A large number of companies with a short history and no or very low revenues have been admitted to trading on Euronext Growth. Investments in such companies involve considerable risk. Finanstilsynet has therefore carried out an inspection of Oslo Børs' process for admission to this marketplace, investment firms that have assisted the companies as advisors and managers, and auditors who audit the financial statements of the companies admitted to trading.
The thematic inspection has been limited to admission processes, transactions and audits related to selected issuers. Inspections have been carried out at Oslo Børs, eight investment firms and four audit firms.
Finanstilsynet's summary of its main findings and assessments can be found in the enclosed report. The main findings are:
- The admission processes at Euronext Growth are very quick, and measures must be implemented to ensure robust procedures and adequate control of compliance with the terms and conditions for admission, including the existence of sufficient information. This applies to both Oslo Børs and the investment firms.
- The Euronext Growth Advisor scheme has several weaknesses. Among other things, the stock exchange’s regulation of the role as Euronext Growth Advisor appears unclear. Oslo Børs’ follow-up of the scheme is insufficient, and the investment firms have not identified the specific conflict of interest arising from both fulfilling their role as Euronext Growth Advisor and confirming to Oslo Børs that the issuer meets all terms and conditions for admission to trading.
- The investment firms’ general and extensive disclaimers included in the issuer's information document in connection with admission to trading on Euronext Growth are not in accordance with the Securities Trading Act's investor protection requirements.
- Some investment firms do not make voice recordings of conversations with issuers, which is a breach of the obligation to make such recordings. Finanstilsynet has made it clear to the firms concerned that conversations that are intended to result in the provision of investment services are also required to be recorded.
- A few employees at some firms have bought shares before the firm published its first investment recommendation concerning the company. Finanstilsynet has not identified infringements of the rules on own account trading, but has nevertheless pointed out to the firms that investment firms shall seek to avert the risk that conflicts of interest arise between the firms and their clients.
- The investment firms have largely met the content requirements related to investment recommendations. Finanstilsynet's review has nevertheless uncovered some deficiencies in several of the recommendations.
- Significant weaknesses have been identified in the audit of one of the issuers in the sample. The audits of the other issuers were considered to be satisfactory.