Norway: Recent Regulatory Developments

In this post, we explore recent regulatory developments that impact international fund managers, investment firms, and investment funds marketing in Norway.

These recent developments include,

• introduction of fees for marketing of non-Norwegian Funds in Norway
• implementation of Delegated Regulation (EU) 2021/1833 concerning investment firms, of Delegated Directive (EU) 2021/1270 and Delegated Regulation (EU) 2021/1255 as regards the sustainability risks and sustainability factors to be taken into account by Alternative Investment Fund Managers into Norwegian Law
• legislative proposal for a national regime for third-country firms’ provision of investment services in Norway. 

Introduction of fees for marketing of non-Norwegian UCITS and AIFs 

From 1 January 2024, the Norwegian Regulator (Finanstilsynet) will charge registration notification fees and annual fees concerning (amongst others) non-Norwegian Alternative Investment Fund Managers (AIFMs) and Undertakings for Collective Investment in Transferable Securities (UCTIS). 

The application for authorisation to market Alternative Investment Funds (AIFs) under the national private placement regime (under Section 6-5 of the Norwegian AIFM Act, Article 42 AIFMD) and the notification for the marketing via the EEA passport of the AIFMD and UCITS directive will occur an application fee payable to the Norwegian Regulator. The fee must be paid before the application or notification is processed. The fees shall not be lower than NOK 5,000 (approximately EUR 430) and no higher than NOK 30,000 (approximately EUR 2,600). 

An annual fee will be introduced to cover the costs of keeping Finanstilsynet’s register of enterprises updated. The fees shall not be lower than NOK 5,000 (approximately EUR 430) and not higher than NOK 10,000 (approximately EUR 860). Finanstilsynet sets the fees for each calendar year. 

Regulatory developments within mutual funds and collective investment schemes: new rules on fund managers’ sustainability risk management 

In December 2022, additional rules and procedures concerning the consideration of sustainability risks and sustainability factors by management companies of UCITS and AIFs respectively were incorporated into the EEA Agreement. The integration of sustainability risks into fund managers’ regulatory obligations is an important measure in line with the objectives of the European Green Deal. 

The amendments were implemented into Norwegian law, in the Norwegian Mutual Funds Act concerning UCITS and in the Norwegian AIFM Act concerning AIFMs, and came into force on 1 January 2023. The European measures were implemented in the European Union in April 2021 in the form of Delegated Directive (EU) 2021/1270 amending Directive 2010/43/EU as regards the sustainability risks and sustainability factors to be taken into account for UCITS and Delegated Regulation (EU) 2021/1255 amending Delegated Regulation (EU) 231/2013 as regards the sustainability risks and sustainability factors to be taken into account by Alternative Investment Fund Managers.  

The amendments are consistent with SFDR, however, it is worth noting that the requirements apply irrespective of the SFDR disclosure obligations of the fund(s) under management, in other words irrespective as to whether the funds disclose in accordance with article 6, 8 or 9 SFDR. 

Norwegian legislative proposal to implement national regime regarding third-country firms’ provision of investment services in Norway 

A legislative proposal from Finanstilsynet aims to permit the provision of investment services without an authorization for establishing a branch from third country firms to professional clients and eligible counterparties in Norway, if the undertaking is respectively authorized in its home state and a memorandum of understanding between the Norwegian regulator and the home state is in place. Besides, the undertaking’s home state cannot be on the Financial Action Task Force’s list of jurisdictions that have a high risk of money laundering or terrorist financing or are under enhanced supervision. 

Under the current legal framework third-country firms may be granted permission by Finanstilsynet to provide financial services or perform activities in Norway in principle only through the establishment of a branch.  

Under current European law, the provision of services by third country firms in the Union is subject to national regimes and requirements. Norway has not yet made use of the provisions of MiFID allowing third-country firms to provide investment services without establishing a branch. When having established a branch in Norway, the third country firm is subject to a number of organisational provisions of the Securities Trading Act, such as the rules on investor protection.  

Specific exemptions exist for British Investment Firms in relation to derivates. In order to allow said firms to provide investment services to professional clients and eligible counterparties in Norway, the Contract Continuity Regulation was adopted on 20 December 2018, which will be effective (at least) until 1 October 2023. 

At the moment, no third country firm has yet made use of the provisions and established a branch in Norway. The Finanstilsynet is therefore of the opinion that it is desirable to implement a regime that allows for the provision of services directly from a place of business outside the EEA, in addition to the existing Norwegian rules on the provision of services by establishing a branch with less organizational requirements.  

If passed, the law will add investment opportunities for Norwegian institutional investors and provide opportunities for third country investment firms wishing to provide investment services in Norway without having to establish a branch and following the requirements that apply consequently.  

The Markets in Financial Instruments Directive (MiFID): Ancillary services at group level 

The Delegated Regulation (EU) 2021/1833 specifying the criteria for assessing when an activity is to be considered ancillary to the main business at group level providing supplementary provisions to Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on Markets in Financial Instruments Directive (MiFID) was incorporated into the EEA Agreement on 28 October 2022, and subsequently transposed into Norwegian law on 31 October 2022. 

The Delegated Regulation (EU) 2021/1833, as transposed into Section 9-3 of the Norwegian Securities Act, introduces new requirements for exemptions from the licensing obligation for firms providing investment services in commodity derivatives. It specifies the criteria for establishing when an activity is considered to be ancillary to the main business group level, and thus covered by the exemption. It stipulates that the assessment whether persons are dealing on own account or are providing investment services in commodity derivatives, emission allowances and derivatives thereof in the European Union as an activity ancillary to their main business, should be performed at group level. It introduces three requirements for the ancillary activity assessment. The implementation of the Delegated Regulation (EU) 2021/1833 into Norwegian law affects the exemption from the authorisation requirement in accordance with the Norwegian Securities Trading Act.

If you have any questions or require support, Zeidler Group is here to help. Our global team of professionals remains up to date on the latest legal, regulatory, and compliance changes affecting the asset management industry.