Enquiries to: Ellen Cecilie Pettersen-Hagh
Dir. line: +47 22 93 98 28
Our reference: 11/3375
Filing code: 724
Reference is made to previous correspondence on this matter, including Finanstilsynet’s (The Financial Supervisory Authority of Norway) advance notification of 23 March 2011, concerning the imposition of a penalty; see the Norwegian Public Administration Act section 16, the response dated 29 April 2011 from Wiersholm, Mellbye & Bech (Wiersholm), representing Golar LNG Ltd. (Golar) and Finanstilsynets decision 24. June 2011, which unfortunately contained some writing errors. Finanstilsynet apologizes for these errors.
Pursuant to STA § 17-4 Finanstilsynet may impose a penalty if the deadline for publishing the annual report is violated, and this is due to negligence or willful misconduct.
According to Oslo Børs’ “Newsweb”, Golar LNG Ltd. published its report for the fourth quarter of 2011 on 1 March 2011 at 08:53. As stated in the notice, the deadline for publication of the quarterly reports is at the latest two months after the end of the quarter, cf the Norwegian Securities Trading Regulations (STR) section 5-5 fifth paragraph. The report for the fourth quarter 2010 should have been made public within 28 February 2011. Publication must be in accordance with the STA section 5-12. Finanstilsynet finds that the company has violated STR 5-5 subsection (5).
In order for Finanstilsynet to impose a penalty the violation must have been committed willfully or through negligence. Finanstilsynet accordingly considers whether the violation was due to circumstances within the company’s control. Finanstilsynet emphasizes that listed companies are expected to exercise a high level of due care in fulfilling their obligations to the market. The difficulties described by the company were not of such a nature as to render a delay unavoidable. Finanstilsynet therefore finds that the company acted negligently.
Golar neither disputes the fact that the report was published after the deadline referred to in STA, nor disputes the fact that the late publishing of the accounts was committed willfully or negligently. The company has, however, comments regarding the amount of the penalty levied. Golar is of the opinion that the penalty should be waived, or alternatively significantly reduced, as the violation did not have any impact on investors or the market in general.
STA section 17-4 (5) specify the criteria to be applied when fixing the amount of the penalty. Pursuant to section 17-4 (5) when the size of a penalty is assessed “importance shall in particular be attached to the scale and effects of the violation as well as the degree of guilt found” Additional guidelines for assessment of the size of the penalty are set out in “Guidelines – penalty related to periodic financial reporting”, published by Finanstilsynet on 10 June 2009. The size of the penalty is set with reference to the market value of the company as of 1 January 2011. The minimum penalty for all issuers of listed shares is normally NOK 130,000. This is in line with the previous practice of Oslo Børs.
Finanstilsynet emphasizes that when deciding the amount of the penalty, Finanstilsynet particularly takes into consideration the scale and the effects of the violation, the degree of guilt as well as whether there have been previous infractions. A repeated violation will result in a higher penalty. Golar failed to comply with the deadline for the publication of the 2008 annual report. Finanstilsynet therefore considers the violation to be repetitious. However as also stated in the company’s comments, both the extent of the violation and its impact is limited. The delay was only 9 hours and the report was made public prior to the opening of the market. Without further inquiries, Finanstilsynet cannot see that the delay had any effect on the market. Based on the information from Wiersholm and the fact that Golar made its annual report public before the Oslo Stock Exchange opened for trade, Finanstilsynet sees fit to reduce the penalty.
In considering whether to make a decision on penalty Finanstilsynet acknowledges that such penalties are intrusive for the company concerned. Whether the penalty should be imposed is thus an assessment of whether the Finanstilsynet considers it necessary to provide a penalty in the current case. Publication of periodic financial information is one of the fundamental duties listed companies are required in relation to the market. Accurate and timely financial information is crucial for market participants and investors' decisions, and thus rate trends in the stock. Finanstilsynet considers delayed reporting as a serious breach of clear fundamental obligations for listed companies. In the interest of a well-functioning market it is necessary to react in this case.
Finanstilsynet has determined that the stipulated penalty referred to in the preliminary decision dated 31 May 2010 may be reduced. Based on the reasoning stated above and with legal basis in STA section 17-4 second paragraph and section 5-5 first paragraph, Finanstilsynet has adopted the following individual decision:
Golar LNG Ltd. must pay a penalty of NOK 180 000 –one hundred and eighty thousand Norwegian kroner- to the Norwegian Treasury.
Individual decisions may be appealed to the Ministry of Finance in accordance with the Norwegian Public Administration Act section 28. The time limit for appeal is three weeks from the date of receipt of this letter. The appeal must be sent directly to Finanstilsynet.
An invoice will be sent to Golar LNG Ltd.
On behalf of Finanstilsynet
Anne Merethe Bellamy
Deputy Director General
Head of Section