Stabilisation

On the rules and conditions for stabilisation

Stabilisation means a purchase or offer to purchase securities for a predetermined period of time in connection with an initial offer (when shares are admitted to trading for the first time) or a secondary offer (additional issuances) of securities, exclusively for supporting the market price of those securities due to a selling pressure. The purchases must be undertaken by a credit institution or an investment firm.

Stabilisation is normally carried out by the manager of the offer pursuant to an agreement with the offeror, which permits the manager to accept subscriptions or offers to purchase a greater number of securities than originally offered through a so-called overallotment facility. Often, one of the issuer's shareholders will lend the overallotted shares to the manager to ensure allotment of the correct number of shares, while the manager is also given a right (by a shareholder or the issuer) to purchase securities for a certain period of time after the offer through a so-called overallotment option or greenshoe option. The manager may choose to fulfil its obligations pursuant to the lending arrangement either by acquiring securities in the market during the stabilisation period at a price that is lower or equal to the offer price or by exercising the overallotment option. See further information under the section Ancillary stabilisation below.

Stabilisation may contribute to alleviate sales pressure generated by short-term investors and maintaining an orderly market in the relevant securities. The stabilisation may, however, create false or misleading signals as to the offer, demand for and/or price of a financial instrument. Article 5 of MAR and Commission Delegated Regulation (EU) 2016/1052 set out conditions that must be fulfilled in order for stabilisation to be carried out irrespective of the prohibitions against market abuse in Articles 14 and 15 of MAR. This includes requirements regarding:

• the length of the stabilisation period and price
• appointment of a stabilisation agent
• disclosure of information about the stabilisation before an offer is initiated
• disclosure and reporting of trades made

The relevant rules apply to both shares and other securities equivalent to shares, bonds and other forms of securitised debt, and securitised debt convertible or exchangeable into shares or into securities equivalent to shares, see Article 3 (2) of MAR, as well as equity certificates, see section 3-2 of the Norwegian Securities Trading Act.

Conditions for the stabilisation period and price

Stabilisation may be carried out in connection with a significant distribution of securities, which means an initial or secondary offer of securities that is distinct from ordinary trading both in terms of the amount in value of the securities to be offered and the selling method to be employed, see Article 3 (2) (c) of MAR.

Article 5 of Commission Delegated Regulation (EU) 2016/1052 sets out conditions for the stabilisation period. In case of an initial offer of shares or other securities equivalent to shares, the period shall start on the date of commencement of trading of the securities on the trading venue concerned and end no later than 30 calendar days thereafter. If the initial offer is made in a member state that permits trading prior to the commencement of trading on a trading venue (“if/when issued” trade), the stabilisation period shall start on the date of disclosure of the final price of the securities and last no longer than 30 calendar days thereafter. In case of secondary offers of shares or other securities equivalent to shares, the stabilisation period shall start on the day the final price of the securities is disclosed and end no later than 30 calendar days after the date of allotment.

In case of an offer of shares or other securities equivalent to shares, Article 7 (1) of Commission Delegated Regulation (EU) 2016/1052 sets out that stabilisation of securities shall not in any circumstances be carried out above the offering price.

Provisions on the stabilisation period and price for bonds and debt instruments are set out in Article 5 (3) and Article 7 (2) of the Commission Delegated Regulation.

Stabilisation agent

The issuer, the offeror and any entity undertaking the stabilisation, as well as the persons acting on their behalf, shall appoint one among them to act as central point responsible for the disclosure of the stabilisation before, during and after the stabilisation period as well as for handling any requests from any competent authorities, see Article 6 (5) of Commission Delegated Regulation (EU) 2016/1052.

Disclosure of information regarding stabilisation before the offer is initiated

The stabilisation agent must ensure that relevant information regarding the stabilisation is disclosed before the start of the offer of securities as further set out in Article 6 (1) of Commission Delegated Regulation (EU) 2016/1052. This includes information on:

• the fact that stabilisation may not necessarily occur and that it may cease at any time
• the fact that stabilisation transactions aim at supporting the market price of the securities during the stabilisation period
• the beginning and the end of the stabilisation period
• the identity of the entity undertaking the stabilisation
• the existence of any overallotment facility or greenshoe option and the maximum number of securities covered by that facility or option, the period during which the greenshoe option may be exercised and any conditions for the use of the overallotment facility or exercise of the greenshoe option
• the place where the stabilisation may be undertaken.

