PREFACE
This booklet presents central Norwegian legislation on banks and other financial institutions in English translation. The translation was done by Peter Thomas, government authorised translator, based on a collaboration between the Banking, Insurance and Securities Commission and the Norwegian Bankers' Association.
The booklet contains the following Acts:
- Act on Commercial Banks
- Act on Financing Activity and Financial Institutions (Financial Services
Act)
- Act on the Supervision of Credit Institutions, Insurance Companies and
Securities Trading, etc. (the Banking, Insurance and Securities Commission)
- Act on the Government Bank Insurance Fund
- Act on the Government Bank Investment Fund
Whereas the first-mentioned Act is addressed specifically to commercial banks, the other Acts encompass all banks and to some extent a wider range of institutions in the financial market. Over the past ten years Norwegian financial legislation has undergone increasing integration. This is clearly illustrated by chapter 2 of the Financial Services Act which sets out a number of general rules - inter alia on ownership structure in financial institutions and capital adequacy requirements - which apply to all financial institutions. The term "financial institution" will be seen to embrace not only commercial banks, savings banks, finance companies, mortgage companies and loan intermediaries, but also insurance companies. Similarly, chapter 2a of the same Act sets out a general body of rules addressed to all categories of financial groups, i.e. bank groups, insurance groups and mixed groups encompassing both banking and insurance.
Moreover, in common with other Nordic countries, Norway operates a joint supervisory authority for banks, insurance companies and other financial market participants. Among its many functions, this supervisory body (the Banking, Insurance and Securities Commission) oversees securities trading. The Commission is a freestanding institution, independent of the central bank of Norway (Norges Bank).
A number of law amendments have been enacted since the second edition of the law booklet was published in 1990. In 1991 the Government Bank Insurance Fund and the Government Bank lnvestment Fund were founded against the background of the banking crisis in Norway of recent years. The main purpose of the Government Bank Insurance Fund is to provide support loans to the Commercial Banks Guarantee Fund and the Savings Banks Guarantee Fund and support loans or equity capital guarantees to the individual bank, while the Government Bank Investment Fund can contribute capital to Norwegian banks. The Acts governing the Government Bank Insurance Fund and the Government Bank Investment Fund are included in the booklet since these institutions are important elements in the banks' safety net in the current situation.
As a result of Norway's accession to the Agreement on the European Economic Area (EEA), Norway has adopted a number of amendments to existing legislation. In the financial field the most important ones - bearing on the Commercial Banks Act, the Financial Services Act and the Act on the Supervision of Credit Institutions, Insurance Companies and Securities Trading etc. - were adopted by Act no. 123 of 4 December 1992. The amendments are expected to come into force simultaneously with the implementation of the EEA agreement, although some provisions (e.g. the rules on money laundering, see section 2-17 of the Financial Services Act) could be given effect beforehand.
In view of this unusual legal situation, we have chosen to include the Commercial Banks Act, Financial Services Act and the Act on the Supervision of Credit Institutions, Insurance Companies and Securities Trading etc. in the form in which they presently apply, followed in each case by an appendix setting out amendments that have been adopted but not yet given effect.
In each Act in this booklet a number of provisions authorise the King (or the Ministry) to make regulations designed to supplement or clarify their subject-matter: the provisions themselves often provide limited information. Although it might be desirable in the interest of completeness, it would clearly be beyond the scope of a booklet of this kind to include the rather large body of pertinent regulations. However, the reader may note that a compendium of regulations on banks' capital adequacy is available in Norwegian and in English translation in another booklet in the series "smaskriftserien" (published in July 1992).
Oslo, 6 July 1993
Sverre Dyrhaug
Kari Sorsdal
Director
Head of Division
Chapter 1 Introductory provisions
Section 1 This Act applies to all institutions which fund their activities by accepting deposits from an unrestricted range of depositors.
Notwithstanding the foregoing provision, this Act does not apply to Norges Bank (the central bank of Norway), savings banks or institutions established pursuant to special statute.
Co-operatives may accept deposits from their members without falling within this Act, but they may not carry on lending activity with funds obtained in this manner, except in accordance with rules established by the King.
In this Act, "commercial bank" means any institution to which this Act is applicable in its entirety.
Section 2 Unless specifically provided by statute, only commercial banks may use the word "bank", with or without an addition, in their name (firm) or in describing their business.
Section 3 A commercial bank may only be formed as a joint stock company.
The provisions of legislation on joint stock companies do not apply to commercial banks to the extent that such provisions conflict with the present Act. Sections 18-3 to 18-5 of the Companies Act do not apply to banks in which the Government Bank Insurance Fund is the sole shareholder.
Chapter 2 Formation, articles of association and share capital of a commercial bank
Section 4 A commercial bank shall be formed following an invitation to the public to subscribe for shares. The founders shall include at least ten Norwegian citizens who are resident in Norway.
The King may authorise a commercial bank to be formed by three or more Norwegian banks without any invitation to subscribe for shares, or without any invitation to the public to subscribe for shares. In such case only Norwegian banks may be shareholders.
The King may authorise a commercial bank to be formed or acquired by one or more foreign banks, or by one or more foreign banks jointly with one or more Norwegian banks, provided a single foreign bank owns more than half of the share capital in the commercial bank. The provision of the second paragraph concerning invitation to subscribe for shares applies pari passu.
The first to third paragraphs imply no restriction of the right of a commercial bank to form part of a financial group pursuant to section 2-2, second paragraph, subparagraph 2, of the Financial Services Act.
The articles of association of a commercial bank and any amendments thereto shall be submitted to the King for approval. The articles of association shall stipulate an age limit for the bank's employees.
Section 5 A commercial bank may not be formed with a smaller share capital than 1,000,000 kroner. In special cases, with due regard to the activities which the bank is to carry on under its articles, the King may authorise the share capital to be fixed at a smaller amount, but not less than 500,000 kroner.
An increase of the share capital of a commercial bank may not be registered until the King has authorised the increase. Any decision to reduce the share capital is void without the consent of the King. The capital may not be reduced to less than the amounts stipulated in the first paragraph, unless the reduction is made without repayment to the shareholders. If the capital is reduced to less than the amounts stipulated in the first paragraph, the King may, to the extent necessary to secure the operation of the bank, establish that the share capital shall be increased by new subscription for shares. The King may in that connection decide that the shareholders' preferential right shall be waived, determine who in the event shall be entitled to subscribe for the new capital, and establish further conditions of subscription.
A commercial bank may only with the consent of the King obtain capital against loan certificates which shall rank below the bank's ordinary liabilities. Such loan capital ranks equal with the share capital for the purpose of the rules on statutory reserves to the extent that the loan capital ranks equal with the share capital pursuant to sections 21 or 23.
Before the King makes any decision as mentioned in this section, the executive board of Norges Bank shall be invited to express its opinion.
Section 6 Payments on shares in a commercial bank may not be made in any other form than money. This does not apply to shares which shall serve as compensation in the event that a bank's assets are taken over in their entirety, cf. sections 31 and 32.
Share transfers are valid in regard to the bank only when approved by the bank's board of directors. Such approval shall be withheld if the transfer contravenes the provisions of section 7.
Section 7 Except as mentioned in section 4, second to fourth paragraphs, a commercial bank may not have fewer than 20 shareholders who are Norwegian citizens resident in Norway. Equivalent to Norwegian citizens for the purpose of this section are the Norwegian state, institutions and funds that are controlled by the state, Norwegian municipalities, Norwegian banks and corporations and foundations having a board of which a majority including the chairman are Norwegian citizens, and having their head office in Norway and serving the public interest. Likewise, if so decided by the King, joint stock companies and other limited liability companies having a board of which a majority including the chairman are Norwegian citizens, and having their head office in Norway may, when at least two thirds of their primary capital is owned by the state, Norwegian municipalities or Norwegian citizens, be regarded as Norwegian citizens for the purpose of this section. The above provision does not apply to banks in which the Government Bank Insurance Fund is a shareholder.
Section 8 A commercial bank may not be registered until the King has authorised it to carry on banking activity. When authorised by the Banking, Insurance and Securities Commission, a commercial bank may have a branch in the municipality in which the bank has its head office and, when authorised by the King, also outside this municipality.
Authorisation as mentioned in the preceding paragraph shall be withheld if the bank fails to satisfy the requirements of this Act, if the bank's capital is not assumed to be in reasonable proportion to the business to be carried on by the bank, or if the formation of the bank or branch is not considered to be in the public interest.
Authorisation as mentioned in the first paragraph may not be granted to a commercial bank which has been formed or acquired pursuant to section 4, third paragraph, if Norwegian banks do not have a corresponding right to carry on banking activity in the home country of the foreign bank or banks. The King may attach further conditions to the authorisation. A foreign bank's representative office in Norway must be registered with the Banking, Insurance and Securities Commission.
Authorisation as mentioned in the first and third paragraphs becomes inoperative if the authorised activity has not commenced within two years after the date of the authorisation.
The King may revoke such authorisation if the board of directors or committee of representatives have been guilty of gross or persistent dereliction of their duties pursuant to law, regulations issued pursuant to law or pursuant the articles of association, if anyone in the management of the bank is guilty of misconduct, or other serious irregularities give reason to fear that the continuation of the business would not be in the public interest.
Before the King adopts any resolution as mentioned in the first, third and fifth paragraphs, the executive board of Norges Bank shall be invited to express its opinion.
Chapter 3 Governing bodies of a commercial bank
Section 9 A commercial bank shall have a board of from five to nine members. It shall represent a variety of interests. Board members must be Norwegian citizens resident in Norway. The King may grant dispensation from the provision of the preceding sentence. In banks formed in accordance with section 4, third paragraph, up to one-third of the members of the board may without dispensation be foreign citizens or Norwegian citizens resident abroad. The chairman of the board shall be a Norwegian citizen resident in Norway.
A commercial bank shall have a bank manager (managing director) who shall be a member of the board. More than one bank manager may not serve on the board. If the board has at least seven members, the articles of association may nonetheless provide that one additional bank manager shall serve on the board. A bank manager is appointed under a contract of employment terminable by notice and the period of notice given by the bank must not exceed six months.
The other board members are elected by the committee of representatives. One member shall be an employee of the bank. This member shall have a personal deputy entitled to attend and speak at meetings. The board chairman and vice chairman are elected by separate ballot.
The election is prepared by an election committee which is elected by the committee of representatives and whose members are drawn from both constituent groups of the committee of representatives; cf. section 11, fourth and fifth paragraphs.
The King may issue further regulations on the election to the board of the member and deputy member representing the employees.
Section 9a The board of directors is responsible for administering the bank's affairs, and this includes deciding the individual credit applications. The board shall ensure that the bank's activities are organised in a satisfactory manner. The committee of representatives may not adopt decisions in matters which pursuant to this section fall within the scope of the board.
Section 10 A bank manager or branch manager must not carry on trade, manufacturing or shipping or participate as a partner or board member in any company engaged in such business. Nor may he act as agent for any person engaged in such business or in insurance.
The provisions of the first paragraph do not apply to the post of board member of a company which is under administration or being wound up. The Banking, Insurance and Securities Commission may in special cases and on the recommendation of the bank's board of directors and control committee make exceptions to the rules of the first paragraph.
Section 11 A commercial bank shall have a committee of representatives numbering 15, 30 or 45 persons.
The committee of representatives should represent a variety of interests and its members should be drawn from various districts and industries that are affected by the bank's activities.
Except with the consent of the King, only Norwegian citizens resident in Norway may be elected as members or deputy members to the committee of representatives. In banks formed or acquired pursuant to section 4, third paragraph, up to one-third of the members and deputy members of the committee of representatives may without such consent be foreign citizens or Norwegian citizens resident abroad. The chairman of the committee of representatives shall be a Norwegian citizen resident in Norway.
The general meeting elects eleven-fifteenths of the members of the committee of representatives. The members and deputy members shall be elected from among the bank's shareholders or, if the bank has been formed or acquired in accordance with section 4, second and third paragraphs, from among the participating banks' shareholders, elected officers or employees. The general meeting in banks formed or acquired pursuant to section 4, third paragraph, may also elect committee members from among others than those mentioned in the preceding sentence. The election is prepared by an election committee elected by the general meeting. The requirement of the second sentence to the effect that members and deputy members of the committee of representatives shall be elected from among the bank's shareholders does not apply in those cases where the Government Bank Insurance Fund is a shareholder.
The employees of the bank elect from among their number four-fifteenths of the members of the committee of representatives. The King issues further rules regarding this election.
Each election group shall elect at least half as many deputies as it elects members to the committee of representatives.
The committee of representatives draws up guidelines for the bank's activities and adopts resolutions on the remuneration of the bank's elected officers and managing director. The guidelines shall take the form of general instructions for the bank's board of directors and administration and shall be submitted to the general meeting for approval.
Section 11a (Repealed)
Section 12 A branch of a commercial bank located outside the home municipality of the bank's head office shall, if so decided by the committee of representatives, have its own board numbering from four to seven members. The branch manager is a member of the board. One member is elected by and from among the employees of the branch - if the branch has 15 or more employees. The other members are elected by the committee of representatives. Branch board members are otherwise subject to the same provisions as those applying to members of the main board; cf. however section 25l, fourth paragraph, final sentence. The main board draws up instructions for the branch board. These instructions shall be approved by the committee of representatives. The King may issue further regulations concerning the election of the employees' member to the branch board.
A commercial bank branch shall, if so decided by the committee of representatives, have an advisory regional council. The regional council is elected by the committee of representatives. If the branch has its own board, the election shall be made on the recommendation of the branch board. A regional council may be common to several branches.
