For:	Members of Oslo Børs, issuers of financial instruments listed on Oslo Børs or Oslo Axess and issuers of fixed income securities listed on Oslo Børs
Date:	14/09/2009

1 Introduction

During the Summer of 2009, important changes to legislation came into effect that are significant for issuers of securities listed on a regulated market.

The new provisions that have come into effect include the implementation in Norwegian law of the EU Shareholders' Rights Directive^[1] and the EU Statutory Audit Directive^[2], and involve:

(i) Changes to the provisions on calling and holding general meetings of public limited companies etc., cf. section 3 below;

(ii) Introducing a duty to appoint an audit committee, cf. section 4 below;

(iii) Changes to the provisions on primary capital certificates, including a change of name to “equity certificates”, cf. section 5 below.

This Circular aims to provide a brief presentation of the changes. Before addressing the specific legislative provisions, section 2 of the Circular provides a brief summary of the most important new features.

The extent to which the changes affect different types of issuer is addressed as part of the presentation of each specific change.

The Norwegian Corporate Governance Board (NUES) is in the process of revising the Norwegian Code of Practice for Corporate Governance, and the revision is due in part to the changes to legislation mentioned above. NUES has advised that the new version of the Code of Practice will be issued during the course of Autumn 2009.

Oslo Børs will evaluate the need for any amendments to Continuing Obligations and the Bond Rules as part of its next review of these documents.

2 Summary

The most important changes that relate to general meetings held by a public limited company that is listed on a regulated market are as follows:

- The company can stipulate in its articles of association that the annual report and other documents for the general meeting can be made available to shareholders on the company's website instead of being distributed in physical form to each individual shareholder.

- The company can stipulate in its articles of association that the right to participate in and vote at a general meeting can only be exercised if the acquisition of the shares in question has been recorded in the company's share register no later than the fifth business day before the date of the general meeting.

- The board of directors may resolve that shareholders shall be permitted to participate in and vote at a general meeting by using electronic means.

- The company can stipulate in its articles of association that shareholders shall be permitted to cast their votes at a general meeting by giving written or electronic notice in a period prior to the date of the meeting.

- The changes clarify that shareholders have the right to put forward questions to be dealt with at the general meeting subject to such questions being notified in writing to the board of directors no later than seven days prior to the latest date for the notice calling a general meeting to be issued.

- The minimum period for distributing the notice calling a general meeting and the documents for the meeting is now 21 days. There are two exceptions from this longer notice period, which are detailed below.

- In addition to the requirements set out in Section 5-10 of the Public Limited Liability Companies Act, the notice calling a general meeting must now satisfy certain additional requirements stipulated by new regulations issued pursuant to the Act.

The most important changes that relate to the requirement for an audit committee are as follows:

- There is now a new requirement that issuers of securities listed on a regulated market must establish an audit committee that is elected by and among the members of the board of directors.

- Smaller companies, and companies that have approved appropriate provisions in their articles of association, can allow the entire board to carry out the duties of an audit committee subject to further conditions.

- The overall function of the audit committee is to carry out independent monitoring of the company's financial reporting and internal control systems.

- The duty to elect an audit committee and the provisions that apply to the duties and composition of the audit committee will come into effect from the date of a company's next annual general meeting.

3 Changes to the Public Limited Liability Companies Act resulting from the implementation of the EU Shareholders' Rights Directive etc.

3.1 Scope and date for coming into effect

The new legal provisions on the notice calling a general meeting and the conduct of the general meeting etc. are set out in the Public Limited Liability Companies Act^[3], and therefore apply to all Norwegian public limited liability companies, regardless of whether or not such companies are listed on a regulated market. However, the longer minimum period for the notice calling a general meeting, and certain of the additional requirements for the content of the notice, only apply to public limited liability companies that have shares listed on a regulated market, cf. sections 3.6.1 and 3.6.2 below.

