Norway: Recent Regulatory Developments – Implementation of the Cross-Border Distribution Framework

On 1 October 2024, significant changes will come into effect in Norway following the implementation of Regulation (EU) 2019/1156 (the “CBDF Regulation”) and Directive (EU) 2019/1160 (the “CBDF Directive”). On 22 June 2022, Norway passed the Act on Amendments to the Securities Trading Act and Related Laws (Lov om endringer i verdipapirhandelloven mv.) (the “Implementing Law”), which implements these EU regulations. The legislation introduces important changes to the Act on Securities Funds (lov 25. november 2011 nr. 44 om verdipapirfond) (the “Securities Funds Act”) and the Act on the Management of Alternative Investment Funds (lov 20. juni 2014 nr. 28 om forvaltning av alternative investeringsfond) (the “AIF Act”), aligning Norway’s financial regulatory framework with European Union (“EU”) standards, particularly in fund distribution and marketing.

Overview of Norway’s AIF Act and EU Cross-Border Distribution Framework

By way of background, the CBDF Regulation and CBDF Directive are part of the Cross-Border Distribution Framework (“CBDF Framework”), which was introduced by the EU to streamline the distribution of both undertakings for collective investment in transferable securities (“UCITS”) and alternative investment funds (“AIFs”) across Member States. This framework, effective from 2 August 2021, consists of the CBDF Regulation and the CBDF Directive, supplemented by Commission Implementing Regulation (EU) 2021/955 and the European Securities and Markets Authority’s Guidelines on marketing communications under the Regulation on cross-border distribution of funds (ESMA34-45-1272).

For EU Member States, the CBDF Regulation was directly applicable, while the CBDF Directive required transposition into national law. For Norway, as part of the European Economic Area (“EEA”), the CBDF Framework is not directly applicable. The CBDF Regulation and the CBDF Directive had to be incorporated into the EEA Agreement by a decision of the EEA Joint Committee and subsequently implemented at the national level. The CBDF Directive and the CBDF Regulation were incorporated into the EEA Agreement on 6 February 2021 and will be in force in Norway from 1 October 2024.

Summary of the Regulatory Changes in Norway 

The Implementing Law amending the Securities Funds Act and the AIF Act introduces new rules on cross-border marketing of UCITS and AIFs in Norway, including notifications, amendments to notifications, and de-notifications of EEA UCITS and AIFs, in line with the CBDF Directive and the CBDF Regulation. Additionally, UCITS and retail AIFs must now provide facilities when marketing to investors in Norway. These facilities must process orders, provide access to fund documentation, handle customer complaints, and more. Information about the facilities must be provided to investors in Norwegian and in a durable medium, including electronically.

These requirements are generally in alignment with the broader EU standards under the CBDF Directive and the CBDF Regulation. There are no additional gold-plating requirements applicable in Norway. Prior to the CBDF Directive, a local agent needed to be appointed to facilitate certain services. The CBDF Directive introduced Art. 92 of the UCITS Directive (see here) which allows the UCITS to provide the facilities either themselves or through a central agent, rather than appointing several local agents in different jurisdictions or setting up a physical presence themselves.

Pre-Marketing in Norway: A New Opportunity for AIF Managers

The Implementing Law also introduces the concept of pre-marketing for AIFs in Norway. Consequently, the Norwegian Financial Supervisory Authority (“Finanstilsynet”) will be accepting pre-marketing notifications from the Home State Regulator of the relevant AIF managers (“AIFMs”) from 1 October 2024. The new pre-marketing framework in Norway does not extend to AIFMs from third countries, non-EEA AIFs, or Norwegian feeder funds to such non-EEA AIFs. AIFMs of such non-EEA AIFs must obtain marketing authorisations to carry out activities that would otherwise be classified as “pre-marketing”. This restriction could reduce the variety of AIFs available to Norwegian investors compared to what would be the case if these AIFMs were allowed to engage in pre-marketing.

How Norway’s Pre-Marketing Framework Impacts Retail Investors

A noteworthy development in Norway’s adoption of the CBDF Framework is the introduction of pre-marketing rules that extend to retail investors, provided that the EEA AIF or its investment strategy is intended to be marketed to retail investors. This means that such AIFs can now pre-market to retail investors in Norway subject to filing a pre-marketing notification with Finanstilsynet. Finanstilsynet has confirmed that further information on the process for filing these pre-marketing notifications will be published soon. This marks a significant shift from the previous regime and the handling in other EU Member States, which do not permit pre-marketing to retail investors.

Key takeaways:

Notification, amendments to notification and de-notification:

• EEA UCITS and AIFs marketed in Norway must follow updated procedures for notifying Finanstilsynet, including amendments or de-notifications, in line with the harmonised requirements of the CBDF Regulation and the CBDF Directive.

Provision of facilities:

• As part of the new regulatory framework, UCITS and AIFs marketed to retail investors in Norway will need to have facilities in place. These facilities are required to ensure compliance with local regulations and facilitate investor access to necessary information and services. This aligns with the harmonised requirements set out in the CBDF Regulation and the CBDF Directive and aims to enhance investor protection and market transparency.

Pre-marketing:

• From 1 October 2024, pre-marketing of domestic and EEA AIFs to professional investors will be permitted in Norway. This change significantly aligns Norway’s financial regulatory landscape with EU standards, creating a more streamlined and transparent environment for cross-border fund distribution. Additionally, AIFs may now engage in pre-marketing to retail investors in Norway, provided that the applicable regulatory conditions are met.

Our European Facilities Agent Service: Simplifying Compliance Across Europe

In light of these new regulatory requirements, ensuring compliance with the obligation to provide facilities has never been more critical. To help you navigate these changes effortlessly, we offer our European Facilities Agent Service – a comprehensive, one-stop solution designed to simplify your fund distribution across Europe.

Our service provides EU-wide coverage, replacing the need for multiple local agents with one central point of contact. We handle all local language requirements, offer access to an online platform for making relevant documents and information available to investors, and ensure full compliance with the new regulations, including the CBDF Framework. With transparent, fixed fees and potential savings of up to 80%, Zeidler Group will seamlessly take over these responsibilities across EU Member States.

How Zeidler Group Can Help

The Zeidler Legal Team is available to assist with any questions or support you may need regarding the implementation of the CBDF Framework in Norway. Our global team of professionals is highly knowledgeable about the latest legal, regulatory, and compliance developments affecting the asset management industry. We have been closely monitoring the rollout of the CBDF Framework in Norway to ensure you have the most current and relevant information.

Should you need further details or assistance in understanding how these changes impact your business, please do not hesitate to reach out to us.