Section 13 A commercial bank shall have a control committee of at least three members and at least one deputy member with a term of office of two years. Members and deputy members are elected by the general meeting. One member of the committee shall have the qualifications required of judges pursuant to section 54, second paragraph, of Act no. 5 of 13 August 1915 on Courts of Justice. The election of this member shall be approved by the Banking, Insurance and Securities Commission. The said Commission may grant dispensation from the provisions of the two preceding sentences. The members of the control committee elect the committee chairman and vice-chairman unless the articles of association vest this authority in the general meeting. Members of the committee who are elected by the general meeting must be eligible for election to the committee of representatives. In banks formed or acquired in accordance with section 4, third paragraph, the Banking, Insurance and Securities Commission shall appoint two of the members of the control committee, while the general meeting shall elect the other members of the control committee. The chairman and vice-chairman of the committee of representatives, a board member or deputy board member, auditor or employee of the bank may not be elected as a member or deputy member to the control committee. Nor may anyone be so elected who is under legal disability or is an associate, subordinate, dependent, spouse or relative by blood or by marriage in direct line of ascent or descent or in the first collateral line of any member, deputy member, auditor or senior employee of the bank. Nor may anyone be elected who has gone bankrupt, opened debt settlement proceedings or is under private administration. If any circumstance arises which renders the person no longer eligible, he shall retire from the control committee. To replace a retiring member, a new member shall be elected at the first opportunity for the remainder of the retiring member's term of office. For branches having their own board of directors, local control committees may be elected to carry out local inspections under the supervision of the main committee.
The control committee shall supervise the activities of the bank and shall inter alia see to it that it complies with the law, the articles of association and the guidelines adopted by the committee of representatives. To the extent it finds it necessary, the committee shall examine the bank's records, books, correspondence and holdings, both the bank's own holdings and holdings on deposit with the bank. The board of directors and the auditors shall furnish the control committee with all the information it deems necessary for the performance of its duties.
The control committee meets as often as is considered necessary to ensure efficient supervision. It shall not inform or notify anyone in advance of the times at which an inspection will be carried out. It shall keep a minute book, authorised by the Banking, Insurance and Securities Commission, and shall each year report on its activities to the committee of representatives, the general meeting and the Banking, Insurance and Securities Commission. If the committee is informed of substantial negligence, error or irregularity of major significance or extent, or if it considers that the bank has sustained heavy losses, it shall promptly take up the matter with the Banking, Insurance and Securities Commission.
The committee of representatives shall adopt instructions for the control committee. The instructions shall be approved by the Banking, Insurance and Securities Commission.
Section 13a An elected member of or the chairman of the board of directors, a branch board, the committee of representatives or the control committee may not hold such office with the same bank continuously for more than 12 years, or hold such offices with the same bank for more than 20 years in aggregate.
Section 14 The committee of representatives shall choose an auditor or a firm of auditors to carry out the auditing of the bank's accounts and in the event to supervise the performance of the everyday audit. The auditor shall be a state authorised accountant.
The auditor shall observe the instructions and orders that are issued by the committee of representatives, provided they do not conflict with any provisions issued by or pursuant to law or with the articles of association of the bank or with generally accepted accounting standards.
The auditor presents his entries and remarks by way of the control committee to the committee of representatives.
An auditor who is guilty of breach of his duties or who proves unfit to discharge his duties shall be removed by the committee of representatives. The auditor may appeal this decision to the Banking, Insurance and Securities Commission.
Section 15 The committee of representatives and the board of directors meeting in joint session adopt resolutions in the following matters:
1. the establishment or closure of a branch in a municipality in which the bank does not have its head office or another branch,
2. the appointment of bank manager who is a member or deputy member of the main board.
3. the amount, if any, which may be distributed as dividend to the shareholders up to the maximum stipulated by the board of directors. The joint meeting decides concurrently the date from which date the adopted dividends may be disbursed.
The chairman of the committee of representatives convenes and chairs the meeting.
To be valid, decisions require quorums of both the committee of representatives and the board of directors. If the voting results in a tie, the chairman has the casting vote.
A record of the proceedings shall be kept under the responsibility of the chairman. The record shall be approved and signed by all the participants at the meeting or by the chairman and two other participants who are chosen at the meeting.
Section 16 Before the general meeting is held, the Banking, Insurance and Securities Commission shall be informed in good time of the matters that are to be dealt with. A copy of the record of the general meeting shall promptly be sent to the Commission.
Not later than one week after the ordinary general meeting the board shall have the annual accounts and balance sheet published in at least one of the newspapers that are generally read in the district.
The Banking, Insurance and Securities Commission replaces the court responsible for administrative receivership in the exercise of the authority mentioned in section 9-8, second paragraph, and section 9-11, first paragraph, fifth sentence, of the Companies Act.
Section 17 A member of the board of directors, branch board, control committee, committee of representatives, or regional council, a bank manager or branch manager must not participate in the proceedings in or decision on any matter in which he personally or his spouse or any relative by blood or by marriage as close as first cousin has a special personal or financial interest. Nor may he participate in the proceedings in or decision on any matter which is of special financial interest to a municipality, company, association or other public or private institution whose interests he is responsible for safeguarding in his capacity as chairman of the municipal council, board member, managing director, business manager or representative. The rules of this paragraph do not however apply to the election of officers or to the amount of their fees.
Before a matter as mentioned in the preceding paragraph is dealt with, any person who does not have the right to participate in the proceedings in or decision of such a matter shall speak up accordingly.
Section 18 Elected officers, employees and auditors of a commercial bank are obliged to treat as confidential any information which comes to their knowledge by virtue of their position concerning the bank or a customer thereof or another bank or its customer, unless they are obliged to disclose information pursuant to this or any other Act. The duty of confidentiality does not apply to information which the board of directors or anyone authorised by the board discloses on behalf of the bank to another bank.
Notwithstanding this provision, the bank may carry on credit reference activity in accordance with the laws applying thereto.
Section 19 A commercial bank may in accordance with this and other laws and regulations issued pursuant to law transact all business and services which it is customary or natural for banks to transact.
A commercial bank must not carry on or participate as an unlimited liability partner or co-owner in wholesale and retail trade, manufacturing, shipping, insurance or other business activity except activity which is authorised pursuant to the provision of the first paragraph. Notwithstanding the provision of the preceding sentence, a commercial bank may temporarily carry on or participate in the carrying on of such activity to the extent necessary to obtain satisfaction of claims. The Banking, Insurance and Securities Commission may require the bank to cease such activity by a specified date.
Section 20 A commercial bank may accept deposits on the conditions set forth in its articles of association.
Any person placing money on a new account shall state the name, occupation or business, and address of the depositor. He receives a certificate of deposit with the number of the account in the bank's deposit books, and with the depositor's name and address. If the bank has issued a passbook for deposits terminable by notice, the depositor may only demand repayment against presentation of the passbook.
The Banking, Insurance and Securities Commission may issue further regulations regarding the form of the certificate of deposit, announcement of the terms of deposit and the procedure for deposits and withdrawals.
A commercial bank may only accept school savings deposits when the savings scheme has been approved and the deposits guaranteed by the Commercial Banks Guarantee Fund; cf. chapter 5.
A depositor may require the bank to make available for inspection the present Act, the bank's articles of association and its latest annual financial statement with the auditor's report.
If no deposit or withdrawal has been made on a deposit account for a period of ten years, and the bank receives no reply to its notice to the depositor or his heirs, it may discontinue crediting interest on the deposit.
If a certificate of deposit which the bank may require to be presented in order to repay the deposit has been mislaid, the bank may issue a notice requiring any finder to come forward within two months, with the effect that the certificate of deposit becomes inoperative and that a new certificate may be issued if no-one comes forward. The notice shall be published in the Norwegian Gazette and in at least one newspaper which is generally read in the locality where the depositor lives or was last resident in Norway.
Section 20a A commercial bank shall have a statutory reserve amounting to at least half the share capital.
Until the reserve has reached the amount stipulated in the preceding paragraph, an amount shall be allocated to the reserve that is equivalent to 20 per cent of the profit for the year unless the profit is employed to cover previous years' losses which cannot be covered by the distributable reserve.
The provisions of section 12-1, second paragraph, subparagraphs 2 and 3, and sections 12-2 and 12-3 of the Companies Act also apply.
Section 21 A commercial bank shall at all times maintain a capital ratio of at least 8 per cent of the bank's on-balance-sheet and off-balance-sheet items calculated according to risk-weighting principles.
The King may stipulate:
a. a minimum amount of capital
b. rules concerning the basis of measurement
c. what shall be eligible for inclusion in capital d. a ratio other than
the one stated in the first paragraph in order to bring Norwegian provisions
into line with international standards.
The King may in special cases and for a limited period consent to a commercial bank having a lower capital ratio than the one stipulated.
If a commercial bank makes some of its assets available as security for a single liability or number of liabilities it shall notify the Banking, Insurance and Securities Commission accordingly. This provision does not apply in respect of loans made to a commercial bank with the aid of the Commercial Banks Guarantee Fund or loans from Norges Bank.
Section 22 A commercial bank shall ensure that it is at all times able to meet its liabilities as and when they fall due.
The King may issue further rules for the minimum ratio of a commercial bank's cash holdings to the bank's liabilities, including off-balance-sheet liabilities.
Section 23 (Repealed)
Section 24 The book value of a commercial bank's real properties and of shares and holdings in companies whose object is to own or utilise real property must not exceed 4 per cent of the bank's total assets according to the latest annual accounts. The Banking, Insurance and Securities Commission may grant dispensation from the provision of the preceding sentence.
The book value of a commercial bank's holdings of shares and holdings, except shares and holdings as mentioned in the preceding paragraph, must not exceed 4 per cent of the bank's total assets according to the latest annual accounts. The Banking, Insurance and Securities Commission may grant dispensation from the provision of the preceding sentence.
Notwithstanding the provisions of the first and second paragraph, a bank may take over assets as mentioned therein for the satisfaction of its claims or the performance of a guarantee, but it shall in such case dispose of such assets as soon as it can obtain satisfaction-of its claim or within a period stipulated by the Banking, Insurance and Securities Commission, unless it by other means brings the book value of such assets below the limits mentioned in the first and second paragraph.
Section 25 (Repealed)
Section 26 A Commercial Banks Guarantee Fund shall be established for Norway's commercial banks with the exception of banks in which savings banks own all the shares. The object of the Fund is to support the activity of member banks and ensure the fulfillment of their obligations by:
1. issuing guarantees for school savings deposits,
2. granting support deposits, loans or guarantees for loans to member banks,
3. issuing guarantees for a member bank's fulfillment of its obligations,
4. covering losses which a creditor may incur on claims on a member bank,
5. carrying on such activities as are decided by the general meeting in
accordance with the articles of association.
The board of the Fund decides in each case whether support shall be provided,
and in what form and on what conditions.
Further rules regarding the activities of the Fund shall be stipulated
in the articles of association of the Fund.
Section 27 The capital of the Fund shall equal at least 11/2 per
cent of the member banks' aggregate deposits from the public at the beginning
of the year in which this Act comes into force.
The capital is to be obtained in the form of guarantees from all member banks equivalent to 1 1/2 per cent of each banks' deposits from the public at the beginning of the year in which this Act comes into force. The guarantees, rounded off up to the nearest hundred kroner, shall have been received by the Fund's board of directors within three months after approval of the articles of association.
As security for its liability under the guarantees, each bank shall deposit with Norges Bank money or government or government-guaranteed bonds in an amount which, based on quoted prices, is at all times equivalent to the bank's guarantee. The board of directors of the Fund may, when special reasons so indicate, exempt certain banks from the obligation to deposit security for their guarantee and consent to the release of all or part of such deposit.
The guarantee amounts are to be recalculated when so decided by the board, but the total of the guarantees and the fund which is accumulated as a result of the contributions stipulated in section 28 shall always equal at least 1 1/2 per cent of the deposits from non-banks at the beginning of the year in which the calculation is made. In the event of any increase of the guarantee amounts, the board of directors may, pursuant to the provision of the preceding paragraph's final sentence, permit deposit of the corresponding security to be deferred.
Section 28 Each member bank shall each year pay into the Fund a contribution corresponding to 0.15 per cent of the bank's total assets according to the penultimate annual accounts until the capital paid into the fund has reached 2 per cent of the banks' aggregate deposits from non-banks. If the fund falls below this amount, it shall be replenished according to the same rules.
The Ministry may consent to the contribution being set lower than provided in the first paragraph.
A new bank may in a transitional period be ordered to pay contributions to the Fund according to rules established by the Ministry.
Section 29 The Commercial Banks Guarantee Fund is an independent legal entity. No member bank has a proprietary right to any part of the Fund.
The Fund's paramount authority is the general meeting which each member bank may attend with one representative.
The general meeting adopts articles of association for the Fund, elects members and deputies to the board mentioned in section 30 and establishes instructions for the board. The articles of association and instructions for the board shall be approved by the King.
The board's annual report and accounts shall be submitted to the general meeting.
The first general meeting shall be called by the Guarantee Fund for Norwegian Commercial Banks, subsequent general meetings by the board of the Commercial Banks Guarantee Fund.
In order for resolutions by the general meeting to be valid, at least one quarter of the member banks must be represented, either in person by an elected officer or employee of the bank or by a vote in writing sent to the board of the Fund.
Section 30 The activities of the Fund are managed by a board comprising seven members. Five members with personal deputies are elected by the general meeting. One member with deputy are appointed by the executive board of Norges Bank. The director of the Banking, Insurance and Securities Commission is a permanent member of the board.