The changes to the legislation include the implementation in Norwegian law of the EU Shareholders' Rights Directive. Companies incorporated in another EU/EEA member state that have shares listed on Oslo Børs or Oslo Axess will accordingly be subject to equivalent statutory provisions in their home state. Oslo Børs emphasises that the provisions that apply in such companies’ home state may in some respects differ from the changes that have been implemented in Norwegian legislation.

These changes to Norwegian legislation have no effect on companies that are incorporated in a country outside the EU/EEA.

The changes to the legislation came into effect 3 August 2009, and do not include any specific transitional provisions.

3.2 Record date five days before the date of the general meeting as a condition for participating in and voting at the meeting

A company can stipulate in its articles of association that the right to participate in and vote at a general meeting can only be exercised if the acquisition of the shares in question has been recorded in the company's share register no later than the fifth business day before the date of the general meeting (the “record date”), cf. Public Limited Liability Companies Act, Section 4-2 (3). Following the expiry of this deadline, the company can rely on the shareholder listings received from VPS (the Norwegian Central Securities Depository) prior to the general meeting as the basis for deciding who is entitled to participate in and vote at the general meeting.

The above provision applies in addition to Section 5-3 stating that it must be specified in the articles of association if it shall be a requirement that the shareholders must give prior notice of their intention to attend the general meeting.

The particular comments on this provision in the preparatory work on the legislation^[4] state that the proposed change “means that all acquisitions of shares that take place prior to and including this date will confer the right to participate in and vote at the general meeting”. This must be interpreted as a clarification that any share transfer that is registered up to and including the fifth business day before the general meeting satisfies the record date requirement.

Without such a provision in the articles of association, the standard provision in the legislation is that shareholder rights can be exercised “when the acquisition has been registered in the register of shareholders or when the acquisition has been reported and documented”. Given the good standard of the shareholder register systems available for companies to receive updated shareholder lists from VPS, Oslo Børs is of the opinion that there would need to be special reasons for a company not to allow all the actual owners of shares to participate in and vote at a general meeting, even in cases where the shares were acquired at a time very close to the general meeting.

A new fifth paragraph to Section 4-15 stipulates that companies are not permitted to use the articles of association to impose any other restrictions on shareholders' rights to transfer shares in the period between the record date pursuant to Section 4-2, third paragraph, and the general meeting other than such restrictions as otherwise generally apply.

3.3 Electronic participation in general meetings

In the absence of any provisions to the contrary in a company's articles of association, the board of directors can now decide that the shareholders shall be allowed to participate in general meetings by using electronic means, including exercising their rights as shareholders by electronic means, cf. Public Limited Liability Companies Act, Section 5-8a.

The use of electronic means for participation in the general meeting is subject to the board of directors ensuring that the general meeting can be held in a proper manner and that appropriate systems are available to ensure that the legal requirements for the general meeting are satisfied. The requirements in question include ensuring that the systems provide satisfactory control of participation and voting, and that satisfactory procedures are used to authenticate the senders of electronic messages.

A company's articles of association may impose more detailed requirements on electronic participation at a general meeting.

3.4 Voting in advance

Section 5-8b of the Public Limited Liability Companies Act now makes it possible for a company to stipulate in its articles of association that the shareholders are allowed to vote in advance of a general meeting, either in writing or by electronic means. The wording of the provision makes explicit reference to the need for such voting to employ a satisfactory method to authenticate the sender of the message. A company's articles of association may impose more detailed requirements on such advance voting.

VPS has informed that it is planning to offer a system for electronic advance voting through the operator of the issuer’s share register account, starting in March 2010.

3.5 The right of shareholders to have matters considered by the general meeting

Section 5-11 of the Public Limited Liability Companies Act has been amended, and now specifies that shareholders have the right to put items on the agenda of the general meeting. However, it is a condition that such items have been notified in writing to the board of directors no later than seven days before the latest date for the issue of the notice calling the general meeting. In addition, the provision introduces a requirement that each such item shall be accompanied by a justification or a draft resolution to be adopted in the general meeting. The comments on this provision at the drafting stage of the legislation make it clear that to satisfy the deadline the company must have received the proposed items within the seven-day deadline^[5].

