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

Thursday April 15 2021

The Norwegian government is proposing new rules that will increase transparency around foreign owners of shares in Norway, as well as increasing the opportunities for foreign shareholders to participate in the general meetings of companies in which they own shares.

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.

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