The elected members and deputies serve a two year term. Three members and three of the deputies who are elected at the first election retire after drawing of lots after one year. Subsequently the longest serving members retire each year. The board members elect the chairman and vice-chairman for one year at a time.
In order for board resolutions to be valid, at least four board members must be present and agree with the resolution.
Section 30a If the Commercial Banks Guarantee Fund receives support loans from the Government Bank Insurance Fund, the special provisions of Act no. 2 of 15 March 1991 on the Government Bank Insurance Fund apply.
Section 31 Any decision to wind up the business of a commercial bank or to merge it with or transfer it to another bank or to acquire another bank must be approved by the King. Before any such decision is approved, the county council - in Oslo the municipal council - of the county in which the bank has its head office shall be invited to express its opinion.
Section 32 If there is reason to believe that only 75 per cent or less of the share capital may be assumed to be intact, the board shall see to it that an audited balance sheet is promptly prepared and shall promptly inform the Banking, Insurance and Securities Commission of its resolution.
If an audited balance sheet shows that a commercial bank has sustained such losses that only 75 per cent or less of the share capital may be assumed to be intact, the board shall promptly refer the matter to the committee of representatives, and notify the Banking, Insurance and Securities Commission.
The matter shall be submitted at the first ordinary or extraordinary general meeting which shall decide whether the bank shall continue in operation. In order for a resolution to continue operation to be valid, two-thirds of the votes cast must be in favour, and those in favour must hold at least one-third of the voting shares. The resolution must be approved by the Banking, Insurance and Securities Commission. As a condition for approval, the Commission may require the bank to implement such measures as the Commission considers necessary.
If no valid resolution to continue in operation has been adopted, the general meeting may by ordinary majority vote resolve that the bank's entire assets shall be transferred to another bank.
If no valid resolution to transfer the entire assets of the bank is adopted, the bank shall be wound up. Unless decided by the general meeting, the Banking, Insurance and Securities Commission shall appoint one or more persons to wind up the bank at the bank's expense. The same applies if the resolution to continue in operation is not approved by the Commission, or conditions for approval are not fulfilled in due time, or a transfer which has been decided is not executed by a date stipulated by the Commission.
If an audited balance sheet as mentioned in the first or second paragraph shows that only 25 per cent or less of the share capital may be assumed to be intact, the board shall promptly and in all cases notify the Banking, Insurance and Securities Commission. The board may submit to the general meeting a proposal to adopt a resolution to write down the share capital against losses appearing in the audited balance sheet pursuant to the preceding sentence. If the general meeting fails to adopt such a resolution within the date stipulated by the Banking, Insurance and Securities Commission, the King may order that the share capital be written down by an amount corresponding to the loss of share capital as shown in the audited balance sheet. In such cases the King may, to the extent necessary to secure continued operation of the bank, stipulate that the share capital shall be increased by subscription for new shares, and may to that end decide that the shareholders' preferential right to the new shares shall be waived and decide who in the event shall be able to subscribe for the new capital. The King lays down further conditions of subscription.
If the commercial bank's share capital is divided into classes with differing priority in the event of losses, write-down against losses, or decrease of share capital to cover losses which cannot be covered by other means, and the audited balance sheet as mentioned in the first or second paragraph shows that only 25 per cent or less of the capital in one or more classes with lowest priority may be assumed to be intact, the provisions of the sixth paragraph apply pari passu for each individual class of share capital. An equity capital deposit in the bank which is not share capital is regarded as a special class of share capital or, if such equity capital deposit is divided into classes with differing priority, as several such classes.
Section 33 If the number of shareholders who are Norwegian citizens resident in Norway falls below 20, the bank shall within a period of three months either have rectified this insufficiency or have adopted a resolution to wind up the bank. If this is not done within the said period, the Banking, Insurance and Securities Commission may adopt a resolution to wind up the bank.
Section 34 When the King, pursuant to section 8, fifth paragraph, has revoked a bank's authorisation to carry on banking operations, the bank shall terminate its business as a bank. If the general meeting fails within three months after the revocation to adopt a resolution to dissolve the bank, or to transfer it to another bank, the Banking, Insurance and Securities Commission shall declare the bank dissolved and shall appoint one or more persons to wind up the bank at the bank's expense.
Section 35 Winding-up proceedings and debt settlement proceedings pursuant to law may not be instituted against a commercial bank.
If the board of directors of a commercial bank have reason to believe that the bank will be unable to meet its liabilities as they fall due, they shall promptly notify the Banking, Insurance and Securities Commission to this effect.
The notification shall explain the reason for the difficulties and furnish such other information as is assumed to be of significance for evaluating the position.
Section 36 When the Banking, Insurance and Securities Commission has received such notification as mentioned in the preceding paragraph, or when the Commission has any other reason to believe that a commercial bank is unable to meet its liabilities as they fall due, it shall notify this to the board of directors of the Commercial Banks Guarantee Fund with its recommendation.
If the Guarantee Fund finds that it cannot provide the support deemed necessary by the Banking, Insurance and Securities Commission, and such support is not obtained by other means, the King may, after the bank's board of directors has been invited to express its opinion, place the bank under public administration. The resolution to this effect shall be reported to the Register of Companies and published in the Norwegian Gazette and in at least one of the newspapers generally read in the district. It shall moreover be registered in the judicial districts where the bank has real property.
When the resolution has been executed, the commercial bank shall add the following words to its name: "Under public administration".
Section 37 When it has been decided that a bank shall be placed under public administration, the bank's former governing bodies become inoperative.
The Ministry appoints an administration board comprising three members with personal deputies and fixes their remuneration. The chairman shall have the qualifications required of a rural or municipal court judge. The Ministry may revoke the appointment at any time.
The last serving board of directors shall decide those matters that cannot be deferred until the administration board has taken up its duties.
Former members of the commercial bank's board of directors, control committee and audit department are obliged to disclose to the administration board all information about the commercial bank's position and activities.
The Banking, Insurance and Securities Commission shall issue further regulations for the activities of the administration board. Within three months after its appointment, the administration board shall send to the Banking, Insurance and Securities Commission a statement of the bank's position and a plan for the board's future work. The Commission may extend the three-month period.
The Banking, Insurance and Securities Commission appoints one or more auditors and lays down instructions for their work. The provisions of section 14 apply wherever appropriate. The auditor's fees are fixed by the Ministry.
Section 38 When a resolution regarding public administration has been adopted, payments to depositors and other creditors may not take place except as decided by the Banking, Insurance and Securities Commission.
The bank may not accept deposits from the public after the resolution regarding public administration has been adopted. When special reasons so indicate, the Banking, Insurance and Securities Commission may authorise this provision to be set aside.
During the period of administration the Act on Creditors' Satisfaction of Claims applies pari passu, except that the filing date for claims is the date of the resolution to place the bank under public administration.
When a resolution regarding public administration has been adopted, the creditors whose claims have been established before this date may not levy any distraint on or otherwise obtain security in assets belonging to the bank.
New deposits and other liabilities that are established during the period of administration shall be regarded as preferential debts.
The Ministry in question may authorise the administration board to summon the bank's creditors, giving them notice of the closing date for claims. Such notice may not encompass deposits in the bank or tax claims. The period of notice and the method of publishing are stipulated in the authorisation.
Section 39 If it is presumed to be in accordance with both the creditors' and the public interest, the King may decide that the bank shall be freely allowed to resume operation.
The King may decide that claims without preferential rights which are not secured by mortgage or other lien shall be reduced to the amounts which it is believed can be satisfied, and may stipulate due dates for disbursement of such amounts.
When the bank is to resume operation, the administration board shall ensure that new officers are elected in time.
The resolution to the effect that the bank may resume operation and the conditions attached thereto shall be notified and published as provided in section 36.
Section 40 If it is presumed to be in accordance with both the creditors' and the public interest, the administration board shall seek to have the bank merged with or transferred to another bank. The provisions of section 31 and section 39, second paragraph, also apply in these cases.
Section 41 If at the latest one year after the bank has been placed under administration, it is unlikely in the near future to be freely allowed to resume operation or to be merged with or taken over by another bank, the administration board shall seek to wind up the bank as soon as possible and settle with the depositors and other creditors in accordance with the Act on Debt Settlement Proceedings and Bankruptcy. The bank may nevertheless at any time be freely authorised to resume operation or may be merged with or taken over by another bank if this is justified pursuant to sections 39 or 40.
When winding-up has been completed the board submits final accounts for approval by the Banking, Insurance and Securities Commission, which gives instructions for publication of the final accounts and notifies the Register of Companies of the liquidation of the bank.
Section 42 Whoever uses the word "bank" with or without an addition in contravention of section 2 is punishable by fines.
Section 43 Any founder, promoter, elected officer, employee or auditor who contravenes the provisions of this Act or regulations issued pursuant thereto, or is an accomplice to such contravention, is punishable by fines or in particularly aggravating circumstances by imprisonment not exceeding three months, unless the offence falls within a more severe penal provision.
Contravention is also punishable when committed through negligence.
Section 44 This Act comes into force on the date decided by the King.
Section 45 Within one year after the coming into force of this Act, commercial banks shall have amended their articles of association to conform with this Act and shall have submitted them to the Banking, Insurance and Securities Commission for approval. The articles of association in effect at the time this Act comes into force shall remain in effect until the new articles have been approved.
Any bank manager or branch manager who carries on any activity or holds any position in contravention of section 10 must have ceased to do so within two years after the coming into force of this Act.
Any commercial bank which fails to satisfy the requirements of section 22 at the time this Act comes into force, shall satisfy them within two years.
The Commercial Banks Guarantee Fund shall have submitted its articles of association for approval pursuant to section 29, third paragraph, within one year after this Act has come into force.
The following amendments will take effect when the agreement on the European Economic Area comes into operation:
Section 1, third paragraph, shall read:
Co-operatives may accept deposits from their members without falling within this Act.
Section 4, first paragraph, second and new third sentence, shall read:
The founders shall include at least ten persons who are nationals of a state which is a party to the Agreement on the European Economic Area and who are resident in such a state. The King may make exceptions from the requirement as to nationality and residence in the preceding sentence.
Section 5, first paragraph, shall read:
A commercial bank may not be formed with a share capital smaller than an amount in Norwegian kroner corresponding to ECU 5 million. The King may in special cases authorise the share capital to be fixed at a smaller amount, but not less than an amount corresponding to ECU 1 million. The bank's capital shall at all times correspond at least to the amount which was required when it received authorisation to carry on business.
Section 8, third paragraph, first sentence, shall read:
Authorisation as mentioned in the first paragraph may be withheld from a commercial bank which has been formed or acquired pursuant to section 4, third paragraph, if Norwegian banks do not have a corresponding right to carry on banking activity in the home country of the foreign bank or banks.
Section 9, first paragraph, shall read:
A commercial bank shall have a board of from five to nine members. It shall represent a variety of interests.
Section 11, third paragraph, is repealed.
Act no. 40 of 10 June 1988 on Financing Activity and Financial Institutions (Financial Services Act) as amended, last by Act no. 76 of 11 June 1993
Chapter 1 General provisions
Section 1-1 Scope
This Act covers financing activity and financial institutions unless otherwise stated in a provision set out in or issued pursuant to this Act.
Section 1-2 Financing activity
"Financing activity" means the granting, intermediating, or furnishing of guarantees for credit or otherwise participating in the financing of activity other than one's own, except for
1. investment of funds with financial institutions, but not the intermediation
of such investments or other receipt of others' funds for reinvestment
with financial institutions
2. acquisition of shares or other proprietary interests
3. credit provided by the seller of a good or service
4. leasing of real property or chattels which does not constitute financial
leasing
5. loans or loan guarantees to one's employees
6. isolated cases of financing.
In cases of doubt the King decides whether a given activity falls within this Act.
Section 1-3 Financial institutions
"Financial institutions" means companies, enterprises or other institutions which carry on financing activity, except
1. public credit institutions and funds
2. public trustee's offices and foundations whose primary purpose is not
to engage in economic activity
3. management companies pursuant to Act no. 52 of 12 June 1981 relating
to Unit Trusts etc.
4. securities houses pursuant to Act no. 61 of 14 June 1985 relating to
Securities Trading
5. any enterprise which confines its financing activity exclusively to
enterprises in which it has a substantial proprietary interest, it being
understood that it does not itself raise or furnish guarantees for loans
other than bearer bond loans or loans from credit institutions, foreign
lenders, or firms in which the enterprise has a substantial proprietary
interest
6. cooperatives, to the extent that their lending activity involves funds
obtained through members' deposits; cf. Act no. 2 of 24 May 1961 on Commercial
Banks, section 1, third paragraph.
The King may in special cases also exclude other financial institutions
or groups of financial institutions from one or more provisions of the
Act, and may attach conditions to such exclusion.
The King may decide that enterprises which under the provisions of this section are or will be excluded from certain provisions of this Act shall be subject to supervision by the Banking, Insurance and Securities Commission.
Section 1-4 The right to carry on financing activity
Financing activity may only be carried on by:
1. savings banks and commercial banks
2. companies or other institutions which fall within Act no. 39 of 10 June
1989 on Insurance Activity
3. finance companies and mortgage companies which receive authorisation
pursuant to chapter 3.
This section does not apply to the intermediation of loans or to enterprises referred to in section 1-3, first paragraph, subparagraphs 1 to 6.
Section 1-5 Other definitions
1. "Mortgage companies" means institutions which pursuant to their articles of association finance their lending activity mainly through the issue of bonds.