If the notice calling the meeting has already been issued, a new notice must be issued provided the deadline for issuing a notice has not expired, cf. Section 5-11, third sentence.

A new fourth sentence to Section 5-11 implements the provision in the Shareholders’ Rights Directive stating that shareholders shall have the right to put forward proposals for resolutions on items that are already on the agenda of the general meeting.

3.6 Notice calling a general meeting – timetable and access to documents

3.6.1 Timetable for calling a general meeting

The minimum notice period for calling a general meeting and distributing documents for the meeting to shareholders has been extended for companies with shares listed on a regulated market from two weeks to 21 days, unless the company's articles of association impose a longer notice period, cf. Public Limited Liability Companies Act, Section 5-11b.

Section 6 of the Norwegian Code of Practice for Corporate Governance already recommends a minimum notice period of 21 days for the notice calling a meeting to be published on the Internet. The difference in practical terms between the amended legislation and this recommendation is that the amended legislation requires that the notice itself must also be sent to shareholders 21 days before the date of the general meeting.

Two exceptions from the rule on a longer minimum notice period are permitted:

- Firstly, the minimum notice period does not apply to a meeting called in relation to a takeover bid where this is permitted by the company’s articles of association pursuant to Section 6-17 of the Securities Trading Act.

- Secondly, where a company admits voting at general meetings by electronic means (see section 3.3 above), the annual general meeting may resolve, with the same majority as is required for a change to the articles of association, that with effect until the next annual general meeting the company shall be able to call an extraordinary general meeting by sending out the notice two weeks before the date of the meeting, cf. Public Limited Liability Companies Act, Sections 5-8a and 5-8b. However, such a resolution will not affect the notice period for the annual general meeting, which will continue to be 21 days. A resolution to approve a shorter notice period for extraordinary general meetings must be renewed by a new resolution at each subsequent annual general meeting if it is to apply for the following period.

3.6.2 Requirements for the contents of the notice calling a general meeting

Some changes have been made to the requirements set out in Section 5-10 of the Public Limited Liability Companies Act regulating the matters to be dealt with in the notice calling a general meeting. The third section of this provision specifies that the notice must list the matters to be considered by the meeting in the form of a proposed agenda for the meeting. In addition, a new fourth section imposes the following specific additional requirements:

- A company that permits electronic participation in the general meeting or for voting in advance of the general meeting must provide information on the applicable procedures for this in the notice calling the meeting, cf. Public Limited Liability Companies Act, Sections 5-8a and 5-8b, also sections 3.3 and 3.4 above.

- A company that has provisions in its articles of association to exempt it from the requirement to physically distribute documents that the company makes available on it’s website, must provide information in the notice of the website address and any other information that shareholders need to access the documents on the company's website. It must also inform how shareholders can contact the company in order to request that the documents should be sent to them, cf. Section 5-11a and section 3.6.3 below. There is, however no requirement for the notice to provide general information on how to use the Internet or on how to access the Internet.

- A company that has provisions in its articles of association that stipulate that rights to participate in and vote at the general meeting can only be exercised if the acquisition of the shares in question has been recorded in the shareholders register no later than the fifth business day before the general meeting, cf. Public Limited Liability Companies Act, Section 4-2 third paragraph, and section 3.2 above, must specify the record date and stipulate that only shareholders included in the share register on this day will be permitted to participate in and vote at the general meeting, cf. Public Limited Liability Companies Act, Section 4-15 (5).

In the case of companies that are listed on a regulated market, the notice calling the general meeting must, in addition to meeting the requirements set out in Section 5-10 of the Public Limited Liability Companies Act (see above), also satisfy the requirements set out in the Regulation No. 0983 of 6 July 2009 on the duty of a company to provide information before and after the general meeting in the case of certain public limited liability companies (the “General Meeting Regulations”)^[6], cf. Section 5-11 b (1) No. 2.

