Nominee registration means that a legal entity, a nominee, is registered in a register of owners of financial instruments instead of the beneficial owner.
Owner registers include:
- registers maintained by a Norwegian central securities depository
- shareholder registers and subscription right registers for Norwegian public limited companies
- registers of owners of equity certificates in Norwegian financial institutions
- registers of shareholders for Norwegian limited companies registered in a central securities depository
- unit holder registers for Norwegian mutual funds
The statutory regulation of the nominee role promotes greater transparency about ownership, which includes ensuring access to information about the beneficial owners of financial instruments. This is information that the tax and debt enforcement authorities and Finanstilsynet, among others, use in the performance of their administrative duties. For Finanstilsynet, this is particularly relevant in connection with suspected insider dealing or market manipulation. However, the legislation shall also ensure that Norwegian share issuers have access to information about their owners.
Conditions for nominee registration
Nominees must have a licence to operate as a bank, mortgage company, investment firm, central securities depository, or fund management company. Finanstilsynet may, in special cases, approve exceptions from this. Furthermore, nominees must be subject to regulation and supervision in their home state and to satisfactory anti-money laundering legislation.
The opening of a nominee account in a central securities depository is regulated in Chapter 4 of the Central Securities Depositories Act, which also includes rules on the establishment of legal rights on nominee accounts.
The registration of nominees in the shareholder registers of public limited companies requires approval from Finanstilsynet pursuant to Section 4-10 of the Public Limited Liability Companies Act. Approval pursuant to this provision is also required for nominee registration in subscription rights registers (Section 4-11 of the Public Limited Liability Companies Act (Norwegian only)), registers of owners of equity certificates issued by financial institutions (Section 10-12 of the Financial Institutions Act) and registers of shareholders for limited companies registered in a central securities depository (Section 4-4 of the Norwegian Limited Liability Companies Act (Norwegian only)). Financial instruments recorded in these registers will be referred to as ‘shares, etc.’ below.
Nominee registration in the unit holder register for mutual funds is regulated in Section 4-10 of the Securities Funds Act and Chapter 13 of the Securities Funds Regulations, and requires authorisation from Finanstilsynet pursuant to Section 13-2, subsection (1) or (2) of the Securities Funds Regulations.
The nominee's obligations
The nominees shall comply with the applicable obligations and have an independent duty to familiarise themselves with these obligations. For the sake of good order, Finanstilsynet would like to point out that nominees will be subject to new obligations once the Second Shareholders' Rights Directive (SRD II) is implemented in Norwegian law.
We would like to draw particular attention to the following aspects:
1. Correct registration in owner registers
A nominee shall inform the registrar or account operator that he is a nominee and ensure that it is duly recorded in the owner register.
Nominees shall ensure that shares etc. issued by Norwegian companies are nominee-registered only on behalf of foreign shareholders. Foreign shareholders are defined as companies registered outside Norway, unless the company's head office is located in Norway, and foreign citizens who are not tax resident in Norway.
Nominees must inform relevant registrars and account operators of changes as mentioned in section 5 and ensure that registered information about the nominee in the owner registers is correct at all times.
2. Access to information about beneficial owners
A nominee must have access to information about the beneficial owners on whose behalf the nominee is registered. For clients who are also nominees (more than one level of nominee registration), the nominee is required to have legal and practical access to information about the beneficial owners.
The nominee must keep an updated register evidencing their clients' holdings in the nominee-registered financial instruments.
3. Disclosure of information about beneficial owners on demand
The nominee shall, on demand, ensure that information about the beneficial owners of the nominee-registered financial instruments is disclosed to entities entitled by law to receive such information. Finanstilsynet assumes that the information will be provided by such means and within such deadline as stipulated by the entity entitled to the information. The information shall be disclosed directly to the entitled entity. It shall be sufficient to direct requests for information to the nominee.
The disclosure obligation applies irrespective of whether the nominee is subject to provisions of confidentiality. Nominees who are subject to provisions of confidentiality that prevent them from fulfilling the disclosure obligation must obtain the necessary legal basis for disclosing such information. This can be achieved by obtaining the client’s prior consent and, if necessary, an authorisation from the competent authority in the nominee's home state before assignments for nominee registration are accepted.
In cases where Finanstilsynet requires information about beneficial owners from a nominee, the nominee will receive a letter specifying the legal basis for demanding the information. In this regard, nominees must pay particular attention to cases where there is more than one level of nominee registration. It is not sufficient to provide information about the nominee’s client where this client is not also the beneficial owner.
4. Reporting to the tax authorities
The nominee shall comply with the reporting obligation pursuant to the Tax Administration Act in respect of the financial instruments comprised by the nominee assignment. Any questions regarding the reporting obligation should be directed to the Norwegian Tax Administration, firstname.lastname@example.org. The Tax Administration will answer both technical questions (reporting) and legal questions.
5. Notification of changes in operations
Nominees authorised by Finanstilsynet shall inform Finanstilsynet of matters causing the nominee to no longer meet the conditions to act as nominee, for example in connection with the return or revocation of the necessary licence, liquidation in the event of merger, etc.
Foreign nominees must also report changes in:
- name and/or type of organisation (documentation must be attached)
- office address or postal address
- e-mail address
- contact details:
- name, title, telephone number and e-mail address of the manager with day-to-day responsibility for following up the nominee registration
- name, title, telephone number and e-mail address of any other contact persons
- e-mail address available to multiple persons for questions about beneficial owners
Authorised nominees who no longer intend to act as nominees may ask Finanstilsynet to revoke their authorisation.