2. "Loan intermediaries" means enterprises whose financing activity consists exclusively in intermediating loans. Such intermediation is activity which consists in organised or professional intermediation of loans or guarantees for loans.
Section 2-1 Scope
The provisions of this chapter apply to financial institutions. A company or other institution that is the parent company in a financial group or the parent company in part of such group is also regarded as a financial institution.
I. Ownership structure, etc.
Section 2-2 Holdings in financial institutions
No-one may hold more than 10 per cent of the share capital in a financial institution. A financial institution may nonetheless hold up to 20 per cent of the share capital in a finance company or mortgage company, loan intermediary or credit-insurance enterprise providing the enterprise has been authorised to carry on, or has commenced, such activity prior to 1 January 1987.
The restrictions of the first paragraph do not prevent
1. an insurance company from being 100 per cent owned by
a) a parent company in a group or jointly by several companies within a group, provided that the distribution of shares in the parent company is in accordance with the restrictions on holdings set out in section 2-2, first paragraph and section 2-3, cf. section 2-6, or by
b) a mutual insurance company or mutual insurance companies which through cooperation agreements form a group entity based on joint controlling bodies which are provided for in their articles of association, cf. Act on Insurance Activity, section 4-10.
c) a bank, provided the bank owns the company through a wholly-owned subsidiary which pursuant to its articles of association shall not engage in other activity than administering its holdings in insurance companies.
2. a bank from being 100 per cent owned by
a) a parent company in a group that falls within the Act on Insurance Activity or a parent company which pursuant to its articles of association shall not engage in other activity than administering its holdings in financial groups; cf. section 2a-2, litera b), provided that the distribution of shares is in accordance with the restrictions on holdings set out in section 2-2, first paragraph, and section 2-3, cf. section 2-6, or by
b) an insurance company, or a group entity as mentioned in section 4-10 in the Act on Insurance Activity, or similar group entity approved by the Ministry of Finance, provided that the bank is 100 per cent owned through a subsidiary which pursuant to its articles of association shall not engage in other activity than administering its holdings in companies which do not engage in insurance activities.
3. a finance or mortgage company or loan intermediary from being owned 100 per cent by a bank or an insurance company or jointly by companies within the group of which the bank or insurance company forms part, or by a group entity as mentioned in section 4-10 of the Act on Insurance Activity or a similar group entity approved by the Ministry of Finance, or a finance or mortgage company or loan intermediary from being 100 per cent owned by a mortgage company.
4. a finance or mortgage company or loan intermediary from being 100 per cent owned by another finance or mortgage company which according to its articles of association shall not carry on other activity than administering its holdings in financial institutions.
5. a credit insurance company from being 100 per cent owned by a bank or jointly by companies within the group of which the bank forms part.
6. a foreign financial institution from having a subsidiary established in Norway with authorisation from the King.
7. the Government Bank Insurance Fund and the Government Bank Investment Fund from owning more than 10 per cent of the share capital in Norwegian banks.
8. two or more financial institutions from together owning, with the King's consent, 100 per cent of another financial institution which pursuant to its articles of association shall offer special financial services.
9. The King may in special cases make exceptions from the restrictions on holdings in the first paragraph.
In the event of conversion of financial institutions pursuant to sections 2-18 to 2-24, the provisions of the first and second paragraphs do not apply for the foundation's acquisition of holdings in the converted institution or the parent company of the institution.
Section 2-3 Holdings of non-Norwegian citizens
No-one who is not a Norwegian citizen may own more than 10 per cent of the share capital in a financial institution. In the case of companies with non-voting shares or shares with restricted voting power, persons who are not Norwegian citizens may in no event own shares which altogether represent more than 10 per cent of the votes in the company. The King may in special cases make exceptions to the restrictions on holdings set out in the first and second sentence.
Non-Norwegian citizens may altogether own shares representing up to 33 1/3 per cent of the share capital in a financial institution. In the case of companies with non-voting shares or shares with restricted voting power, non-Norwegian citizens may in no event own shares which altogether represent more than 33 1/3 per cent of the votes in the company.
If the restriction on the overall holding or voting power of non-Norwegian citizens is exceeded, the necessary reduction shall be made such that earlier share acquisitions rank ahead of recent ones.
Equivalent to Norwegian citizens for the purpose of this section are the Norwegian state, institutions and funds that are controlled by the state, Norwegian municipalities, Norwegian banks, corporations and foundations with a board of which a majority, including the chairman, are Norwegian citizens, and with their head offices in Norway and whose purpose is to benefit the public good, as well as joint stock companies and other companies with limited liability with a board of which a majority, including the chairman, are Norwegian citizens, and with their head offices in Norway when at least two-thirds of their primary capital belongs to the state, Norwegian municipalities or Norwegian citizens. Companies in which shares or interests representing more than one half of the votes are held by the state, municipality or county municipality shall in all circumstances be considered equivalent to Norwegian citizens.
This section does not apply to shares held in a financial institution which is a subsidiary of a foreign financial institution and which has been established in Norway with authorisation from the King.
The restrictions set out in section 2-2, first paragraph, first sentence, and in the first paragraph of this section do not apply to interests in Samvirkegruppen A/S that are held by a foreign interest organisation forming part of a trade union movement, a cooperative organisation or company which is a subsidiary of such an organisation. In case of doubt the King decides whether an organisation or a company falls within this section.
Section 2-4 Restrictions on voting rights
No-one at the general meeting of a financial institution may cast votes for more than 10 per cent of the voting shares in the company or for more than 20 per cent of the voting shares represented at the general meeting. In cases where, in accordance with section 2-2, first paragraph, a financial institution owns more than 10 per cent of the share capital, it may nonetheless only cast votes for up to 10 per cent of the voting shares in the company.
The rules of this section do not apply at the general meeting of financial institutions that fall within the provisions of section 2-2, second paragraph. The King may decide that the rules of the preceding paragraph shall not apply at the general meeting of a financial institution where the King has made exceptions from restrictions on holdings pursuant to section 2-3, first paragraph, third sentence.
Section 2-5 Underwriting of share issues
No-one may underwrite a share issue if such underwriting could lead to acquisition of shares in excess of the limits set out in sections 2-2 and 2-3.
A financial institution may not underwrite a share issue if such underwriting could lead to acquisition of shares in excess of the limit prescribed by law for the institution's aggregate holdings in other companies.
Section 2-6 Consolidation of holdings
For the purpose of sections 2-2, 2-3, 2-4 and 2-5, first paragraph, shares held or acquired by the following persons and institutions are considered equivalent to the shareholder's own shares:
a) the shareholder's spouse, under-age children or persons with whom
the shareholder shares a household,
b) a company in which the shareholder exercises influence as referred to
in section 1-2 of the Companies Act,
c) a company within the same group as the shareholder, and
d) someone with whom the shareholder must be assumed to be acting in concert
in the exercise of shareholder rights.
In cases of doubt the King decides whether shares not held by the shareholder shall be considered equivalent to the shareholder's own shares pursuant to the rules of the first paragraph.
Section 2-7 Cooperation agreements
Cooperation agreements between financial institutions which are not part of the same group shall be approved by the Ministry. This does not apply to agreements on individual projects or on technical or practical matters with no significant bearing on competitive conditions.
"Financial institutions" also means securities houses and estate agencies, as well as enterprises which administer unit trusts.
In cases of doubt the King decides whether an agreement requires approval pursuant to the first paragraph.
Section 2-8 Posts in controlling bodies
Unless otherwise decided by the King, no person who is a member of a controlling body or has a senior position in a financial institution may concurrently be a member of a controlling body of another financial institution.
The King issues further rules on the implementation and variation of the prohibition of the first paragraph.
II. General rules for business
Section 2-9 Capital adequacy requirements
A financial institution shall maintain a satisfactory capital ratio at all times, and meet the minimum capital requirement ensuing from law or regulation issued by the King.
The King may by regulation lay down further rules for the method of calculation and other factors relating to implementation of the capital requirement.
The King may lay down rules to the effect that a financial institution shall also maintain a minimum capital ratio in respect of off-balance-sheet commitments.
Section 2-10 Restriction on credit to one single customer
A financial institution's overall credit to one single customer may at no time exceed a prudent level.
The King may issue regulations on the maximum total credit to be granted to one single customer, on the method of calculation of on- and off-balance-sheet items and other factors related to implementation of this requirement. The King may lay down rules regarding the application of a limit on total credit to one single customer, also in the case of credit to two or more customers when the balance of influence or financial relations between them may have a substantial bearing on the institution's assessment of their creditworthiness.
Section 2-11 Duty to disclose information on prices and product packages
A financial institution shall give customers information on interest rates, commissions and other prices of its services. It shall also state whether services which are part of a product package are offered individually, and state the price of each of the services that are included in the package.
The Banking, Insurance and Securities Commission may lay down further rules on the implementation of the disclosure duty set out in the first paragraph.
Section 2-12 Duty to disclose information to borrowers
A financial institution which offers or grants loans to borrowers other than financial institutions shall state in writing the borrowing conditions and the effective interest rate before the loan contract is concluded. Such information shall show the interest rate and interest-rate-adjustment conditions, other credit costs and repayment conditions.
The same information shall be given when interest rates or other borrowing conditions are changed. This applies for all current loans when the borrower so requests.
When information on credit conditions is given in brochures, advertisements or other written material for the marketing of borrowing facilities as referred to in the first paragraph, the effective interest rate shall also be stated.
The King may lay down further regulations for the performance of the disclosure duty, and for the calculation of effective interest rates.
The King may grant exception from the disclosure duty when there are special reasons for doing so.
The provisions of this section also apply to enterprises as mentioned in section 1-3, first paragraph, subparagraphs 1 to 6. For loans granted in connection with purchases referred to in Act no. 82 of 21 June 1982 relating to Credit Purchases etc., section 3, subsection 1, the provisions on the disclosure duty in the Credit Purchase Act apply. As regards the disclosure duty in connection with the intermediation of loans, section 4-2 of this Act applies.
Section 2-13 Pricing, etc.
The King may issue regulations concerning the pricing of and charges for services provided by financial institutions. This provision does not apply to interest and commission rates which are dealt with in the Monetary and Credit Policy Act of 25 June 1965, section 14.
Section 2-14 Product packages etc.
The King may issue regulations which restrict a financial institution's right to offer a service on condition that the customer concurrently procures another service from the same or another financial institution, or to accord a customer favourable terms on condition that this is done.
Section 2-15 Security for loans to employees, officers, etc.
A financial institution may not grant a loan or provide a guarantee in favour of the chairman of its committee of representatives or to member of its board of directors, control committee or auditing department, or to its employees or a company of which any of the persons mentioned is a liable member or board member, unless the loan or guarantee is secured by mortgage in a bank deposit, bearer bonds or bonds registered with the Norwegian Registry of Securities, life insurance policies up to their repurchase value, real property and chattels which may be mortgaged as accessories to real property, ships or motor vehicles and construction machinery, agricultural movables and fishing gear mortgaged pursuant to sections 3-8 to 3-10 of the Mortgage Act. The security offered must be approved as fully satisfactory by the control committee. In the case of ships, motor vehicles, construction machinery, agricultural movables and fishing gear, the value of the security offered must be within one half of their sale value. In the case of employees of the financial institution, except for the managing director, satisfactory security other than that mentioned in the first sentence may also be accepted if the borrower is to use the loan to acquire a dwelling.
The provision of the preceding paragraph does not apply to loans to or guarantees in favour of a company when the officer or employee in question represents the financial institution's interests in the company, and the company is either directly connected to the operation of the financial institution or carries on an activity that the financial institution itself can perform. Nor does the provision apply when the loan or the guarantee is made in order to ensure the redemption of claims that the financial institution has on the company, nor does it apply to loans that are made in accordance with borrowing arrangements that the financial institution offers to particular groups of customers on standardised terms. The board shall see to it that statements of account showing security, if any, for loans and guarantees made in accordance with this paragraph are issued at the end of each quarter. The statements shall be submitted to the control committee and the auditor.
A financial institution may not make loans or guarantees against surety or endorsement by the officers or employees mentioned in the first paragraph.
The provisions of this section do not apply for pure commercial bills or for loans made before the person in question was elected or appointed to the position mentioned. Nor do they apply for elected members of a local board of a regional or local branch or control committee when a loan, guarantee, endorsement or other surety is treated as a loan by the head office.
The Banking, Insurance and Securities Commission may, when special reasons so indicate, make exceptions to the provision of the first paragraph in cases in which a financial institution issues a loan or guarantee in favour of a company of whose board of directors the chairman of the financial institution's committee of representatives or member of the financial institution's board of directors is a member. Conditions may be attached to such exception, inter alia in cases concerning the financial institution's treatment of such loans and guarantees.
Section 12-10 of the Companies Act does not apply to financial institutions.
Section 2-16 Repealed
Section 2-17 Repealed
III Conversion of financial institutions into joint stock companies
Section 2-18 Scope
The provisions of part III of the present chapter (sections 2-18 to 2-24) apply to
1. mutual insurance companies
2. credit associations.
The King may issue regulations on conversion of financial institutions which fall within this section and on the activity of the foundation and the joint stock company or companies that are established.
Section 2-19 Resolutions on conversion
Resolutions on conversion must be approved by the King.
Conversion pursuant to part III of this chapter is effected by transfer of the financial institution's assets and liabilities in their entirety to a newly founded joint stock company.