Section 2 of the General Meeting Regulations stipulates that the notice calling a general meeting must provide a clear and precise description of the procedures that shareholders must follow in order to participate in and vote at general meeting, including information on:

- The rights of shareholders to put forward matters for consideration by the general meeting pursuant to Section 5-11 of the Public Limited Liability Companies Act and the management’s general notification duty pursuant to Section 5-15 (1) of the Public Limited Liability Companies Act, as well as the deadlines for exercising these rights. It is sufficient to provide information in the notice on the deadline for exercising such rights, subject to the notice referring to more detailed information about these rights on the company's website.

- The procedures for voting at the meeting by proxy, the forms which must be used and information on the company's requirements for accepting electronic messages to appoint a proxy, cf. Public Limited Liability Companies Act, Section 5-2 (2), cf. Section 18-5 (2).

- The procedures to be used for voting by electronic means or by letter pursuant to Sections 5-8a and 5-8b of the Public Limited Liability Companies Act, subject to voting by such means being permitted by the company.

The notice calling a meeting must also state where and how shareholders can access the complete text of the documents and the resolutions to be put before the meeting, that are published on the company's website.

Section 3 of the General Meeting Regulations stipulates that, starting no later than on the 21 day before the date of the general meeting and thereafter until and including the day of the general meeting, the company must make the following documents and information available for its shareholders on its website:

(i) The notice calling the meeting.

(ii) The aggregate number of shares and voting rights at the date of the notice, including the aggregate numbers for each share class where the company's shares are divided into two or more share classes.

(iii) The documents that shall be presented to the general meeting.

(iv) The proposed resolutions, or if no resolutions are proposed, a statement by the board of directors in respect of each item on the proposed agenda for the general meeting.

(v) Any forms that shareholders must use to appoint a proxy to vote on their behalf or to vote by post, except where these forms have been sent directly to every individual shareholder.

If a shareholder has put forward a proposal for a resolution pursuant to Section 5-11 of the Public Limited Liability Companies Act, the resolution shall be made available on the company's website as soon as practically possible following the receipt by the company of the proposed resolution, cf. section 3.5, third paragraph, above.

3.6.3 The possibility of making general meeting documents available on the company's website

Section 5-11a of the Public Limited Liability Companies Act represents a simplification of the rules on distributing general meeting documents. The new provisions allow companies to stipulate in their articles of association that documents relating to matters to be considered by a general meeting can be made available to shareholders by publication on the company's website. This applies, for example, to the annual report. In such cases, there is no requirement to send the documents to shareholders as well.

Please note that the provision does not stipulate whether listed companies should make documents available to shareholders on the Internet. Listed companies are in any case obliged to make these documents available for shareholders on the Internet, cf. Public Limited Liability Companies Act, Section 5-11b No. 3 and General Meeting Regulations, Section 3, see also Section 6 of the Norwegian Code of Practice for Corporate Governance.

The provision applies to all documents that relate to matters the general meeting shall consider, including documents that by legislation shall be included in or appended to the notice calling the meeting. However, it should be noted that the company in any case must send the notice calling the meeting to shareholders, cf. Public Limited Liability Companies Act, Section 5-10 (1), first sentence. The company is not permitted to take a charge from the shareholders for sending out the notice.

Notwithstanding these provisions, a shareholder can insist that the company send the documents that relate to matters the general meeting shall consider. Section 18-5 of the Public Limited Liability Companies Act stipulates that in such a case the documents can only be sent electronically if the shareholder has expressly approved the use of electronic means. This means that if shareholders so wish, they are entitled to receive the documents by post. The company cannot request charge from the shareholders for providing the documents in this manner.

A shareholder can register its consent to the company using electronic means of communication pursuant to Section 18-5 of the Public Limited Liability Companies Act on the shareholder's VPS account, and at the same time provide the e-mail address to be used.

