The Norwegian Financial Supervisory Authority (FSA) proposes
to amend the Act on Securities Funds to open up the
establishment of special funds in Norway. These funds would
become a new group of securities funds, through which investors
would be offered participation in high-risk investment schemes.
Special funds would create a new organization model for venture
capital and private equity funds. If the proposition is
adopted, hedge funds and derivative funds will be allowed to
set up in Norway.
Proposal for establishment of special funds
In a green paper dated November 18 2004 to the Ministry of
Finance, the Norwegian FSA proposed the introduction of special
funds to Norway. The proposition opens up for establishment of
so-called hedge funds, venture funds and private equity funds
pursuant to the Norwegian Act on Securities Funds.
According to the proposal, units in special funds could be
offered to professional investors. As to private persons, the
proposal sets out a two requirements: (i) a gross financial
wealth of minimum NOK5 million ($748,000), and (ii) a minimum
subscription amount of NOK500,000.
The new funds would not be able to make direct investments
in real property and raw materials (including derivatives). But
the special funds will be allowed to make investments in
companies involved in such activities.
Marketing of foreign special funds
If the Norwegian FSA's proposal is adopted, foreign special
funds could be marketed in the same way as Norwegian special
funds, subject to advance authorization by the FSA. A vital
condition for such authorization is the existence of
satisfactory supervisory cooperation between the supervisory
authorities in the home jurisdiction of the foreign fund and
the Norwegian FSA.
The Norwegian FSA's proposition is in line with the European
Commission's work on a directive regulating advanced
alternative investment methods.
A white paper is now being prepared by the Ministry of
Finance and will most likely be brought before the parliament
in February 2006. The new framework for special funds is
expected to enter force in spring 2006.
Bernt Olav Steinland and Are Herrem