already filed all required Form 4s or had no reportable transactions during the year, where he reports certain changes in pecuniary interest not reported earlier.[118] The Primary Insiders must immediately notify the NFSA or its designee of any insider trades (including those by Related Parties).[119] In addition, upon any change in the list of Primary Insiders, the issuer shall, without undue delay, send to Oslo Børs an updated list of Primary Insiders.[120] The reports filed are different as between the US and Norway. Norway requires issuers to file a list of its Primary Insiders with Oslo Børs and thereafter notify the NFSA or its designees immediately of any insider trades (including those by Related Parties). In comparison, the US requires each insider upon becoming an insider to file a Form 3 with the SEC thus notifying of insider status and to report any changes in pecuniary interest within 2 days on Form 4. 18

19 Cont d: Insider Reporting and Trading Restrictions United States Norway Comments for Dual-Listed Issuers Restrictions Aside from the general prohibition on illegal insider trading,[121] the short-swing profit recapture rules require an insider to disgorge profits on any purchase and any sale of issuer securities that occur within a six-month period of each other, regardless of possession of material non-public information.[122] Norway prohibits illegal insider trading (as discussed above), but Norwegian regulations do not impose any prohibition on insiders profiting from trades on their own account within a defined time period.[123] While both Norway and the US prohibit illegal insider trading, the US also automatically disgorges profits from any purchase or any sale of issuer securities that occur within a six month period of each other. While Norway has no such prohibition on insiders executing and profiting on trades for their own account within a defined time period, such trades must comply with insider trading laws. 19

20 5% Beneficial Owner vs. Large Shareholder - Reporting Requirements United States Norway Comments for Dual-Listed Issuers Reporting Obligation Beneficial owners of more than 5% of the issuer s securities must disclose their ownership to the SEC.[124] A person is deemed to be the beneficial owner of securities if he, directly or indirectly, has (1) the power to vote (or direct the voting of) the securities or (2) the investment power including the power to dispose (or direct the disposition of) the securities.[125] When two or more persons agree to act together for the purposes of acquiring, holding, voting or disposing of the securities of an issuer, they are generally considered a group and their security holdings are aggregated for purposes of determining their filing obligations.[126] Additionally, in the event of a material change to the information in the schedule, the beneficial owner must promptly file an amendment.[127] At any time a shareholder s or other person s proportion of shares and/or rights to shares or voting power reaches, exceeds or falls below 5%, 10%, 15%, 20%, 25%, 1/3, 50%, 2/3 or 90% of the share capital or voting power as a result of acquisition, disposal or other circumstance (including the issuer s following i.e. a share repurchase program), the party concerned shall immediately notify the issuer and NFSA or its designee.[128] In calculating the percentages above, related persons rights to shares or voting rights are included.[129] Related Parties include a party with whom the insider must be assumed to be acting in concert with in the exercise of shareholders rights.[130] With no exemption from the filing obligation, and with different trigger times, trigger events (see Deadlines below) and different basis for ownership calculations, Shareholders of dual-listed issuers must file Large Shareholder Notices under Norwegian regulations in addition to any schedules required under US regulations. The Schedule or Notice Depending upon the facts and circumstances, the beneficial owner or group of beneficial owners may be eligible to file the more abbreviated Schedule 13G in lieu of Schedule 13D. Provided the beneficial owner does not file the abbreviated Schedule 13G, the Schedule 13D discloses, among others: (1) Source and amount of funds or other considerations; (2) Purpose of transaction; (3) Interest in securities of the issuer; and (4) Contracts, understandings or relationships with respect to the securities of the issuer.[131] The shareholder must file a Large Shareholder Notice. The notice may be in English and shall include information regarding, among others: (1) reason for the notification; (2) type of transaction; (3) timing of and market for the transaction; and (4) price and volume of the transaction.[132] In addition, the notice shall include information concerning Related Parties transactions. The information required to be included in a Schedule 13D appears to be broader than the information required in the Large Shareholder Notice. Instead, the information required in the Large Shareholder Notice appears substantially similar to the information that is provided on US Forms 4 and 5 (discussed above in Insider Reporting and Trading Restrictions). Deadline The Schedule 13D must be submitted to the SEC within 10 days by anyone who acquires beneficial ownership (calculated from the trade date, not the settlement date) of more than 5% of any class of publicly traded securities in a public company.[133] A filer must promptly (taking into consideration all facts and circumstances) update its Schedule 13D filing to reflect any material changes in the facts disclosed.[134] The reporting person shall immediately notify the issuer and NFSA or its designee when it crosses the above listed thresholds immediately an agreement on acquisition or disposal has been entered into, or the party concerned becomes aware, or should have become aware, of any other circumstance causing the party concerned to reach or fall below a threshold. [135] While US regulations provide that the initial Schedule be filed within 10 days, and amendments thereafter be filed promptly and no later than 10 days after the trade,[136] Norwegian regulations provide that Large Shareholder Notices be filed immediately. Thus, the deadline for filing is shorter in Norway, than in the US. 20