3.6.4 Minutes of the general meeting and the results of voting

As a consequence of the implementation of the Shareholders' Rights Directive, the Public Limited Liability Companies Act now specifies in Section 5-16 that the minutes of the general meeting shall detail the number of votes cast and how many shares and what proportion of the total share capital the votes casted represent, with aggregate figures provided for votes cast for and against each resolution, to the extent that this is relevant to the outcome of the voting. This change represents a clarification of what is already assumed to be required by the current legislation.

It should be noted that the General Meeting Regulations stipulate that listed companies must, within 15 days of the date of the general meeting, publish the results of the voting at the general meeting on their website, cf. Section 4 of the General Meeting Regulations. For the sake of good order, Oslo Børs points out that general meetings often also trigger a duty of disclosure pursuant to the Continuing Obligations of the Stock Exchange Rules.

4 Audit committee etc.

4.1 Scope and date for coming into effect

The new provisions on the duty to establish an audit committee are contained in the Public Limited Liability Companies Act, as well as in the specific legislation for commercial banks, savings banks and finance companies, cf. section 4.3 below. The duty therefore extends to all Norwegian issuers that are incorporated in a form regulated by the legislation mentioned, subject to the issuer having securities listed on a regulated market.

However, the Statutory Audit Directive imposes this duty on all public-interest entities; so all types of undertakings (“entities”) that issue transferable securities listed on a regulated market.^[7] Accordingly, the directive stipulates that all issuers of transferable securities listed on Oslo Børs or Oslo Axess have a duty to establish an audit committee, and this includes all issuers with listed bonds or other fixed income instruments.

The preparatory work on the legislation^[8] took the view that the duty should also apply to such issuers even if they are incorporated in an EU/EEA member state other than Norway, but envisaged that Norway as the host state would be able to grant exemptions for issuers that were subject to equivalent requirements in their home state.

In addition, the preparatory work on the legislation^[9] took the view that the duty should also apply to issuers incorporated outside the EU/EEA that have transferable securities listed on a regulated market in Norway.

The question of imposing a duty to establish an audit committee in Norwegian law on these companies is currently being considered by the Financial Supervisory Authority of Norway (“Kredittilsynet”), and Kredittilsynet will in due course make a recommendation to the Ministry of Finance. The Ministry of Finance has indicated that it will make changes to the Stock Exchange Regulations and the Securities Trading Regulations in order to include such companies, and that the changes to the regulations will be in place before the close of 2009. Oslo Børs will circulate further information in this respect as soon as the details are available.

The changes to the Public Limited Liability Companies Act and financial market legislation in respect of audit committees came into effect on 1 July 2009. However, the duty to elect an audit committee and the rules on the duties and composition of the committee will not come into effect for individual companies until the date of their next annual general meeting.

4.2 Requirement for public limited liability companies with securities listed on a regulated market to establish an audit committee

A company that issues securities listed on a regulated market must establish an audit committee. The legislation states that the audit committee shall fulfil an advisory and preparatory role as a working committee for the board of directors, cf. Public Limited Liability Companies Act, Section 6-41 (1).

The duty does not apply to companies that satisfy at least two of the following three criteria in their recent financial year, cf. Public Limited Liability Companies Act, Section 6-41 (2):

1. Average number of employees less than 200.
2. Total assets less than NOK 300 million at the close of the financial year.
3. Net annual turnover less than NOK 350 million.

If a company satisfies at least two of the above criteria, it is not required to establish an audit committee. Instead, the entire board of directors is required to carry out the duties stipulated for an audit committee. If the chairperson of the board of directors is also a member of the company’s executive management, he or she must not participate in a meeting when the board carries out the duties of an audit committee, cf. Public Limited Liability Companies Act, Section 6-41 (2), third sentence.

Other companies may also stipulate in their articles of association that the entire board of directors shall act as the audit committee, cf. Public Limited Liability Companies Act, Section 6-42 (3): Note that if a member of the board is also a member of the company’s executive management, he or she cannot be elected as a member of the audit committee, cf. Section 6-42 (3) and section 4.4 below.

There is also an exemption from the duty to establish an audit committee for wholly owned subsidiaries, where the parent company has established an audit committee that satisfies the requirements that would apply to an audit committee for the subsidiary, cf. Public Limited Liability Companies Act, Section 6-41 (3).