In the event of conversion either
a) all the shares in the newly founded company shall be distributed to the financial institution's customers with the exception of shares that are issued in replacement of primary capital or
b) a foundation shall be established which shall be the owner of all the shares in the joint stock company with the exception of shares that are issued in replacement of primary capital.
The distribution of shares pursuant to the third paragraph, litera a), shall be on the basis of the institution-customer relationship. The King may issue further rules on the distribution of shares. The rules on share issues in chapter 2 of the Securities Trading Act apply.
A joint stock company may be established which shall be the parent company in a group which includes the joint stock company which is to continue the activity of the financial institution.
In mutual insurance companies the resolution regarding conversion is adopted by the general meeting unless such decision has been assigned to the committee of representatives pursuant to the articles of association. In the case of credit associations the resolution is adopted by committee of representatives. The resolution requires at least two thirds of the votes cast. The resolution shall contain further provisions on the rights of owners of primary capital pursuant to section 2-21.
Section 2-20 Effects of conversion
The licence for the activity of the financial institution is transferred to the joint stock company.
The institution's liabilities are transferred to the joint stock company. Creditors in respect of the transferred liabilities may not oppose the conversion resolution.
Such liability as the borrowers or policyholders may have for losses accrued by the institution may also be enforced after the conversion of the institution. The company or foundation may not impose new additional liability on borrowers or policyholders.
A company that is established through conversion of a mutual insurance company is regarded as a limited insurance company under the provisions of Act no. 39 of 10 June 1988 on Insurance Activity.
Section 2-21 Primary capital
Unless otherwise agreed, owners of primary capital certificates issued by a financial institution which undergoes conversion, shall be offered the opportunity to exchange their primary capital certificates for shares in the company. If the offer is not accepted, the joint stock company assumes the liabilities pertaining to the primary capital certificates, and the owners of the primary capital certificates may not request redemption with reference to conversion pursuant to the rules of part III of this chapter.
Exchange for shares shall take place at the face value of the primary capital certificates, unless the financial institution undertakes to redeem the certificates at market value.
Pursuant to this section, other holdings of primary capital are also regarded as primary capital certificates.
Section 2-22 Organisation of the foundation
The rules on commercial foundations of Act no. 11 of 23 May 1980 on Foundations etc. (cf. section 24, first paragraph, first subparagraph), apply to the foundation, unless otherwise provided in or pursuant to this act.
The foundation's articles of association and amendments thereto shall be approved by the Banking, Insurance and Securities Commission which oversees the foundation's activity, cf. Act no. 1 of 7 December 1956 on the Supervision of Credit Institutions, Insurance Companies and Securities Trading etc. Expenditure on supervision is covered as provided in the same act.
The articles of association shall, in addition to the stipulations of the Company Formation Act, lay down rules on:
1. composition of and voting rights at the general meeting,
2. dissolution of the foundation,
3. how the assets shall be disposed of upon dissolution of the foundation,
4. application of the profit for the year and covering of any deficit,
5. when the general meeting shall be held.
The foundation's articles of association may contain provisions restricting the number of votes that may be cast by a participant at the general meeting.
The board of the foundation is elected by the general meeting. The composition of the board shall reflect the composition of those groups which are entitled to vote at the general meeting.
At the general meeting a participant is entitled to have the meeting consider any question which he notifies in writing to the board within one week before the meeting is held.
Section 2-23 The activity of the foundation
The foundation administers shares that were supplied to the foundation upon its establishment and funds received as dividend on shares. The foundation may issue primary capital certificates for the purpose of buying shares in the company. The foundation may sell shares in the associated joint stock company, buy shares or primary capital certificates in other institutions, and administer its liquidity inter alia by making deposits with banks and purchasing government securities.
Issue of primary capital certificates requires the consent of the Banking, Insurance and Securities Commission.
The rules restricting holdings and voting rights pursuant to sections 2-2 and 2-4 of this Act do not apply for foundations which have been established pursuant to the rules of part III of this chapter insofar as shares which the foundation owns in the company or parent company are concerned.
Section 2-24 Merger and winding up of the activity
The foundation may decide to wind up its activity. Winding up requires the approval of the King. The King may also in other cases decide that the activity shall be wound up if the necessary conditions for its activity substantially change.
In the case of winding up pursuant to the first paragraph, the King may determine that the assets shall be disposed of by other means than stipulated in the articles of association, for instance by distribution as mentioned in the fifth paragraph. In this connection special importance shall be attached to promoting the customers' or company's interests or the foundation's objective.
If the foundation, upon the merger of two financial institutions of which one has previously been converted pursuant to part III of this chapter, chooses to continue its activity, the range of persons entitled to vote shall be extended to encompass the entire merged financial institution.
In the event of merger of two financial institutions both of which have previously been converted pursuant to part m of this chapter, the King decides whether the two institutions shall be merged, unless one of the institutions adopts a resolution to wind up its activity. The rules of the first and second paragraphs and section 2-22 apply pari passu.
In the event of merger or winding up pursuant to the above alternatives, the King may decide that the assets of the foundation shall be distributed among the converted institution's customers and the method by which this shall be carried out. The distribution shall take place according to the same principles as provided in section 2-19, third paragraph, litera a).
Chapter 2a Financial groups
Section 2a-1 Scope, etc.
The provisions of this chapter apply to financial groups and their activity unless otherwise provided in provisions in or pursuant to law.
Further rules on financial groups, the parent company in a financial group or in a part of such group, and their activity may be laid down by regulation issued by the King.
Section 2a-2 Definitions
Definitions:
a) In this chapter "financial group" means groups in which at least one company, which is not the parent company, is a financial institution falling within section 1-4.
b) In this chapter "mixed group" means a financial group including both a bank and an insurance company.
c) In this chapter "sub-group" means two or more companies between which a group relationship exists. The parent company in a financial group does not form part of a sub-group.
d) In this chapter ''financial institution" also means a company which is only the parent company in a financial group or in a part thereof and whose activity is confined to administering its holdings in the group.
I Licence
Section 2a-3 Licence requirement etc.
A financial institution which is a parent company as mentioned in section 2a-2, litera d), may not be established without authorisation from the King.
Except when so authorised by the King, a financial institution may not, through establishment or other acquisition, hold interests in another financial institution that are so large that a group relationship exists between the two institutions. Securities houses and estate agencies as well as enterprises which administer unit trusts are also regarded as financial institutions. The taking over of a substantial part of the activity of a financial institution is also regarded as acquisition.
Except when so authorised by the King, a financial institution may not establish a subsidiary or branch abroad or acquire more than 10 per cent of the shares in a foreign financial institution.
Section 2-6 applies pari passu for establishment or acquisition pursuant to the second and third paragraph.
The King may attach conditions to authorisation as mentioned under the first, second and third paragraphs. A condition may be attached to the effect that the activity of the group or enterprises which form part thereof is organised in a particular manner or is operated subject to certain constraints or that certain types of activity may not be engaged in. Other conditions may also be attached in accordance with the interests that the legislation on financial institutions shall promote.
Section 2a-4 Application for licence
Licence applications pursuant to section 2a-3 shall contain such information as is considered to be of significance for processing the applications. In the event of the establishment or acquisition of a financial institution, the licence applicant shall enclose articles of association or draft articles of association and an operating schedule for the first three years of operation of the group. The operating schedule should contain:
a) information about the group's corporate structure after the establishment or acquisition,
b) an overview of the operating set-up and routines for the business and services that the various enterprises will offer,
c) information about the group's capital composition,
d) budgets for establishment and administrative costs,
e) budgets including the profit and loss account, balance sheet and funds flow statement for each of the first three years, and
f) a forecast of the financial position for each of the first three years.
II Organisational set-up
Section 2a-5 Parent company in a financial group
Subject to the restrictions set out in section 2-2, second paragraph, the parent company in a financial group may be:
a) a financial institution falling within section 1-4, or
b) a company falling within section 2a-2, litera d).
Section 2a-6 Companies which may form part of a financial group
Unless otherwise provided by law, a financial group may, in addition to a parent company as mentioned in section 2a-5, encompass:
a) financial institutions,
b) management companies for unit trusts,
c) property and investment companies,
d) debt collection companies,
e) companies which intermediate financial services, and
f) companies with a natural connection with financing activity or insurance
business.
The organisational set-up of a financial group shall be approved by the King. In connection with such approval conditions may be attached to the effect that a company which forms part of a financial group shall be directly owned by the parent company or be organised in the same sub-group. Special rules apply for the organisational set-up of mixed groups; cf. section 2-2, second paragraph.
Enterprises which intermediate financial services shall be organised in such a way as to secure their status as independent intermediaries as effectively as possible.
Special rules laid down in or pursuant to the Act on Insurance Activity apply for enterprises carrying on insurance business.
The name of the parent company, group unit or the group shall be clear from the name or from an addition to the name of any enterprise that forms part of a financial group when such a group is Norwegian.
Section 2a-7 Changes in organisational set-up
The parent company in a financial group is required to notify the Banking, Insurance and Securities Commission of the following changes in the organisational set-up of the group:
a) disposal of holdings as mentioned under section 2a-3, third paragraph, in a financial institution,
b) disposal of a subsidiary in a financial group that does not fall within section 2a3, second paragraph. The provision applies pari passu in the event of disposal of a substantial portion of the activity to a subsidiary,
c) closure of a foreign branch.
Changes in organisational set-up other than those mentioned in the first paragraph shall be approved by the King. The King may issue further rules to the effect that changes falling within the notification requirement pursuant to the first paragraph shall be subject to a licensing requirement.
Section 2a-8 Transactions between enterprises in a financial group
Transactions between enterprises in a financial group shall be in accordance with ordinary business terms and principles. The Banking, Insurance and Securities Commission may order that changes be made in transactions between enterprises in the group that are not in accordance with the provision of the first sentence.
A financial group shall have rules for its activity that ensure that revenues, expenses, losses and gains are distributed as correctly as possible among the group enterprises and among the group areas of activity. The Banking, Insurance and Securities Commission shall supervise such distribution and may order that changes be made in transactions among the group enterprises or that changes be made in other dispositions which have brought about a distribution that is not in accordance with the principles set out in the first sentence of this paragraph. The Banking, Insurance and Securities Commission may issue further rules on such distribution.
Group contributions may not be given between sister companies. Nor may group contributions be given by life insurance companies, unless otherwise provided in the company's articles of association. The contribution together with dividend must not exceed a prudent distribution of dividend based on the individual year's operation unless the King, in order to secure the financial strength of a group company, authorises a higher contribution. The King may establish supplementary rules pursuant to this paragraph.
Unless otherwise provided by the King, a group company may not make loans to or provide guarantees in favour of another company within the group.
Unless otherwise provided in the terms of the licence, a securities house which forms part of the group may transact business on behalf of another enterprise in the group. In cases where such broking is performed, the enterprise shall ensure that the opposite party employs a broker unless the terms of the licence state that this is not required.
Section 2a-9 Rules of consolidation
A financial institution shall, when applying rules on capital adequacy and other rules as to financial strength and safety, undertake consolidation pursuant to the rules of this section when it directly or indirectly has a holding which represents 20 per cent or more of the share capital or the votes in:
a) another Norwegian or foreign financial institution,
b) a Norwegian or foreign securities house, commercial property or property
company, investment trust company or other company with substantial financial
assets.
The obligation to undertake consolidation also applies to a financial institution which is the parent company in a sub-group, as well as to collaborative mutual insurance companies and other corresponding group affiliates which are not part of an ownership hierarchy.
Group accounts shall be based on the principle of proportional consolidation. The Banking, Insurance and Securities Commission may also instruct consolidation to be implemented in respect of holdings of 10 per cent and more.
In cases where consolidation is not implemented pursuant to the first paragraph, a reserve of 100 per cent of book value shall be set aside in respect of holdings of 10 per cent or more. The Banking, Insurance and Securities Commission may also instruct the financial institution in question to maintain such reserve in respect of holdings of less than 10 per cent.
If a financial institution has invested capital apart from share capital in another financial institution, which alone or together with a holding in the financial institution corresponds to 10 per cent or more of the latter's total capital, and consolidation pursuant to the first paragraph is not effected, a reserve shall be set aside corresponding to 100 per cent of the book value. The Banking, Insurance and Securities Commission may also instruct a financial institution to set aside such reserve when its total capital as mentioned in the first sentence constitutes less than 10 per cent. The King may in special cases grant exception from the provisions of this paragraph.
The Banking, Insurance and Securities Commission may issue further rules concerning the implementation of consolidation or allocation to a capital adequacy reserve pursuant to this section.
IV Special rules on parent companies as mentioned in section 2a-2, litera d)
Section 2a-10 Mode of organisation, articles of association
The parent company shall be organised as a joint stock company. The provisions of the Companies Act apply unless otherwise provided by law or regulation.
The company's articles of association and amendments thereto shall be approved by the Banking, Insurance and Securities Commission.
Section 2a-11 Controlling bodies
A parent company shall have a committee of representatives.
The parent company and enterprises forming part of the group may have the same committee of representatives.
The enterprises in the group shall have the same auditor unless otherwise provided by law or regulation.
The parent company shall have a control committee. The control committee shall see to it that the entire activity of the group is carried on in an appropriate and satisfactory manner, and shall cooperate with the control committees of the group companies. The Ministry may give its consent for several companies, including the parent company in the group, to have the same control committee.
Section 2a-12 Increase of capital
Except with the King's consent, the capital may not be increased by other means than through retained profits.
Resolutions regarding the write-down of share capital are not valid without the King's consent.
Section 2a-13 Confidentiality
Employees and members of controlling bodies of the parent company are subject to a duty of confidentiality in regard to information they obtain about the commercial or private circumstances of others, unless they are required by law or regulation to disclose such information.
