Circular No. 4/2015
To: Issuers of fixed income instruments listed on
Oslo Børs and Nordic ABM
OFFICE TRANSLATION
10 December 2015
http://www.oslobors.no/OsloBoers/Regelverk/Boerssirkulaerer
Changes to the Bond Rules for Oslo Børs and the ABM Rules for Nordic ABM
1
Introduction
Oslo Børs approved changes to the following sets of rules on 9 December 2015, and the revised rules
are appended to this Circular:
(i)
The Bond Rules for Oslo Børs
(ii)
The ABM Rules for Nordic ABM
The approved rules correspond in all material respects with the proposals circulated for consultation
on 23 September 2015, although some minor changes and clarifications have been incorporated
based on responses received to the consultation exercise. Oslo Børs received responses to the
consultation from Folketrygdfondet (the Norwegian Government Pension Fund), the Norwegian
Society of Financial Analysts and the Norwegian Ministry of Justice and Public Security.
The remainder of this document sets out the approved changes. Section 2 provides a short overview
of the changes. Sections 3 and 4, which concern the Bond Rules and the ABM Rules respectively,
contain more detailed explanations of the changes.
The revised rules will come into effect on 15 January 2016.
2
Overview of the approved changes
2.1
Changes to the Bond Rules for Oslo Børs
- The provision previously contained in Section 2.3.3 (1) whereby Oslo Børs could, if
circumstances made it necessary, propose the replacement of the trustee for the bond
loan, has been removed.
- The guarantor agreement that a guarantor of a bond issue enters into with Oslo Børs has been
replaced by a statement of acceptance, and the responsibilities and duties of the guarantor are
now directly regulated by the Bond Rules. This has caused changes to Section 2.4.
- The reference to the Securities Trading Act in the admission requirement relating to annual
reports has been removed, and accordingly SMB companies are no longer required to use IFRS
for historical financial information when applying for listing, which brings the Bond Rules into
line with the prospectus rules.
- A new provision on change of debtor has been incorporated, cf. the new Section 3.1.10.
- A decision by the issuer to exercise its right to redeem its bonds is now included in the
provision that lists the matters that the borrower must immediately publicly disclose
regardless of whether or not the matter is considered to be inside information, cf. Section 3.3
(1).
- Section 3.6.2 (4) now states that Norwegian municipalities and county authorities shall
produce their annual reports in accordance with Section 48 of the Norwegian Local
Government Act.
- An exemption from the duty to prepare half-yearly interim reports has been introduced for
municipalities and county authorities, cf. Section 3.6.4 (3).
- The requirement previously contained in Section 3.9.3 (4) to notify Oslo Børs that a
bondholders’ meeting is to be held has been removed.
- The wording in the provision whereby issuers of convertible bonds are subject to the rules
on the duty of disclosure in Section 3 of the Continuing Obligations of Stock Exchange
Listed Companies has been revised.
2.2
Changes to the ABM Rules
- The provision previously contained in Section 2.3.3 (1), whereby Nordic ABM could, if
circumstances made it necessary, propose the replacement of the trustee for the bond
loan, has been removed.
- The listing of convertible bonds on Nordic ABM where the underlying shares are not
listed is now permitted, cf. the new Section 2.3.4 (2).
- The guarantor agreement that a guarantor of a bond issue enters into with Nordic ABM has
been replaced by a statement of acceptance, and the responsibilities and duties of the
guarantor are now directly regulated by the ABM Rules. This has caused changes to Section
2.3.6. The equivalent change has been made to the Bond Rules for Oslo Børs.
- Section 2.7.2.3 of the ABM Rules now stipulates that financial information must be
audited for admission to listing, as is current practice.
- As with the Bond Rules for Oslo Børs, a new provision on change of debtor has been
introduced, cf. the new Section 3.1.8.
- As with the Bond Rules for Oslo Børs, a decision by the issuer to exercise its right to redeem
its bonds is now included in the provision that lists the matters that the borrower must
immediately publicly disclose regardless of whether or not the matter is considered to be
inside information, cf. Section 3.2.2 (1).