Change notifications and questions about recorded information etc. can be sent to email@example.com. Please write ‘nominee’ in the subject field to ensure quick processing.
6. Non-compliance with nominees’ obligations
If the nominee fails to meet its obligations, Finanstilsynet may revoke the authorisation to act as a nominee. Finanstilsynet may also require nominee accounts to be blocked or issue an order to the effect that the nominee may not dispose over the nominee-registered financial instruments, see Section 11-7 of the Central Securities Depositories Act and Section 13-6 of the Securities Funds Regulations.
Finanstilsynet may also impose an infringement penalty for infringement of the nominee's obligations relating to financial instruments recorded in a Norwegian central securities depository, see Section 11-9 of the Central Securities Depositories Act.
Requirements for rules governing legal rights when opening a nominee account
Pursuant to Section 7-7 of the Central Securities Depositories Act, dispositions of financial instruments registered on a nominee account have legal effects according to rules on colliding rights and on defects in the transferor’s title when the nominee receives notification of the disposition. Nominees shall establish rules for when they shall be considered to have received notification of a legal right thus created. These are called rules governing legal rights and must be approved by Finanstilsynet.
Based on the purpose and legislative history of the Act, Finanstilsynet's preliminary interpretation is that the requirement for rules governing legal rights applies to Norwegian nominees and foreign nominees carrying out this activity through a Norwegian branch.
The purpose of the rules governing legal rights is to avoid conflicting priorities related to legal rights. Consequently, the rules must be as clear and unambiguous as possible with respect to when the nominee shall be considered to have received notification of a legal right. The rules must also be designed to include all forms of legal rights that may be relevant, i.e. notifications of pledging, freezing of assets, expenses, bankruptcy, purchase, sale, etc. Furthermore, it may be convenient to have rules concerning the different ways individual nominees may receive notifications, for example by courier, e-mail, etc.
As an example, legal protection is normally provided for notifications by e-mail at the time the e-mail is received by the nominee, even if this is outside the company's ordinary business hours. Such a solution clarifies the order of priority between competing legal rights reported outside ordinary business hours. Furthermore, notifications sent by regular mail are considered to be received when they have been registered by the company in connection with the daily opening of mail.
Application for approval to act as nominee and rules governing legal rights
It is free of charge to have your application processed by Finanstilsynet. The application will normally be processed within one month after the complete application has been received. Please note that there are some differences in the application process for Norwegian and foreign applicants.
1. Norwegian applicants
Norwegian companies intending to act as nominee for Norwegian shares, etc. or Norwegian mutual fund units must apply to Finanstilsynet for approval. Norwegian companies wishing to open a nominee account in a Norwegian central securities depository must also apply for approval of the rules governing legal rights.
When applying, the ‘Application form for approval related to nominee registration – Norwegian applicants’ (Norwegian only) should be used and sent via Altinn along with any attachments. Use the Altinn form ‘General form for annexes to Finanstilsynet (KRT 1060)' and enter ‘INFRA’ in section 2.3.1 of the form.
2. Foreign applicants, excluding UK applicants (CASS)
Foreign companies intending to act as nominee for Norwegian shares, etc. or Norwegian mutual fund units must apply to Finanstilsynet for approval. Companies with a branch in Norway wishing to open a nominee account in a Norwegian central securities depository must apply for approval of the rules governing legal rights or send a confirmation that Norwegian rules on legal protection do not apply to their registration activities. Any confirmation must be sent in the same way as the application.
Applications for approval related to agreements on custody services (custodian bank services) with a registrar in a Norwegian central securities depository must be sent via the relevant registrar. After the registrar has concluded that the applicant meets the conditions for holding a nominee account, the application must be forwarded to Finanstilsynet for consideration.
In other cases, applications may be sent directly to Finanstilsynet, for example if the application for approval only concerns nominee registration of Norwegian mutual fund units.
The form ‘Application form nominee registration – foreign applicants’ shall be used when applying for approval as a nominee.
Any application for approval or submission of confirmation relating to rules governing legal rights must contain the information specified here.
Applications can be sent to Finanstilsynet via Altinn or to firstname.lastname@example.org. When using Altinn, use the ‘General form for annexes to Finanstilsynet (KRT 1060)' and enter ‘INFRA’ in section 2.3.1 of the form.
3. Specifically for UK applicants established to comply with the CASS regulations
Finanstilsynet occasionally receives applications from subsidiaries of UK investment firms and banks whose purpose is to act as nominee for the parent company's clients, so-called ‘nominee companies’. The subsidiaries have been established in order for the parent company to fulfil requirements for the safe custody of clients’ assets via a nominee controlled by the parent company, cf. the provision of CASS 6.2.3R (2) (a) in the Client Assets Sourcebook in the Financial Conduct Authority's Handbook.
Since these subsidiaries do not have their own licence, the opening of a nominee account in a Norwegian central securities depository in their name requires special authorisation from Finanstilsynet pursuant to Section 4-3, third subsection of the Central Securities Depositories Act.
Applications for approval to act as nominee on behalf of such subsidiaries must include the information provided here.
Applications must be sent to Finanstilsynet according to the same procedure as for other foreign companies.