4.3 Particular requirements for audit committees in financial institutions, commercial banks and savings banks

The general rule is that financial institutions^[10], commercial banks^[11] and savings banks^[12] that have issued securities listed on a regulated market must appoint an audit committee. Note that financial institutions include both finance companies and credit institutions.

The separate legislation that governs financial institutions and commercial banks provides certain special exemptions from the duty to establish an audit committee.

For financial institutions, the general rule on the duty to establish an audit committee does not apply to:

a) A finance company that is a wholly owned subsidiary of a financial group, subject to the parent company operating with an audit committee that satisfies the requirements set out in the Financial Institutions Act. For this purpose, an “owner undertaking” as mentioned in Section 2a-2, item e, of the Financial Institutions Act does not qualify as a parent company.

b) A credit institution that issues covered bonds pursuant to the provisions of Chapter 2 IV of the Financial Institutions Act.

c) A finance company that has not issued shares or primary capital certificates that are traded on a regulated market, but which routinely carries out bond issues with total outstanding nominal value of less than EUR 100 million for which no prospectus is published, or which has repeatedly carried out such issues.

A commercial bank that is a wholly owned subsidiary of a financial group is not required to establish an audit committee if its parent company has an audit committee, unless Kredittilsynet decides otherwise. For this purpose, an “owner undertaking” as mentioned in Section 2a-2, item e, of the Financial Institutions Act does not qualify as a parent company.

Kredittilsynet is entitled by issuing regulations or by decisions on a case by case basis to grant exemptions from the duty of financial institutions commercial banks or savings banks to have an audit committee, and is also entitled to issue more detailed regulations on the composition and duties of audit committees.

4.4 Election of the audit committee and its composition – requirement for independence

The members of the audit committee are elected by and among the members of the board of directors. If any member of the board is also a member of the executive management, he or she cannot be elected as a member of the audit committee, cf. Public Limited Liability Companies Act, Section 6-42 (1).

Section 6-42 (2) of the Public Limited Liability Companies Act stipulates that the audit committee shall represent, in total, the expertise that is necessary in relation to the company's organisation and activities to ensure that the committee carries out its duties. At least one of the members of the audit committee must be independent of the company's business activities, and be proficient in accounting or auditing.

In terms of the requirement for independence, the Ministry of Finance expressed the view in the preparatory work on the legislation^[13] that it would be natural for the evaluation of independence to be based on the provisions on independent board members in Commission Recommendation 2005/162/EC^[14]. The preamble of the Statutory Audit Directive also refers to this Commission Recommendation^[15]. Reference is also made to the commentary on the requirement for independence in Section 8 of the Norwegian Code of Practice for Corporate Governance. The Code of Practice includes the following factors, which should be considered when determining whether a member of the board of directors is independent of the company's executive management or its main business connections:

That the individual:

• has not been employed by the company (or group where appropriate) in a senior position at any time in the last five years,
• does not receive any remuneration from the company other than the regular fee as a board member (does not apply to payments from a company pension),
• does not have, or represent, business relationships with the company,
• is not entitled to any fees as a board member that are dependent on the company’s performance or to any share options,
• does not have any cross-relationships with members of the executive management, other members of the board of directors or other shareholder elected representatives,
• has not at any time in the last three years been a partner or employee of the accounting firm that currently audits the company.

This list stems from Commission Recommendation 2005/102/EC.

More specifically, the Ministry of Finance expressed the view that the general starting point must be that a board member can be regarded as independent if he or she has no business, family or other relationships with the company or its controlling shareholder that might give rise to a conflict of interest that could affect the individual's judgement.

In terms of employee representatives on the board of directors, the view taken by the Ministry in the preparatory work on the legislation^[16] was that while an employee representative cannot in general be assumed to be fully independent, the audit committee should not be automatically prevented from benefiting from the company-specific expertise of employee representatives. It therefore seems that the Ministry of Finance has taken the view that employee representatives may be members of audit committees, subject to the individual not being selected as the member required to have accounting or auditing qualifications, who must be an independent member.