- A new requirement has been included in Section 3.2.4 whereby issuers of convertible bonds
shall also publicly disclose inside information regarding the underlying shares as if the shares
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were listed, which brings the ABM Rules into line with Section 3.5 of the Bond Rules for Oslo
Børs.
- The previous requirement for the annual report to include consolidated accounts for the
group if such accounts are produced has been changed so that as a general rule group
accounts shall be produced if the borrower is the parent company in a group or subgroup.
- A new requirement has been introduced whereby an issuer must immediately disclose that
an auditor has issued a qualified audit report or made comments or clarifications in the
report as soon as the report is received by the issuer, cf. the new Section 3.4.3 (4).
- The provision whereby Nordic ABM may grant exemptions in respect of financial reporting
requirements has been changed to include borrowers who issue bonds with denomination
per unit of less than EUR 100,000, cf. Section 3.4.5 (2).
3
Further information on the approved changes to the Bond Rules for Oslo Børs
3.1
Summoning a meeting of bondholders to replace the trustee
In accordance with Section 2.3.3, Oslo Børs has the option, if circumstances make it necessary, of
summoning a meeting of bondholders and proposing the replacement of the trustee. The
standardised loan agreements created by Nordic Trustee include a provision that gives Oslo Børs
the option of requesting that a meeting of bondholders be held. However, when listing is sought
for bond loans with other trustees with which such a right to call a meeting has not been agreed,
Oslo Børs does not have the option to request a meeting. The loan agreement will already be
binding when listing is sought and Oslo Børs is not party to the loan agreement. It has therefore
been decided to remove this provision. The change is not deemed to be of practical significance
as the provision is not used.
3.2
Listing agreement for guarantors
Prior to the current changes, Section 2.4 stipulated that Oslo Børs could demand that a guarantor
of a borrower’s bonds enter into a specific agreement with Oslo Børs that would regulate in
detail the responsibilities and duties of the guarantor in respect of Oslo Børs. Oslo Børs is of the
view that it is more appropriate for the relationship that regulates the responsibilities and duties
of the guarantor to be set out directly in the Bond Rules. It has therefore been decided to replace
the agreement with a statement of acceptance that refers to the relevant provisions in the Bond
Rules.
It has also been decided to insert wording in Section 8.4 stating that it is possible for a guarantor
to be sanctioned for breaches of the duty of disclosure. The existing standard listing agreement
entered into with guarantors states that breaches of the provisions may lead to sanctions in
accordance with the Bond Rules. Furthermore, Section 2.4 already stipulates that in the event of
breaches of the provisions of the above-mentioned agreement, Oslo Børs is able to impose
sanctions on the guarantor in accordance with Section 8.3 (daily fines for breaches of the duty of
disclosure) and Section 8.4 (violation charges for breaches of the duty of disclosure). The change
is consequently not deemed to be materially significant.
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In addition, it has been decided to make the provision a continuing obligation to enable Oslo Børs
to demand that a statement of acceptance be entered into if there is a new guarantor for a loan
that is already listed.
Given this context, the following wording has been included in the Bond Rules as a new Section
2.4.2:
3.2.2
Guarantors
(1) Oslo Børs can demand that if a third party is to guarantee payment of the interest and
principal (a guarantor), the guarantor shall, prior to the borrower’s bonds being admitted to
listing, enter into a statement of acceptance that regulates in detail the guarantor's
responsibilities and duties in respect of Oslo Børs. This also applies if the loan acquires a new
guarantor during the term of the loan and the new guarantor has not previously given such a
statement. The guarantor will be bound by the same rules as the borrower, including Section
24, seventh paragraph, of the Stock Exchange Act, the Bond Rules, the Securities Trading Act
and the Securities Trading Regulations.
(2) The guarantor shall, upon request, provide Oslo Børs with the information mentioned in
Section 24, seventh paragraph, of the Stock Exchange Act.
(3) The guarantor shall nominate a person as its contact person for Oslo Børs. The person
nominated shall have satisfactory knowledge of the rules that apply to the borrower.
(4) Oslo Børs can impose sanctions on the guarantor pursuant to section 8.3 and
section 8.4 if the guarantor breaches the statement of acceptance mentioned in the
first paragraph.