Section 2a-14 Merger and demerger
Merger and demerger of the parent company may not be carried out without authorisation from the King.
Section 2a-15 Winding up, etc
. Resolutions regarding the winding up or dissolution of the parent company may not be carried through unless authorised by the King. This does not apply if the company's licence is withdrawn. In such event the board is required to initiate winding up proceedings immediately.
The Banking, Insurance and Securities Commission takes the place of the bankruptcy court when the rules of chapter 13 of the Companies Act are applied.
Winding up and debt settlement proceedings pursuant to the Act on Debt Settlement Proceedings and Bankruptcy may not be instituted against the parent company.
V Public administration
Section 2a-16 Public administration
If an enterprise in a financial group fails to fulfil the capital adequacy requirements pursuant to law and regulation, or there is reason to believe that the enterprise is unable or will be unable to honour its obligations as they fall due, the board of the parent company shall notify the Banking, Insurance and Securities Commission accordingly. The said Commission may issue orders regarding the activity of the enterprise.
The King may render the controlling bodies of the enterprise inoperative, appoint an administration board and decide that the entire financial group shall be placed under administration. The Banking, Insurance and Securities Commission issues further rules on the activity of the administration board.
Chapter 3 Finance companies and mortgage companies
Section 3-1 Scope, etc.
The provisions in this chapter apply to finance companies and mortgage companies. Further rules regarding finance and mortgage companies and their activities may be established in regulations issued by the King.
A finance or mortgage company is a financial institution which is not:
1. a savings bank or commercial bank,
2. a company or other institution falling within Act no. 39 of 10 June
1988 on Insurance Activity,
3. a loan intermediary.
I Organisational set-up of the company
Section 3-2 Type of company, structure, etc.
Except with the consent of the King, finance companies and mortgage companies may not be organised as other than joint stock companies, self-owning institutions (foundations), or borrowers' associations (loan associations, mortgage associations). The King sets requirements as to the company's structure as a condition of authorisation.
The articles of association shall contain further provisions as to the organisational setup of the company. Unless otherwise provided in this Act or in regulations issued thereto, the legislation on joint stock companies applies to enterprises organised as joint stock companies.
Section 3-3 Licence
Finance companies and mortgage companies may not carry on business without authorisation from the King. This does not apply to enterprises as mentioned in section 1-4, second paragraph.
Authorisation shall be refused if the provisions of this Act are not complied with or if the activity or establishment of the enterprise is not deemed to be in the public interest.
Conditions may be attached to authorisation such that the activities must be carried on in a certain way or subject to certain constraints or from certain places of business. Other conditions may also be set, including the changing of previously established conditions, in order to safeguard the interests to be protected by this Act.
The articles of association shall be approved by the King and may not be a mended without approval from the King.
Section 3-4 Ownership. Foreign-owned enterprises
The King may authorise foreign financial institutions to engage in activity in Norway as finance companies or mortgage companies. Such activity must be carried on through an enterprise set up in Norway. The control committee shall be appointed by the Banking, Insurance and Securities Commission. The King may attach conditions to such authorisation and may delimit the activities which the enterprise will be authorised to engage in. The Norwegian representative offices of foreign finance companies and mortgage companies must be registered with the Banking, Insurance and Securities Commission.
Section 3-5 Capital
The capital of a finance company or mortgage company, comprising the sum of its equity capital, subordinated loan capital, and guarantee commitments, cannot be less than 1,000,000 kroner. The King may authorise the capital to be fixed at a smaller amount.
Except with the consent of the King, the capital may not be increased by other means than through retained profits. Such conditions may be attached to authorisation as are suited to safeguarding the interests to be protected by this Act.
Section 3-6 Winding up, merger, etc.
Any resolution to the effect that a finance company or mortgage company shall wind up its activity, merge with or be taken over by another enterprise or change its organisational set-up, must be approved by the King. Such a resolution requires at least two-thirds of the votes cast. The creditors of the enterprise may not oppose such a decision provided that its implementation will not result in an impairment of security or such impairment must be regarded as immaterial.
If the enterprise is organised in any other way than as a joint stock company, such a resolution shall be made by the committee of representatives. The King may lay down rules for the implementation of the resolution.
Acquisition of shares in finance companies and mortgage companies which have received authorisation pursuant to section 3-3 must be approved by the King when such acquisition entails:
a) that the enterprise becomes a wholly-owned subsidiary within a group pursuant to section 2-2, second paragraph, or that an ownership structure is established that requires approval pursuant to section 2-2, second paragraph,
b) that the enterprise becomes a subsidiary of a foreign financial institution.
Furthermore, only Norwegian or foreign financial institutions may own shares in a finance company or mortgage company that is a subsidiary of a foreign financial institution.
Section 3-7 Revocation of licence
The King may revoke authorisation given to an enterprise to carry on business in the event that the board of directors or other controlling bodies have committed gross or repeated contraventions of their statutory duties, of regulations issued pursuant to law, of the conditions set for authorisation to carry on the business in question, or of the articles of association. The same applies in the event of other serious irregularities on the part of the management of the enterprise, or other circumstances which give reasonable cause to believe that continuation of the activities would not be in the public interest.
In the event of revocation of authorisation to carry on its activities, the enterprise shall wind up its business in accordance with rules established by the King.
II Controlling bodies of the enterprise
Section 3-8 Offiers
Except with the consent of the King, only Norwegian citizens resident in Norway may serve as officers of finance companies and mortgage companies.
Officers shall remain in office until replacements have been elected or appointed, even if their term of office has expired.
Section 3-9 Board of directors. Managing director
The enterprise shall have a board of at least four elected members, unless the King consents to a lesser number.
The members of the board are elected by the committee of representatives. If the enterprise in question does not have a committee of representatives, the members of the board shall be elected at the general meeting. The articles of association may provide that the right of the committee of representatives or the general meeting to elect members to the board of directors shall be transferred to other bodies, albeit not to the board itself or to any member of the board.
The enterprise shall have a managing director who shall be a member of the board. The managing director shall be appointed by the committee of representatives. If the enterprise does not have a committee of representatives, the managing director shall be appointed by the board.
The provisions of the Companies Act concerning the terms of office of the members and the authority of the board of directors and the managing director shall apply pari passu to enterprises not organised as joint stock companies.
Section 3-10 Committee of representatives
The enterprise shall have a committee of representatives of at least twelve members. The King may consent to a lower number. If the enterprise is organised as a joint stock company, the King may permit the committee of representatives to be dispensed with.
If the enterprise is organised as a joint stock company, the committee of representatives has such authority as ensues from the Companies Act. If the enterprise is organised in any other manner, the committee of representatives constitutes the highest authority in the enterprise.
The committee of representatives should represent a variety of interests, its members being drawn from the various districts, interest groups and industries affected by the enterprise's activities. Members of the board may not serve as members of the committee of representatives.
The members of the committee of representatives are elected in accordance with further rules set out in the articles of association.
The provisions of the Companies Act concerning the terms of office of the members apply pari passu to enterprises not organised as joint stock companies.
Section 3-11 Control committee
The enterprise shall have a control committee of at least three members and a deputy member. Members and deputy members shall be elected at the general meeting. One member of the committee shall have the qualifications required of judges pursuant to Act no. 5 of 13 August 1915 relating to the Courts of Justice, section 54, second paragraph. The election of this member shall be approved by the Banking, Insurance and Securities Commission. The Commission may grant dispensation from the provisions of the two preceding sentences.
The control committee shall supervise the activities of the enterprise and, inter alia, ensure that the activities are carried out in accordance with this Act and with the articles of association of the enterprise. It shall in particular oversee the dispositions of the board. The King establishes further rules for the committee's work. At least once a year the committee shall report on its work to the committee of representatives and the Banking, Insurance and Securities Commission. Should the committee become aware of substantial negligence, errors or irregularities of major significance or scope, or it believes that the enterprise has suffered heavy losses, it shall immediately take up the matter with the Banking, Insurance and Securities Commission.
The provisions of section 3-10, fifth paragraph, apply pari passu to the members of the control committee.
Section 3-12 Disqualification
No member of the board, committee of representatives or control committee may participate in the discussion of or decision on any matter of such great importance to himself or to persons closely connected with him that he must be considered to have a marked personal or financial interest in the matter. Nor may any board member participate in decisions conceming loans against, or the discounting of, any paper bearing his name.
Section 3-13 Auditor
An auditor is elected by the committee of representatives. If the enterprise does not have a committee of representatives, the auditor is elected by the control committee.
The auditor shall be state authorised unless otherwise provided by the King by regulation or in the particular case.
Section 3-14 Duty of confidentiality
Officers and employees must treat as confidential any information that may come to their knowledge by virtue of their position concerning other persons' business or private matters unless they are required by law to disclose such information. The same applies to assessors, agents and others acting on behalf of the enterprise. The duty of confidentiality does not apply to information provided by the board, or by anyone authorised by the board, to other credit institutions on behalf of the enterprise.
Notwithstanding this provision, the enterprise may engage in credit reference activity in accordance with the legislation governing such activity.
Section 3-15 Deputies, etc.
The articles of association shall specify whether the officers of the enterprise shall have deputies. Insofar as appropriate, the provisions of this Act concerning officers apply to deputies.
III Activity of the enterprise
Section 3-16 Scope of activity
Finance companies and mortgage companies may only engage in financing activity and activity naturally related thereto.
The articles of association shall contain provisions stating what kind of financing activities the particular enterprise shall be authorised to carry on.
Notwithstanding the provisions of the first paragraph, an enterprise may temporarily carry on or participate in another activity to the extent necessary to recover its claims. The Banking, Insurance and Securities Commission may require the enterprise to cease such activity within a certain date.
The King may, by regulation or in the particular case, permit enterprises to deviate entirely or in part from the provisions of the Companies Act, section 12-10, first and second paragraphs.
Section 3-17 Capital adequacy requirements
The enterprise shall at all times maintain a capital ratio of at least 8 per cent of the bank's on-balance-sheet items and off-balance-sheet engagements calculated according to risk-weighting principles.
The King may stipulate:
a) a minimum amount of capital
b) rules concerning the basis of measurement
c) what shall be eligible for inclusion in capital
d) a ratio other than the one stated in the first paragraph in order to
bring Norwegian provisions into line with international standards.
As a condition for approving the articles of association, the King may require the share capital to be fully paid up before the enterprise commences operations and may in special cases and for a limited period consent to an enterprise having a lower capital ratio than the one stipulated.
Section 3-18 Restriction on holdings of shares, etc.
Except with the consent of the King, the sum of the book value of shares and holdings, real property, and owner-interests in ships must not exceed one-half of the enterprise's equity capital.
The limit pursuant to the first paragraph does not apply to leasing portfolios.
Chapter 4 Intermediation of loans
Section 4-1 Notification requirement, etc.
All persons engaging in the intermediation of loans shall notify such activity to the Banking, Insurance and Securities Commission on the form specified by the Commission. Commercial banks, savings banks and finance companies are exempt from the notification requirement.
Should the activity be carried out in a manner contrary to statutory provisions or regulations pursuant thereto, the King may order the cessation of such activity. The Banking, Insurance and Securities Commission may demand the information necessary to verify that the said activity ceases.
Section 4-2 Duty of care and duty to disclose information
Any person engaged in the intermediation of loans shall protect the interests of both the borrower and the lender in a satisfactory manner. He shall inform the parties to the loan of the effective rate of interest and other pertinent matters, including repayment terms and the right, if any, to adjust the rate of interest. Any payment whatsoever on the part of the borrower, including broker's commission, guarantee commission, other commissions and costs of administering the loan, as well as any discount deducted at the time of the disbursement of the loan, shall be taken into account when the interest rate is calculated. Information on the effective interest rate shall be given clearly and in writing, with a margin of error no greater than one quarter of one per cent per annum.
The King may issue further regulations regarding loan intermediation and require security to be fumished for such liability as the broker may incur in transacting such business.
Chapter 5 Penalties etc.
Section 5-1 Penalties
Anyone who wilfully or through negligence contravenes the provisions of this Act or orders or injunctions issued pursuant thereto is punishable by fine or, in particularly aggravating circumstances, by imprisonment of up to 1 year, provided the offence is not subject to any severer penalty provisions.
Section 5-2 Injunctions and coercive measures
The Ministry may issue injunctions to the effect that circumstances in contravention of this Act or provision issued in pursuance of this Act shall cease. The Ministry may set a deadline for the circumstances in question to be made to comply with the injunction. If such injunction is not complied with, the Ministry may adopt a resolution to the effect that one or more of the sanctions mentioned in the second paragraph shall be applied.
The Ministry may impose a coercive fine, accruing to the State, on anyone who fails to comply with the injunction pursuant to the first paragraph. The coercive fine may be imposed in the form of a non-repeatable fine or a daily fine. The imposition of a fine is a basis for enforcement by distraint. The Ministry may issue further rules on the stipulation of coercive fines, including the size of the fine. The Ministry may have shares which are held in breach of the restrictions on holdings set out in section 2-2 and section 2-3, cf. section 2-6, sold by public auction after publishing in the Norwegian Gazette an announcement to this effect with a deadline for compliance of four weeks.
Section 5-3 Duty to disclose information
All shareholders in a financial institution or parent company in a financial group are required to disclose at the request of the Banking, Insurance and Securities Commission such information as is necessary to oversee compliance with this Act.
Chapter 6 Coming into force, transitional provisions, repeal and amendments to other Acts
Section 6-1 Coming into force. Transitional provisions
This Act comes into force on the date decided by the King. The King establishes transitional provisions.
