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Complex prospectus rules introduced

The new prospectus rules in the Norwegian Securities Trading Act of 1997 (STA) and the regulations related to prospectuses entered into force on January 1 2006. The new rules implement the EU prospectus rules (Directive 2003/71/EC) and are complex and detailed.

Offering prospectus

STA Section 5-2 states that a prospectus has to be prepared when an invitation to subscribe or to buy securities is directed at more than 100 persons in the Norwegian market for an amount over €100,000 (calculated over 12 months). The provision applies to securities in both listed and unlisted companies. The total amount offered will decide the type of prospectus required. For amounts between €100,000 - €2.5 million, the company has to prepare a national prospectus. If the amount exceeds €2.5 million, the EU prospectus rules will apply and a European Economic Agreement (EEA) prospectus is required.

Practical exemption: offers directed to professional investors (as defined in STA) or offers with minimum subscription exceeding €50,000 do not require a prospectus (STA Section 5-4).

Listing prospectus

An EEA prospectus is mandatory for companies applying for stock exchange listing or listing at a regulated market place or securities issues made by companies already listed (STA Section 5-3). However, according to STA Section 5-5, listed companies do not need to prepare a prospectus if the shares to be issued represent less than 10% of the capital in the same class of shares already listed (calculated over 12 months).

Listing prospectuses are valid for 12 months, subject to the information remaining valid and to necessary additional information being provided. This implies in practice that an approved basic prospectus can be the basis for several transactions within the 12-month period, provided that an additional minimum prospectus is prepared and approved for each transaction. Additional prospectuses also need to be approved, see STA Section 5-7. The additional prospectus may rely on information "incorporated by reference".

Dag Erik Rasmussen and Bernt Olav Steinland

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