It is the normal practice of Oslo Børs to demand that a guarantor enters into a statement of
acceptance in situations where the guarantee is issued by a parent company for bonds issued by a
subsidiary. In a situation where a subsidiary company is a guarantor of bonds issued by its parent
company, Oslo Børs does not normally insist on such a statement of acceptance. However, Oslo Børs
will consider whether to demand a statement of acceptance on a case-by-case basis depending on
the particular circumstances.
By entering into a statement of acceptance, the company issuing the guarantee becomes subject to
the same duty of disclosure about the borrower as the borrower itself.
3.3
Requirements for the annual reports of SME companies
There is a requirement that annual reports shall be appended to applications for bond loans to be
admitted to listing on Oslo Børs. Section 2.7.1 (4) requires that the annual reports comply with
the continuing obligations in Section 3.6.2, which in turn refers to Section 5-5 of the Securities
Trading Act, which itself requires financial reporting in accordance with IFRS. SME companies are
not required to observe IFRS when producing an EEA prospectus in accordance with the
prospectus rules. The reference to the Securities Trading Act has therefore been removed, and
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accordingly the Bond Rules are no longer stricter than the prospectus rules for listing
prospectuses.
As a consequence of this, Section 2.7.1 (4) has been revised to read as follows:
2.7.1 Contents of the application
(4) The application must in particular contain, or have appended to it, the information
listed below:
4. The annual report for the two preceding financial years or for such shorter
accounting period that the borrower has been in existence. Oslo Børs may
require annual reports for the three preceding financial years if there are
particular reasons for this. The half-yearly report (alternatively interim
reports for a period shorter than six months) shall be included if such a
report has been published since the most recent annual report. It must be
stated whether or not the interim report has been audited.
3.4
Change of debtor
Prior to the current changes, the rules did not contain a specific provision to regulate change of
debtor beyond the requirement that a stock exchange announcement had be published if there
was a change of debtor. If a listed bond loan was transferred to a new issuer that did not already
have loans listed, the Bond Rules did not make clear what responsibilities and duties the new
issuer had. Because of this a new provision has been inserted. In addition, it has been decided
that Oslo Børs may demand that the new issuer shall document its compliance with parts of the
requirements for admission.
Given this context, the following new Section 3.1.10 has been included in the Bond Rules:
3.1.10 Change of debtor
(1) Following a change of debtor, the new debtor shall be subject to the Bond Rules for
borrowers with stock exchange listed bond loans. Oslo Børs can require the new debtor
to document its compliance with selected parts of the requirements for admission to
listing set out in section 2.
3.5
Public disclosure of a decision to exercise the right to call a loan
A new Section 3.3 (1) item 7 has been approved to stipulate that a borrower’s decision to
exercise its right to redeem its loan either wholly or in part shall immediately be publicly
disclosed regardless of whether or not the matter is considered to be inside information.
The new Section 3.3 (1) item 7 reads as follows:
3.3 Other material matters
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(1) The borrower must immediately publicly disclose:
7. Any decision to exercise the right to call the loan, either wholly or in part.
3.6
Annual reports for municipalities and county authorities
The Securities Trading Act does not require municipalities and county authorities to prepare
annual reports, but Section 3.6.2 (4) of the Bond Rules stipulates that municipalities and county
authorities shall prepare annual reports in accordance with Section 5-5 of the Securities Trading
Act. However, the provisions on financial reporting contained in the Local Government Act apply
to these issuers, and it has been decided to change the provision in the Bond Rules to reflect this.
It has also been decided to introduce a right to exempt foreign municipalities and county
authorities from this requirement.
Following these changes, Section 3.6.2 of the Bond Rules reads as follows:
3.6.2 Duty to publish annual reports and half-yearly interim reports
(4) The first and second paragraphs shall also apply to a regional or local authority of a
foreign state. Norwegian municipalities and county authorities must prepare annual
reports in accordance with the requirements of Section 48 of the Local Government Act.
Oslo Børs may grant an exemption from the first and second paragraphs for a regional
or local authority of a foreign state.