The preparatory work on the legislation also added a commentary on the relationship between the overall expertise of the audit committee and its specific accounting expertise. The view taken was that while the minimum requirement is for one member of the audit committee to have expertise in accounting or auditing, it might be the case in some companies that more than one member should have such expertise, and that other forms of expertise may be required.

According to the preparatory work on the legislation, the requirement for a member to be proficient in accounting or auditing does not represent a requirement for a formal qualification in this respect. Since the audit committee will be elected among members of the board of directors, the general meeting will be responsible for ensuring that one of the persons elected to the committee satisfies this requirement. This means that the general meeting must take a view on whether a specific candidate's actual expertise can be assumed to be sufficient. By way of example, the preparatory work on the legislation suggested that in certain cases satisfactory actual and practical expertise may, on a case-by-case basis, taking into account the nature and scope of the company's business, be provided by a candidate with accounting expertise at a lower professional level than that of an authorised public accountant, for example as a finance director or as the head of the internal audit function of a listed company^[17].

4.5 The duties of the audit committee

The duties of the audit committee are to:

a) carry out preparatory work for the board of directors’ monitoring of the financial reporting,

b) monitor the company's systems for internal control and risk management, and the company’s internal audit function if applicable,

c) maintain regular contact with the company's elected auditor in respect of the statutory audit of the annual accounts,

d) review and monitor the independence of the statutory auditor, and in particular the extent to which services other than statutory audit provided by the auditor or audit firm represent a threat to the auditor's independence.

The audit committee is also required to issue a recommendation on proposals made by the relevant corporate body for the election of the auditor, and this recommendation shall be put before the general meeting prior to such election, cf. Public Limited Liability Companies Act, Section 7-1 (1).

There is no specific requirement for the audit committee to keep minutes of its meetings. However, it was noted as part of the preparatory work on the legislation that it must be assumed that the general requirement for minutes of board meetings set out in the Public Limited Liability Companies Act would apply to the extent that the board either operates as the audit committee pursuant to provisions for this in the articles of association or carries out the duties of the audit committee as a result of the exemption for smaller companies^[18]. In such cases, in order for the board minutes to comply with the requirements of the Public Limited Liability Companies Act, Section 6-29 (1), the minutes must clearly state that the board has acted as the audit committee. Further, the minutes must record the monitoring and control measures that have been carried out, the results of such measures, and the evaluation and the conclusions the board reached acting as the audit committee.

4.6 Auditor's duty to report to the audit committee

Where a company has an audit committee, a new Section 5a-3 of the Auditors Act now imposes various duties on the auditor to communicate with the audit committee in respect of the annual audit, internal control and the auditor's independence. The auditor must provide the audit committee with an account of the main features of the audit carried out for the immediately preceding financial year, including an account of any material weaknesses discovered in internal control in respect of the financial reporting process.

In addition, the auditor shall provide the following to the audit committee:

1. An annual confirmation of the auditor’s independence.
2. A report detailing any services other than statutory audit carried out for the company during the course of the financial year.
3. Notification of any threats to the auditor’s independence and written evidence of the measures implemented to mitigate these threats.

Where the board of directors carries out the duties of the audit committee in accordance with the relevant exemptions, the information mentioned above must be provided to the board of directors.

5 Changes to the Financial Institutions Act – primary capital certificates are now equity certificates

New legislative provisions on capital adequacy and organisational structures in the savings bank sector etc. have created a modernised regulatory framework for the primary capital certificates issued by savings banks, which have been re-named equity certificates. The capital they represent is now known as equity certificate capital. The main provisions regulating equity certificates previously contained in the Primary Capital Certificate Regulations, have now been included in the Financial Institutions Act in Chapter 2b “Capital adequacy. Equity certificates”^[19]. The changes to the legislation came into force 1 July 2009. A new regulation on equity certificates came into force at the same time as the amended legislation^[20].