Section 1-3, subsection 6, is repealed.
Section 1-4, first paragraph, new subsection 4, shall read:
Credit institutions, including such institutions's branches established in Norway, which have a head office, which are authorised to carry on business as credit institutions and which are subject to the supervision of authorities of other states encompassed by the European Economic Area. Such an institution may, in addition to carrying on financing activity, accept deposits from an unrestricted range of depositors and use the term "bank", "savings bank" or the like in its name or when describing its activity in Norway, provided it is authorised to do so in the state in which it has received authorisation to carry on business as a credit institution. The King may lay down further rules for the activity of credit institutions mentioned above, including subsidiaries of such credit institutions.
Section 1-4, second paragraph, shall read:
This section does not apply to the intermediation of loans or to enterprises as mentioned in section 1-3, first paragraph, subparagraphs 1 to 5.
Section 1-5, new subsection 3, shall read:
3. Enterprises whose activity consists in accepting deposits and other repayable funds from the general public and in making loans for own account, are regarded as credit institutions.
Section 2-12, sixth paragraph, first sentence, shall read:
The provisions of this paragraph also apply to enterprises as mentioned in section 1-3, first paragraph, subparagraphs 1 to 5.
Section 2-12, new final paragraph, shall read:
The King may decide that rules as mentioned in the preceding paragraphs shall also apply to agreements between other commercial providers of credit and consumers.
New section 2-12a shall read:
Section 2-12a Loan agreements with consumers etc.,
Credit agreements between financial institutions and consumers shall be contracted in writing. The consumer shall be supplied with a copy of the agreement. The King may lay down further rules on the subject matter of such agreements. The King may also lay down rules on the debtor's right of fulfilment before maturity, on the debtor's rights in connection with change of lender and on the debtor's right to raise the same objections against the acquirer of a claim as against the seller. The King may lay down rules concerning consumers' use of bills of exchange and other admissions of debt which in the event of endorsement or mortgage may exclude or restrict the consumer's right to raise objections or counterclaims, and he may prohibit the use of such admissions of debt.
The King may decide that rules as mentioned in the first and second paragraphs shall also apply to agreements between other commercial lenders and consumers.
New section 2-16 shall read:
Section 2-16 Credit institutions' holdings in enterprises engaged in other
activity
A credit institution's qualifying holding in an enterprise which carries on other activity shall not exceed 15 per cent of the credit institution's capital. A credit institution's aggregate qualifying holdings in enterprises engaged in other activity shall not exceed 60 per cent of the credit institution's capital.
"Qualifying holding" means a holding which directly or indirectly represents 10 per cent or more of the capital or votes in the enterprise or which otherwise provides an opportunity to exercise substantial influence on the administration of the enterprise. "An enterprise which carries on other activity" means an enterprise which is not a financial institution. Moreover, enterprises engaged in the administration of investment funds, the provision of data processing services or other activity closely connected with banking are not regarded as carrying on other activity under this provision.
The limits set out in the first paragraph do not apply to shares or participations temporarily acquired as part of a financial reorganisation or rescue of a company, as part of the ordinary underwriting of a share issue, or in an institution's own name for others' account.
New section 2-17 shall read:
Section 2-17 Measures against money laundering
A financial institution shall demand that new customers provide documentary proof of their identity. The duty of the previous sentence also applies to the institution's employees. The King may issue further rules regarding exemption from the duty to demand proof of identity, as well as rules concerning the duty to provide proof of identity. The King may issue further rules regarding a financial institution's duty to take steps to ascertain the identity of persons on whose behalf the customer is acting. A financial institution shall have in its safekeeping a copy of, or reference to, the documents which were necessary to provide proof of identity as mentioned in the first paragraph for at least five years after the institution's relationship with the customer ceased. Documents pertaining to transactions as mentioned in the third paragraph shall be held in safekeeping for at least five years. The King may make further rules specifying which documents shall be held in safekeeping and specifying the method of safekeeping.
Should a financial institution suspect that a transaction is linked to the proceeds of a drug trafficking offence, a criminal offence coming under chapters 24 to 26 of the Criminal Code, or a misdemeanour coming under section 391a of the Criminal Code, it is obligated to carry out further enquiries to confirm or refute its suspicion. The duty of the previous sentence also applies to the institution's employees. All financial institutions are obligated to establish control routines to ensure that such enquiries will be carried out. The King may issue further rules regarding the performance of the obligation to make enquiries and regarding control routines.
Should there be suspicion of a contravention as mentioned in the third paragraph, first sentence, the financial institution is obligated, on its own initiative, to forward information on all circumstances that point towards such a contravention to the Central Unit for Investigation and Prosecution of Economic and Environmental Crime. The financial institution and its employees are obligated at the request of the Central Unit for Investigation and Prosecution of Economic and Environmental Crime to provide the said Central Unit with all necessary information conceming the possible contravention. Neither the customer nor any third party shall be apprised that information as mentioned has been forwarded. The King may issue further rules regarding the obligation to furnish information pursuant to the provisions of this paragraph, and may decide that the information shall be delivered in machine-readable form. Information received by the said Central Unit pursuant to the provisions of this paragraph may only be employed in connection with the investigation of acts as mentioned in the third paragraph, first sentence, and of the criminal acts from which the monies stem.
The financial institution shall not carry out a transaction as mentioned in the third paragraph, first sentence, before the Central Unit for Investigation and Prosecution of Economic and Environmental Crime has been informed. The said Central Unit may in special cases order the institution not to carry out such a transaction. The transaction may nonetheless be carried out before the said Central Unit is informed if it is not possible to desist from carrying it out, or if omitting to carry out transactions would impede the investigation. In such case the said Central Unit shall be notified immediately after the transaction has been carried out.
One year after the investigation is completed, the Central Unit for Investigation and Prosecution of Economic and Environmental Crime shall on petition inform the individual who has been the object of suspicion. The King may issue further rules on the duty to expunge information that has been furnished in accordance with the duty to furnish information pursuant to the present provision.
The fact that a financial institution has in good faith communicated to the Central Unit for Investigation and Prosecution of Economic and Environmental Crime information pursuant to the foregoing provisions does not constitute a breach of the institution's duty of secrecy, and cannot give grounds on which to call the institution or its employees to account.
Section 3-5, first paragraph, shall read:
A finance or mortgage company may not be founded with share capital or primary capital smaller than the equivalent in Norwegian kroner of Ecu 5 million. The King may in special cases authorise the share capital or primary capital to be fixed at a smaller amount, but not smaller than the equivalent in Norwegian kroner of Ecu 1 million. The enterprise's capital shall at all times correspond to at least the amount required when it received authorisation to carry on business.
Section 3-8, first paragraph, shall read:
Except with the consent of the King, only persons who are citizens of a state that is a party to the agreement on the European Economic Area and are resident in such a state may serve as officers of finance companies and mortgage companies not organised as joint stock companies.
Section 5-1, first paragraph, new final sentence, shall read:
Contravention of section 2-17 of this Act through negligence is nonetheless not a criminal offence.
Act no. 1 of 7 December 1956 on the Supervision of Credit Institutions, Insurance Companies and Securities Trading, etc. (the Banking, Insurance and Securities Commission) as amended, last by Act no 76 of 11 June 1993
Section 1 This Act provides for the supervision of:
1. Commercial banks
2. Savings banks
3. Non-life insurance companies, including the general agents (principal
agents) in Norway of foreign non-life insurance companies.
4. Life insurance companies, including general agents (principal agents)
in Norway of foreign life insurance companies.
5. ----
6. Finance companies and mortgage companies; cf. section 3-1 of Act no.
40 of 10 June 1988 on Financing Activity and Financial Institutions.
7. Any person who is required under section 4-1 of the Financing Activity
and Financial Institutions Act to notify the Banking, Insurance and Securities
Commission of organised or commercial intermediation of loans.
8. Any enterprise which falls within section 1-3, first paragraph, subparagraph
1 to 6, of the Financing Activity and Financial Institutions Act or which
the King pursuant to section 1-3, second paragraph, excepts from any of
the provisions of the Act, when it is decided that the Banking, Insurance
and Securities Commission shall supervise the business.
9.----
10. Norges Postbank.
11. Maritime insurance associations; cf, Act no. 2 of 3 July 1953.
12. Representative offices in Norway of foreign financial institutions.
13. Securities houses and other undertakings which carry on business connected
with securities trading, and of compliance with provisions on securities
trading issued in or pursuant to law.
14. Other undertakings to the extent provided in or pursuant to special
law.
When an institution as mentioned in the first paragraph forms part of a group, other companies in the group shall also be subject to supervision pursuant to this Act. When required on supervisory grounds this also applies to those parts of the business of the companies in the group that would not otherwise have fallen within the provisions of this Act.
Section 2 Supervision is carried out by the Banking, Insurance and Securities Commission (hereafter called the Commission). The King may issue further regulations on the activity of the Commission.
The Commission is managed by a board of five members. The members and deputy members are appointed by the King. The King nominates the chairman and vice chairman of the board. The director of the Commission is appointed by the King for a period of six years. The members and deputy members of the board are appointed for a period of four years. The King may lay down instructions for the board.
Two members are elected by and from among the members of the board to supplement the board when it deals with administrative business. The election arrangement is agreed upon by negotiation with the employees, and in the absence of such agreement is stipulated by the Ministry.
The Commission may engage state authorised and registered accountants and persons with other expert knowledge to perform assignments within the Commission's area of responsibility.
The Commission may appoint committees to undertake independent investigations within the Commission's area of responsibility. Institutions and officers and employees of financial institutions under the Commission's supervision are subject to the same disclosure duty towards such a committee as towards the Commission; cf. section 3, second and third paragraph. As part of its investigation, the committee may require evidence to be taken in court pursuant to section 44 of the Courts of Justice Act. The members of the committee are subject to a duty of confidentiality as stated in section 7, fifth paragraph, and must, except as otherwise stipulated or premised upon appointment, follow such rules as apply to members of the board of the Commission.
The Ministry may decide that the expenditure on assignments as mentioned in the two preceding paragraphs shall be refunded entirely or in part by the institutions at which the assignments have been carried out.
Section 3 The Commission shall ensure that the institutions it supervises operate in an appropriate and proper manner in accordance with law and provisions issued pursuant to law and with the intentions underlying the establishment of the institution, its purpose and articles of association.
The Commission shall examine accounts and other records of the institutions and shall otherwise carry out such investigations into their position and activity as the Commission deems necessary. The institution is obliged at all times to give the Commission access to its records, books, documents and holdings of whatever kind and disclose any information that the Commission may require.
If the disclosure duty imposed on the institution pursuant to the second paragraph is not complied with, the disclosure duty may be may be imposed on the individual officers and employees of the institution. The institution shall as a rule be notified in such cases. The auditor may be ordered to disclose information which appears in the annual accounts, account form, summary of staff pay and deduction sheets, auditing records and the auditor's report.
Section 4 The Commission may order the institutions it supervises:
1. to arrange their bookkeeping, annual report and accounts, interim reports and auditing in conformity with the rules laid down by the Commission,
2. to publish their annual accounts in the form decided by the Commission,
3. to submit extracts of accounts as decided by the Commission, furnish statements of their interest rates on deposits and their interest and commission rates on loans and otherwise submit any information that is deemed necessary for the preparation of statistics of the activity of the supervised institutions.
4. to submit other statements and information which the Commission considers it needs in order to discharge its functions,
5. to comply with regulations issued by the Commission regarding the form and content of deposit certificates, deposit books (passbooks) and other proof of deposits.
6. to maintain a higher capital ratio than the statutory minimum requirement,
7. to restrict overall credit to a customer to a lower amount than the statutory maximum,
8. to alter the composition of the control committee,
9. to rectify the matter if an institution's controlling bodies have acted, or shown negligence, in contravention of their duties pursuant to legislation or the articles of association,
10. to rectify any inappropriate investment of the institution's funds, and to organise their activity to comply with resolutions adopted pursuant to law by the Storting, the King, a Ministry or Norges Bank.
The rules of the Companies Act regarding auditing, annual report and accounts and interim reports may be overridden by rules as mentioned in the first paragraph, subparagraphs 1 and 2.
Section 5 The Commission may convene meetings of the board, control committee and committee of representatives or similar controlling bodies of institutions which are under its supervision. At such meetings and in general meetings the Commission may be represented and may submit proposals, but may not vote. If an extraordinary general meeting is not convened when so demanded by the Commission, the Commission may convene such a meeting.
Contravention of provisions applying to institutions under the supervision of the Commission may be notified to the prosecuting authority or to the public authority to which the case specifically pertains.
As part of its supervisory activity the Commission may require evidence to be taken in court pursuant to section 44 of the Courts of Justice Act. The rules concerning the taking of evidence in civil litigation apply pari passu to the taking of evidence under this Act.
Section 6 (Repealed)
Section 7 Board members and employees of the Commission must not disclose to unauthorised persons any information about a customer's affairs which may come to their knowledge in the course of their duties. Nor may they make use of such information for commercial purposes. The duty of confidentiality does not apply to disclosure of information to Norges Bank.
Board members and employees of the Commission must not be employed by or take paid work with or be a member of the board, committee of representatives or corresponding body of any institution under the Commission's supervision.