3.7
Exemption from half-yearly interim reports for municipalities and county authorities
Section 3.6.2, second paragraph (cf. fourth paragraph), of the Bond Rules states that
municipalities and county authorities have to prepare half-yearly interim reports. Oslo Børs may
grant exemptions from this provision pursuant to Section 3.6.4 (3). Oslo Børs’ practice is to
approve applications for such exemptions from preparing half-yearly reports. The view has been
taken that the market does not have the same need for interim half-yearly reports from
municipalities and county authorities as it does from other issuers. It has therefore been decided
to remove this requirement for Norwegian municipalities and county authorities.
Given this context, Section 3.6.4 has been amended to read as follows:
3.6.4 Exemption from the duty to prepare a half-yearly report
(1) A borrower founded prior to 1 July 2005 (the date on which Directive 2003/71/EC
came into force) that only issues bond loans guaranteed by the Norwegian state and
listed on a regulated market is exempt from section 3.6.2, second paragraph.1
1
Securities Trading Regulations, Section 5-6 first paragraph.
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(2) The prospectus authority may grant an exemption from section 3.6.2, second
paragraph, for a borrower founded before the Prospectus Directive came into force that
only issues bond loans guaranteed by a Norwegian municipality or county authority and
listed on a regulated market.2
(3) Oslo Børs may grant an exemption from section 3.6.2, second paragraph, for a
borrower that only issues bond loans with denomination per unit of at least EUR 100,000
or for a regional or local authority of a foreign state. Norwegian municipalities and
county authorities are exempt from section 3.6.2, second paragraph.
3.8
Additional requirements for issuers of convertible bonds
Section 3.5 requires that issuers of convertible bond loans adhere to the rules on the duty of
disclosure for companies with listed shares set out in Section 3 of the Continuing Obligations of
Stock Exchange Listed Companies. It has been decided to reformulate this provision to make clear
that issuers of convertible bond loans must publicly disclose inside information as if the shares
were listed on a regulated market.
Given this context, Section 3.5 has been amended to read as follows:
3.5 Additional requirements for bonds that confer the right to acquire shares issued by
the borrower
A borrower that has issued stock exchange listed bonds that give bondholders the
right to acquire shares issued by the borrower shall, in addition to adhering to the
provisions of sections 3.2 to 3.4, publicly disclose inside information as if the shares
were listed on a regulated market.
3.9
Notifying Oslo Børs that a bondholders’ meeting is to be held
Section 3.9.3 of the Bond Rules requires that borrowers publicly disclose the notice calling a
bondholders’ meeting and the attachments thereto.
Prior to the changes, Section 3.9.3 also contained a requirement whereby the borrower had to
notify Oslo Børs that a bondholders’ meeting was to be held no later than the time at which the
notice calling a meeting was distributed.
In view of the requirement for the notice to be published, the provision regarding notifying
Oslo Børs has been deemed to be superfluous and has therefore been removed.
2
Securities Trading Regulations, Section 5-6 second paragraph.
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4
4.1
Further information on the approved changes to the ABM Rules
Summoning a meeting of bondholders to replace the trustee
The same change has been approved as for the Bond Rules for Oslo Børs; see the discussion
in section 3.1 above.
4.2
Listing of convertible bonds with underlying unlisted shares
Section 2.3.4 of the ABM Rules states that convertible bonds can be listed on Nordic ABM
provided the underlying shares to which the bonds can be converted are listed on a regulated,
recognised and open market that functions routinely.
Oslo Børs has decided to permit the listing on Nordic ABM of convertible bonds where the
underlying shares are not listed. This brings the provision into line with the equivalent provision
in the Bond Rules for Oslo Børs. A condition for the listing of such loans is that the market has
sufficient information about the underlying shares to be able to assess their value.
It has also been decided to introduce a new requirement at Section 3.2.4 whereby issuers of
convertible bond loans must publicly disclose inside information about the underlying shares as if
the shares were listed on a regulated market, as in Section 3.5 of the Bond Rules for Oslo Børs.