The changes to the legislation are intended to make equity certificates more competitive with shares by bringing their regulatory framework more in line with that for shares. The most important elements are as follows:

- Equity certificates now convey the right to a proportionate share of the bank’s profits.

- New provisions have been introduced that will help to prevent the dilution of equity certificate capital relative to the mutual capital.

- The new legal structure offers greater scope for structural changes for savings banks a.

For more detailed information on the new rules for equity certificates, please see the Norwegian Savings Banks Association website (English pages) at: http://www.sparebankforeningen.no/index.gan?id=14498&subid=0

Yours truly
OSLO BØRS ASA

Atle Degré Senior Vice President Legal Affairs

June Marit Tangen Attorney-at-law

 

^[1] Directive 2007/36/EC on the exercise of certain rights of shareholders in companies listed on a regulated marketplace (http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2007:184:0017:0024:EN:PDF)
^[2] Directive 2006/43/EC on the statutory audits of annual accounts and consolidated accounts http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2006:157:0087:0107:EN:PDF)
^[3] cf. The Act amending the Limited Liability Companies Act and the Public Limited Liability Companies Act etc. (implementation of the shareholders’ rights directive in Norwegian law etc.) of 19 June 2009 No. 77
(http://www.lovdata.no/cgi-wift/ldles?xdoc=/all/nl-20090619-077.html)
and the Act on Public Limited Liability Companies of 13 June 1997 No. 45 (http://www.lovdata.no/all/hl-19970613-045.html)
^[4] cf. Ot. prp. (Odelsting Bill) No. 46 (2008-209) on an Act to amend the Limited Liability Companies Act and the Public Limited Liability Companies Act etc. (implementation of the shareholders’ rights directive in Norwegian law etc.) (“Ot. prp. No. 46”) page 39 (http://www.regjeringen.no/pages/2167027/PDFS/OTP200820090046000DDDPDFS.pdf)
^[5] cf. Ot. prp. No. 46 page 40
^[6]http://www.lovdata.no/for/sf/jd/xd-20090706-0983.html
^[7] cf. Article 2 No. 13 of the Statutory Audit Directive: “public-interest entities means entities governed by the law of a Member State whose transferable securities are admitted to trading on a regulated market of any Member State within the meaning of point 14 of Article 4(1) of Directive 2004/39/EC. . . “
^[8] Ot. prp. No. 78 (2008-2009) on an Act to amend the Act on auditing and auditors and certain other Acts (implementation of the statutory audit directive in Norwegian law etc.) (Ot. prp. No. 78) page 66 (http://www.regjeringen.no/pages/2178167/PDFS/OTP200820090078000DDDPDFS.pdf) and cf. Article 41 No. 5 of the statutory audit directive.
^[9] Ot. prp. No. 78 page 66
^[10] cf. Section 3-1 a of the Act of 10 June 1988 No. 40 on financing activity and financial institutions (http://www.lovdata.no/all/hl-19880610-040.html)
^[11] cf. Section 16a of the Act of 24 May 1961 No. 2 on commercial banks (http://www.lovdata.no/all/hl-19880610-040.html)
^[12] cf. Section 17c of the Act of 24 May 1961 No. 1 on savings banks (http://www.lovdata.no/all/hl-19880610-040.html)
^[13] cf. Ot. prp. No. 78 page 72
^[14]http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2005:052:0051:0063:EN:PDF
^[15] cf. Paragraph 24 of the preamble to the statutory audit directive
^[16] cf. Ot. prp. No. 78 2008-2009 page 73
^[17] cf. Ot. prp. No. 78 page 73
^[18] cf. Ot. prp. No. 78 page 77
^[19] Act on Financing Activity and Financial Institutions of 10. June 1988 No. 50
(http://www.lovdata.no/all/hl-19880610-040.html)
^[20] Regulation of 29 June 2009 on equity certificates for savings banks, credit associations and mutual insurance companies (http://www.lovdata.no/for/sf/fd/xd-20090629-0913.html)