2/2009: Combining different languages in prospectuses and information documents

1 Summary

The Circular clarifies the language requirements in prospectuses. Oslo Børs will accept that documents incorporated by reference in or appended to prospectuses are prepared in other languages than the prospectus itself, provided that the documents in question are prepared in Norwegian, English, Swedish or Danish. The same applies for information documents and “equivalent documents”.

2 Introduction

Section 7-17, first sentence of the Securities Trading Act states that:

“Prospectuses shall be prepared in Norwegian, English, Swedish or Danish.”

Circular 9/2005 provides a commentary on this provision and its interpretation by Oslo Børs.¹

The CESR Prospectus Expert Group has issued an opinion on the interpretation of the language requirements that differs from the way in which Oslo Børs had interpreted the provisions on combining different languages in a prospectus.² The scope of the CESR interpretation and its relationship to the position stated in the Appendix to Circular 9/2005 has caused some problems in practice, and this Circular is intended to clarify this issue.

This Circular applies to EEA prospectuses that are to be approved by Oslo Børs pursuant to Section 7-7 of the Securities Trading Act, including supplements to a prospectus prepared pursuant to Section 7-15 of the Securities Trading Act, regardless of whether the securities to which the prospectus relates are listed on a regulated market or are subject to application for admission to such a listing.

Section 4 of this Circular deals in particular with the language requirements for information documents prepared pursuant to Section 3.5 of Continuing Obligations and documents prepared in accordance with the exemptions permitted by the Securities Trading Act at Section 7-4, Nos. 4 or 6/Section 7-5, Nos. 5 or 7 (“equivalent documents”).

This Circular does not apply to loan documents prepared pursuant to Section 2.9 of the Bond Rules, nor does it apply to offer documents that are subject to approval pursuant to the provisions of Chapter 6 of the Securities Trading Act.

This Circular replaces Section 6.3, fourth paragraph, and Section 7.4, third paragraph, of the Appendix to Circular 9/2005.

3 Combining different languages in a prospectus

Oslo Børs is of the opinion that Section 7-17 of the Securities Trading Act should be interpreted to mean that a prospectus must, in general, be prepared in one of the languages stated (Norwegian, English, Swedish or Danish), and that as a consequence it is not possible to combine different languages in one and the same prospectus.

Oslo Børs expressed the view in Circular 9/2005 that this principle should also apply to information incorporated in a prospectus by reference, and similarly should also apply to information included in an appendix to the prospectus to the extent that the information in question is provided in order to satisfy the requirements for information to be included in the prospectus, cf. Regulation (EC) No. 809/2004 (Prospectus Regulation) Article 28(2) and Paragraph 30 of the preamble. The Prospectus Regulation applies in Norway as a statutory regulation, cf. Section 7-13 of the Securities Trading Regulations.

The option to incorporate by reference is provided by Section 7-14, second paragraph, of the Securities Trading Act. The technique applies to information that is provided to satisfy the requirements for the content of a prospectus but is not included in the prospectus itself. Instead, the prospectus makes reference to the document where the information in question is available, typically a published annual report or interim report. Documents can only be incorporated by reference if they are available electronically, and they must be approved by or reported to the authorities in accordance with the specific requirements that apply to the company. For further information, see Section 6.3 of the Appendix to Circular 9/2005.

There are no specific provisions to govern reference to documents that are appended to the prospectus. This may be an appropriate technique for documents that cannot be incorporated by reference, for example annual reports that have not been previously publicly disclosed, and similarly loan agreements.

However, the CESR Prospectus Expert Group published an opinion in September 2007 on the language requirements for prospectuses that included the following:

“… the issuer can incorporate a document drawn up in a different language than that of the prospectus provided that the language of the incorporated document complies with the language rules of the Directive”.³

The subsequent example provided in the document makes it clear that the opinion means that information incorporated by reference can be in any language accepted by the country in question, regardless of whether it differs from the language in which the prospectus is drawn up. However, if the prospectus is to be used cross-border in another EEA state (“passported”) the information incorporated by reference must also satisfy the language requirements that apply in this respect, cf. Section 11 of the Appendix to Circular 9/2005.

On this background, we emphasize that Oslo Børs – based on the position taken by CESR - assumes that information in Norwegian, English, Swedish or Danish can be incorporated in a prospectus by reference without translation, regardless of the language in which the prospectus itself is drawn up.

Oslo Børs further gives notice that it will in future also apply this interpretation to information included as an appendix to a prospectus. This will apply to cases where the requirements for the content of a prospectus are satisfied in part by information provided in an appendix to the prospectus, which typically applies to the requirements for financial information. Oslo Børs cannot see any substantial reasons to impose more stringent language requirements in such cases.

In practical terms, this means that issuers can incorporate by reference or append documents that are in a language other than the language in which the prospectus is prepared, subject to the document(s) being in Norwegian, English, Swedish or Danish. However, if a document is to be passported out of Norway, the particular language requirements that this involves must be satisfied (translation into language(s) accepted by the host states, or English).

Oslo Børs wishes to point out in this connection that as part of the same opinion the CESR Prospectus Expert Group stated that translations of documents can be incorporated by reference. This accords with the interpretation previously applied by Oslo Børs, which will therefore continue without change. This means that documents originally drawn up in a third language (for example French) can be incorporated by reference or appended to a prospectus subject to the document being translated into one of the four nominated languages.

However, Oslo Børs would also like to point out that a prospectus must in any case satisfy the requirement that information is presented “in an easily comprehensible and analysable form”, cf. Section 7-13 first paragraph, second sentence, of the Securities Trading Act.⁴ This standard may in particular circumstances serve to set a limit to the nature and extent of information that is provided in a language other than that used for the prospectus itself.

4 Information documents and equivalent documents

Section 3.5.5.4 of Continuing Obligations incorporates language requirements for information documents that are equivalent to those stipulated by Section 7-17, first sentence, of the Securities Trading Act as quoted in section 2 above.

Oslo Børs has not provided specific guidance in earlier Circulars in respect of combining different languages in information documents and equivalent documents.

Equivalent documents are briefly described in Sections 4.1.2 and 4.1.4 of the Appendix to Circular 9/2005. Information documents and the relationship to the rules on equivalent documents are described in the commentary to Section 3.5 of Continuing Obligations.

In practice, Oslo Børs has applied the same general principles as for prospectuses, but with somewhat greater flexibility.

In future, the principles described in section 3 above will also be applied to information documents and equivalent documents. This means that it will be possible to incorporate by reference or append documents drawn up in a language other than the language of the information document or equivalent document itself. It will similarly be a condition that such documents incorporated by reference or appended are in Norwegian, English, Swedish or Danish.

Yours truly
OSLO BØRS ASA

¹ See Section 7.4 of the Appendix to Circular 9/2005, cf. Section 6.3 and Section 11, for commentary on particular questions arising in respect of information incorporated by reference and prospectuses that are used cross-border.

² CESR is the Committee of European Securities Regulators.

³ See “Frequently asked questions regarding Prospectuses: Common positions agreed by CESR Members”, available at http://www.oslobors.no/Oslo-Boers/Regelverk/Prospekt-rettskilder-og-sjekklister.

⁴ Cf. Prospectus Regulation, Article 28(5).