Given this context, a new second paragraph has been added to Section 2.3.4, as follows:
2.3.4 Terms and conditions for listing of convertible bonds issued by the borrower
(2) However, Nordic ABM may also allow other convertible bonds to be admitted to listing
if it considers it to be apparent that bondholders and the public in general have access to
all the information needed to assess the value of the shares to which the bonds are linked.
It has also been decided to introduce a new requirement at Section 3.2.4 whereby issuers of
convertible bond loans that confer a right on the bondholder to acquire shares issued by the
borrower must publicly disclose inside information about the underlying shares as if they were
listed on a regulated market, as in Section 3.5 of the Bond Rules for Oslo Børs.
The approved new Section 3.2.4 reads as follows:
3.2.4 Additional requirements for bonds that confer the right to acquire shares issued
by the borrower
A borrower that has issued listed bonds that give bondholders the right to acquire
shares issued by the borrower shall, in addition to the provisions of section 3.2,
publicly disclose inside information as if the shares were listed on a regulated market.
Page 8 of 12
4.3
Listing agreement for guarantors
The same change has been approved as for the Bond Rules for Oslo Børs; see the discussion
in section 3.2 above.
Given this context, a new Section 2.3.6.2 has been included and reads as follows:
2.3.6.2 Guarantors
(1) Nordic ABM can demand that if a third party is to guarantee payment of the interest and
principal (a guarantor), the guarantor shall, prior to the borrower’s bonds being admitted to
listing, enter into a statement of acceptance that regulates in detail the guarantor's
responsibilities and duties in respect of Nordic ABM. This also applies if the loan acquires a
new guarantor during the term of the loan and the new guarantor has not previously given
such a statement. The guarantor will be bound by the same rules as the borrower, including
the ABM Rules.
(2) The guarantor shall, upon request, provide Nordic ABM with the information mentioned in
section 3.1.5 (5) of the ABM Rules.
(3) The guarantor shall nominate a person as its contact person for Nordic ABM. The person
nominated shall have satisfactory knowledge of the rules that apply to the borrower.
(4) Nordic ABM reserves the right to give public criticism pursuant to section 8 if the
guarantor breaches the statement of acceptance mentioned in the first paragraph.
4.4
Requirements for audited financial information in the listing document
For bond loans to be admitted to listing on Nordic ABM, there is a requirement that the profit
and loss account, balance sheet and cash flow statement in accordance with accounting
legislation must be attached to the listing document, cf. Section 2.7.2.3.
It has been decided to insert a requirement whereby this financial information must have been
audited, as is current practice.
This requirement also applies to newly established companies. As a general rule, a newly established
company must produce a financial report for the accounting period for which it has been in
existence. This financial report must have been audited. For example, Nordic ABM may, on a case-bycase basis, permit a newly established company to produce only an opening balance sheet. The
opening balance sheet must have been audited.
The ability to make exemptions from these requirements related to financial information shall
continue, cf. the second paragraph of the provision.
Section 2.7.2.3 has been amended to read as follows:
Page 9 of 12
2.7.2.3 Additional requirements for the listing document
(1) Where the borrower does not fall within the scope of section 2.7.2.2, first or second
paragraph, the listing document must contain the following information in addition to
the information set out in section 2.7.2.2, first paragraph, items 3 and 4:
20. Audited financial information in accordance with the accounting legislation to
which the borrower is subject for the two preceding financial years or for
such shorter accounting period as the borrower has been in existence. Nordic
ABM may require a statement based on the three preceding financial years if
called for in special circumstances. Interim reports in accordance with section
3.4.4 shall be included if such reports have been published since the most
recent annual report. It must be stated whether or not the interim report has
been audited.
4.5
Change of debtor
The same change has been approved as for the Bond Rules for Oslo Børs; see the discussion
in section 3.4 above.
A new Section 3.1.8 has been added that reads as follows:
3.1.8 Change of debtor
Following a change of debtor, the new debtor shall be subject to the ABM Rules for borrowers
with listed bond loans. Oslo Børs can require the new borrower to document its compliance
with selected parts of the requirements for admission to listing set out in section 2.