Such institutions shall not grant loans against endorsement or other guarantee provided by a board member or employee of the Commission or by a partnership of which he is a partner. Nor shall they grant loans to officers or employees of the Commission without in each case obtaining the consent of the appropriate Ministry as regards loans to the Commission's board members or directors and the consent of the director of the Commission as regards loans to other employees. Board members, deputy board members and directors of the Commission shall, pursuant to further rules laid down by the King, disclose information about their own securities trading and about the customer relationships they enter into with institutions that are supervised by the Commission.
Board members and employees of the Commission may not own shares in or participations issued by institutions which are subject to supervision. The Ministry may grant dispensation from the prohibition.
Section 8 The Commission shall prepare all cases falling within its area of responsibility in which the final decision rests with the King or a Ministry.
The Commission submits each year a report on its activity to the appropriate Ministry.
Section 9 The costs of supervision shall be distributed on the institutions which pursuant to section 1 or other special authority in law are under supervision at the beginning of the budget year. The costs are distributed on the various groups of institutions according to the extent of the supervision. In those groups mentioned in section 1, subsection 1, 2, 5, 6 and 8, distribution shall be on the basis of the size of the institution's total assets at the beginning of the year, nonetheless such that the Ministry stipulates for each year a minimum and maximum amount which can be allotted to the individual institution in each group. For a commercial bank which has been formed pursuant to section 4, second paragraph, third sentence, of Act no. 2 of 24 May 1961 relating to Commercial Banks, an amount may be specially stipulated on the basis of the extent of the supervision. Distribution within groups mentioned under section 1, subsection 3, 4 and 10 is based on the size of the total premium income for direct insurance contracted in Norway. The Ministry may nonetheless for each year stipulate a minimum and maximum amount which may be allotted to the individual institution in each group. Distribution within groups which fall within section 1, subsection 7, 11 and 12 is on the basis of rules stipulated by the Ministry. The Ministry stipulates a separate amount for group 9. When supervision ensues from section 1, second paragraph or other special authority in law, cf. section 1, first paragraph, subparagraph 13, distribution within each group is in accordance with rules stipulated by the Ministry. Allotment shall be performed by the Commission, but shall be approved by the Ministry.
That part of the costs which is allotted to housing savings associations shall be paid by the Treasury.
The allotted amounts are a basis for enforcement of distraint. The announcements which the Commission sends to the Norwegian Gazette pursuant to Act of 29 July 1911 on Insurance Companies are payable by the insurance company concerned.
Section 10 Any officer or employee of an institution which is under the supervision of the Commission who wilfully or through negligence contravenes this Act or provision or order issued pursuant thereto or is an accomplice to such contravention is punishable by fines or by imprisonment of up to one year, or both, unless the offence falls within a more severe penal provision. If particularly aggravating circumstances obtain, imprisonment of up to three years may be imposed.
If an order issued by the Commission is not complied with, the Ministry in question may decide that the persons or the institution, the parent company of the institutions or the parent company in the group of which the institution forms part, that shall comply with the order, shall pay a daily fine until the circumstance in question is rectified. The imposition of a fine is a basis for enforcement of distraint.
Section 11 This Act comes into force immediately.
The following amendments will take effect when the agreement on the European Economic Area comes into operation:
Section 1, first paragraph, subparagraph 5, shall read:
Branches of credit institutions as mentioned in section 1-4, first paragraph, subparagraph 4, of Act no. 40 of 10 June 1988 on Financing Activity and Financial Institutions insofar as their activity in Norway is concerned.
Section 1, new third paragraph, shall read:
Foreign enterprises corresponding to enterprises as mentioned in the first paragraph, or which carry on activity corresponding to activity as mentioned in the first paragraph, and foreign enterprises corresponding to enterprises as mentioned in Act no. 40 of 10 June 1988 on Financing Activity and Financial Institutions, section 2a-6, first paragraph, litera b and e, are also subject to supervision pursuant to this Act to the extent that they carry on activity in Norway.
Section 5, second paragraph, is repealed.
Section 6 shall read:
Contravention of provisions applicable to institutions that are supervised by the Banking, Insurance and Securities Commission may be reported to the prosecuting authority or to the public authority within whose jurisdiction the matter specifically falls.
When the Commission in the course of its work becomes aware of circumstances which give reason to suspect contraventions of the provisions of section 317 cf. section 162 or chapters 24 to 26 of the Criminal Code, information to this effect shall be forwarded to the Central Unit for Investigation and Prosecution of Economic and Environmental Crime.
Section 1 Purpose
The purpose of the Government Bank Insurance Fund (the Fund) is to grant loans on special terms (support loans) to the Commercial Banks Guarantee Fund and the Savings Banks Guarantee Fund, and in special cases to be able to acquire shares, primary capital certificates or other equity capital instruments in Norwegian banks, and to issue equity capital guarantees in favour of Norwegian banks.
Section 2 Resources of the Fund
(1) The Fund's resources are appropriated by the Storting.
(2) Resources which are not granted for support loans or invested in shares, primary capital certificates or other equity capital instruments, shall be placed on deposit with the Treasury and carry the same interest rate as that received by the Treasury on its deposits on ordinary current account with Norges Bank.
Section 3 Organisation of the Fund
(1) The Fund is an independent legal entity.
(2) The Fund shall have a board with a chairman and two other members and deputy members appointed by the King. The board members and deputy members are appointed for a term of up to three years. The Banking, Insurance and Securities Commission and Norges Bank each nominate a representative who attends the meetings of the board as adviser without being entitled to vote.
(3) The board is responsible for the activity of the Fund and manages its resources. The board nominates a business manager. Before the board adopts decisions of special importance the case in question shall be submitted in writing to the Ministry. The King may in special cases instruct the board in individual cases. The board of the Fund shall have the opportunity to state its opinion in writing before the King adopts a decision pursuant to the fourth sentence. The King shall inform the Storting of his decision. The Ministry issues further rules on the secretariat, as well as on the Fund's accounting and auditing arrangements.
(4) The Fund shall have articles of association established by the Ministry.
Section 4 Activity of the Fund
(1) The Fund may grant support loans to the Commercial Banks Guarantee Fund and to the Savings Banks Guarantee Fund. The Fund may in special cases grant interest-free support loans. Resolutions to grant interest-free support loans are only valid when the Storting has given its consent for such loans to be granted. The Fund may in special cases acquire shares and primary capital certificates issued by Norwegian banks. The Ministry may decide that the Fund shaII be able to deposit resources in other equity capital instruments in Norwegian banks, and that the Fund shall be able to issue equity capital guarantees in favour of Norwegian banks.
(2) Support loans may only be granted to the Commercial Banks Guarantee Fund or the Savings Banks Guarantee Fund pursuant to application if the Guarantee Fund in question does not have sufficient resources available to carry on its activity.
(3) The Fund shall attach conditions to support loans. Such conditions may apply both to the Guarantee Fund which receives a support loan and its activity and the member bank which is to be the beneficiary of the loan. Such conditions may encompass:
a) the application of the support loan, including whether support to a member bank shall be given in the form of preference capital,
b) write-down of share or primary capital or other capital in the bank which receives the support, and restriction on the member bank's right to pay dividend on such capital.
c) supply of fresh equity capital or other capital in addition to the support received by a member bank,
d) measures to be implemented by the member bank which receives support, including measures designed to strengthen profits,
e) changes in the controlling bodies and management of the bank,
f) repayment of the support loan,
g) other conditions in accordance with the purposes of the support loan arrangement.
(4) The Fund shall submit questions of resolutions concerning support loans or acquisition of shares or primary capital certificates, or deposit in other equity capital instruments, to the governor of the central bank and the director of the Banking, Insurance and Securities Commission for comment.
(5) The Fund may, when it considers such action appropriate, request the Banking, Insurance and Securities Commission to obtain information about the member bank when considering the granting of a support loan. The same applies when considering the question of acquisition of shares, primary capital certificates or deposit in other equity capital instruments.
Section 5 The application of support loans
(1) The Guarantee Fund in question shall apply the resources supplied through support loans from the Government Bank Insurance Fund in accordance with the conditions which are stipulated and also in accordance with the rules and articles of association which apply for the activity of the Guarantee Fund.
(2) The Guarantee Fund in question shall ensure that the conditions stipulated for support loans are brought to bear on the member bank which receives support.
(3) The Guarantee Fund in question may not allow remission of loans which the Guarantee Fund has granted to a member bank. The Government Bank Insurance Fund may only in special cases allow remission of a claim against the Savings Banks Guarantee Fund or the Commercial Banks Guarantee Fund if either is in substantial deficit. Such a resolution is only valid when the Storting has approved the remission.
Section 6 Changes in the board of the Guarantee Fund
(1) Notwithstanding section 30 of the Commercial Banks Act and section 46 of the Savings Banks Act, the Fund may before disbursement appoint up to two members with deputy members to the board of the Guarantee Fund which receives the support loan.
(2) The board member(s) appointed by the Fund shall in such case replace one, alternatively two, of the five members who have been elected by the general meeting of the Guarantee Fund. The general meeting of the Guarantee Fund decides which of these members shall step down.
(3) The Fund's appointment of board members pursuant to this section shall be approved by the Ministry.
Section 7 Relationship to the provisions of the Public Administration Act, etc.
(1) The Public Administration Act, Civil Service Act and Government Service Dispute Act do not apply to the Fund.
(2) The rules of the Public Administration Act concerning disqualification and confidentiality nevertheless apply to the officers and employees of the Fund. The duty of confidentiality does not apply to the disclosure of information to the Ministry, the Banking, Insurance and Securities Commission and Norges Bank.
Section 8 Annual accounts, annual report, etc.
The Fund shall each year prepare annual accounts and an annual report. The annual accounts and annual report shall be sent to the Ministry by the end March each year and form the basis for information to the Storting.
Section 9 Audit
The accounts of the Fund are audited by the Office of the Auditor General.
Section 10 Winding up of the Fund
Upon the winding up of the Fund, its resources shall revert to the Treasury. Parts of the Fund's resources may revert to the Treasury by decision of the Storting.
Section 11 The King may by regulation lay down further rules concerning the Fund, its activity and administration
III Coming into force
This Act comes into force on such date as is decided by the King.
The King lays down transitional arrangements.
Act no. 78 of 29 November 1991 on the Government Bank Investment Fund as amended, last by Act no. 1 of 8 January 1993
Section 1 Purpose
The purpose of the Government Bank Investment Fund (the Investment Fund) is to contribute capital to Norwegian banks based on commercial considerations. Acquisitions as mentioned in section 5, first paragraph, litera f and g, may in special cases be implemented without their being based on commercial considerations.
Section 2 Capital of the Investment Fund
The Investment Fund's capital is appropriated by the Storting. The Fund is owned by the State. The King stipulates the annual return on the capital which is paid to the State.
Section 3 Organisation and management
The Investment Fund is an independent legal entity. The State's responsibility for the Investment Fund is limited to the capital held by the Fund at any time.
The Investment Fund is managed by a board of three members. The King appoints the members and nominates the chairman and vice chairman of the Fund for a term of three years. Board members may be reappointed.
The King lays down articles of association for the Investment Fund.
Section 4 Administration of the resources of the Investment Fund. The King's power of instruction, etc,
The board is responsible for the administration of the Investment Fund's resources. Before the board adopts a resolution regarding the application of resources, or disposal of assets, the matter shall be submitted in writing to the Ministry.
The King may in special instances instruct the board in individual cases. The board shall have an opportunity to state its opinion before the King adopts a resolution to instruct the board. The Storting shall be informed of the content of the King's resolution.
Section 5 Activity of the Investment Fund
The Investment Fund's resources may be applied for the following purposes:
a) Acquisition of new shares issued by Norwegian commercial banks.
b) Acquisition of new primary capital certificates issued by Norwegian savings banks.
c) Loans to Norwegian commercial and savings banks which may be regarded as capital.
d) Interest-bearing deposits with the Treasury.
e) Payment of return on capital to the Treasury.
f) Acquisition of shares and primary capital certificates in Norwegian banks from the Government Bank Insurance Fund.
g) Takeover from the Government Bank Insurance Fund of loans to Norwegian banks which may be regarded as capital.
The Investment Fund may not raise loans or furnish guarantees in respect of others' debts. The Investment Fund may nevertheless furnish guarantees in connection with Norwegian banks' issues of shares, primary capital certificates and subordinated loan capital. The Investment Fund may assume such debts as are necessary in connection with the management and administration of the activity of the Fund.
Section 6 Annual financial statement
The Investment Fund shall each year prepare a financial statement which is to be sent to the Ministry by the end of March and forms the basis for information from the Ministry to the Storting.
The financial statement shall comprise the profit and loss account, balance sheet and annual report. The provisions of chapter 11 of the Companies Act apply pari passu insofar as they are appropriate.
Section 7 Audit
The Investment Fund's accounts are audited by the Office of the Auditor General.
Section 8 Relationship to the provisions of the Public Administration Act
The Public Administration Act, Civil Service Act and Government Service Dispute Act do not apply to the Fund.
The rules of the Public Administration Act concerning disqualification and confidentiality nevertheless apply to the officers and any employees of the Fund. The duty of confidentiality does not apply to the disclosure of information to the Ministry, the Banking, Insurance and Securities Commission and Norges Bank.
Section 9 Winding up, conversion
The King may decide that the Investment Fund shall be wound up or converted. In such case all or parts of the Investment Fund's capital may revert to the Treasury. Any decision to this effect shall be approved by the Storting.
Section 10 Supplementary rules
The King may by regulation lay down further rules for the Investment Fund. The board shall have an opportunity to state its opinion on such regulations.
Coming into force and transitional provisions
This Act comes into force on such date as the King decides.
Different parts of the Act may be given effect at different times.
The Ministry may lay down further transitional rules.