Disclosure of stabilisation transactions

The stabilisation agent must ensure disclosure of details of all stabilisation transactions no later than the end of the seventh daily market session following the date of execution of such transactions, see Article 6 (2) of Commission Delegated Regulation (EU) 2016/1052. Accordingly, if stabilisation transactions are carried out daily throughout the period, transactions must be disclosed at least every seventh trading day.

The same information on stabilisation transactions must also be reported to the competent authority of the trading venue within the same deadline, see the section Reporting, supervision and sanctions below. 

Disclosure of information after the end of the stabilisation period

According to Article 6 (3) of Commission Delegated Regulation (EU) 2016/1052, the stabilisation agent shall ensure that the following information is disclosed within one week after the end of the stabilisation period:

• whether or not the stabilisation was undertaken
• the date on which stabilisation started
• the date on which stabilisation last occurred
• the price range within which stabilisation was carried out, for each of the dates during which stabilisation transactions were carried out
• the trading venue(s) on which the stabilisation transactions were carried out, where applicable 

On ancillary stabilisation

Article 5 of MAR, cf. Article 8 of Commission Delegated Regulation (EU) 2016/1052, sets out certain additional requirements in case of ancillary stabilisation.

According to Article 1 (e) of the Commission Delegated Regulation (and as further explained above), ancillary stabilisation means the exercise of an overallotment facility or of a greenshoe option by investment firms or credit institutions, in the context of a significant distribution of securities, exclusively for facilitating stabilisation activity.

Ancillary stabilisation must be carried out in accordance with the requirements for disclosure of information and reporting of transactions as well as the price conditions described above. Article 8 of the commission delegated regulation further stipulates the following: 

• Overallottment shall only be permitted during the subscription period and at the offer price.
• A position resulting from the exercise of an overallotment facility by an investment firm or credit institution which is not covered by the greenshoe option shall not exceed 5 per cent of the original offer.
• The greenshoe option shall be exercised by the beneficiaries of such an option only where the securities have been overallotted.
• The greenshoe option shall not amount to more than 15 per cent of the original offer.
• The period during which the greenshoe option may be exercised shall be the same as the stabilisation period.
• The exercise of the greenshoe option shall be disclosed to the public promptly, together with all appropriate details, including in particular the date of exercise of the option and the number and nature of securities involved.

Reporting, supervision and sanctioning

Each stabilisation transaction shall be reported to the competent authority of each trading venue where the securities are admitted to trading or are traded and each trading venue where transactions in associated instruments for the stabilisation of securities are carried out (see Article 5 (5) of MAR and Article 6 (4) of Commission Delegated Regulation (EU) 2016/1052). From 1 April 2025, this authority is Finanstilsynet for securities admitted to trading on Euronext Oslo Børs, Euronext Expand and Euronext Growth Oslo.

The deadlines for reporting and the information to be reported to the relevant authorities correspond to the deadlines and the information to be disclosed, see Disclosure of stabilisation transactions above. The reporting obligations to Finanstilsynet will be fulfilled by timely disclosure of this information and and by simultaneously sending the disclosure notification to the officially appointed mechanism (OAM) for storage in Norway, which is Oslo Børs through NewsWeb.

A template for disclosure and reporting of stabilisation transactions is available. The template is a continuation of the disclosure and reporting template that was used when reporting to Oslo Børs prior to 1 April 2025.

• Template for disclosure and reporting of stabilisation transactions (docx)

Article 5 of MAR provides exemptions from the market abuse prohibitions in Articles 14 and 15 only if all conditions for stabilisation are fulfilled. Accordingly, stabilisation and activities that are carried out in this respect without fulfilment of the conditions, may be considered as insider dealing, incitement, unlawful disclosure of inside information and/or market manipulation. Chapter 21 of the Norwegian Securities Trading Act regulates administrative and criminal sanctions in case of violation of MAR, see General information about sanctioning for infringement of the market conduct regulations. 

Regulations

Rules on issuers’ buy-back of own shares or equity certificates follow from:

• MAR Article 5
• Commission Delegated Regulation (EU) 2016/1052 (chapter III)
• Securities Trading Act, Section 3-2

For further guidance, please refer to:

• ESMA's Final report ESMA/20151455, pages 17-20 

For further information – see Laws and regulations.