4.6
Public disclosure of a decision to exercise the right to call a loan
The same change has been approved as for the Bond Rules for Oslo Børs; see the discussion
in section 3.5 above.
Section 3.2.2 item 6 has been amended to read as follows:
3.2.2 Other material matters
(1) The borrower must immediately publicly disclose:
6. Any decision to exercise the right to call the loan, either wholly or in part.
4.7
Requirement for consolidated accounts for the group
Prior to the changes, Section 3.4.3 (3) item 4 required that the annual report include
consolidated accounts for the group if such accounts were produced. There have been instances
in which borrowers applying for their bonds to be listed have not been required by other laws or
Page 10 of 12
rules to produce consolidated group accounts, but whose parent company accounts alone have
not been judged by Oslo Børs to provide sufficient information about the borrower’s accounts.
As a consequence of this, it has been decided that consolidated accounts for the group shall as
a general rule have to be produced if the borrower is the parent company in a group or
subgroup.
Section 3.4.9 contains a provision whereby Nordic ABM may grant exemptions in whole or part
from the financial reporting requirements if called for by special circumstances.
Section 3.4.3 (3) item 4 has been amended to read as follows:
3.4.3 Annual report
(3) The annual report shall comprise:
4. Consolidated accounts for the group if the borrower is the parent company in a group
or subgroup.
4.8
Qualified audit reports, or comments or clarifications in the report
It is a requirement for bond loans to be listed on Nordic ABM that if the auditor has issued a
qualified audit report or made comments or clarifications in the report, this must be made
public in the listing document. It has been decided to make this requirement a continuing
obligation in Section 3.4.3 (4), as in the Bond Rules for Oslo Børs. It was not intended that the
ABM Rules should differ in this regard from the Bond Rules.
A new fourth paragraph has been added at Section 3.4.3 (4) that reads as follows:
3.4.3 Annual report
(4) If the auditor has determined that the accounts cannot be approved as they stand or if
the auditor has issued a qualified audit report or made comments or clarifications in the
report, Nordic ABM must be notified of this as soon as the audit report is received by the
borrower.
4.9
Exemption from annual accounts for loans with denomination per unit of less than EUR
100,000
Prior to the current changes, Section 3.4.5 (2) stipulated that Nordic ABM could grant
exemptions from the requirement to produce annual reports and half-yearly interim reports for
a borrower that only issued bonds with denomination per unit of at least EUR 100,000. This
threshold is a result of (reflects) the Securities Trading Act which only requires financial
information to be produced for bonds with denomination per unit of less than EUR 100,000
(these are deemed to be aimed at “non-professional” investors).
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Nordic ABM’s practice in relation to the granting of exemptions from producing half-yearly
interim reports is strict. In cases where such exemptions are granted, Oslo Børs reserves the right
to make the exemption subject to certain conditions.
Bond loans that are listed are most often aimed at professional investors even if the
denomination per unit is less than EUR 100,000. Oslo Børs has decided to remove the threshold in
the provision relating to possible exemption and replace it with an individual analysis of any such
application for exemption.
Given this context, Section 3.4.5 (2) has been amended to read as follows:
3.4.5 Exemptions from financial reporting
(2) Nordic ABM may grant exemptions from section 3.4.3 and section 3.4.4.
4.10 Exemption from half-yearly interim reports for municipalities and county authorities
The same change has been approved as for the Bond Rules for Oslo Børs; see the discussion
in section 3.7 above.
Section 3.4.5 (3) has been amended to read as follows:
3.4.5 Exemptions from financial reporting
(3) Nordic ABM may grant an exemption from section 3.4.4 for a regional or local
authority of a foreign state. Norwegian municipalities and county authorities are exempt
from section 3.4.4.
4.11 Notifying Nordic ABM that a bondholders’ meeting is to be held
The same change has been approved as for the Bond Rules for Oslo Børs; see the discussion
in section 3.9 above.
Section 3.6.3 (4) has been amended to read as follows:
3.6.3 Bondholders’ meeting
(4) The notice calling a bondholders’ meeting, the agenda and any other documents sent
to bondholders in connection with a bondholders’ meeting shall be made public no later
than at the time notice of the meeting is given.
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