The Government has proposed that the deadline for May/June be reduced by 4 %. No reduction for other due dates has been proposed. The proposal will be presented in the revised national budget 2020, presented on 12 May.
The Government has proposed that the deadline for May/June be reduced by 4 %. No reduction for other due dates has been proposed. The proposal will be presented in the revised national budget 2020, presented on 12 May.
ESMA has published a statement advising national financial regulatory authorities not to prioritise supervisory actions against issuers in respect of the upcoming deadlines for financial reports in light of the difficulties caused by COVID-19. The statement by ESMA is available here. Both the Norwegian Financial Supervisory Authority and the Oslo Stock Exchange have stated that they will adhere to the statement from ESMA, and the Oslo Stock Exchange has published an overview of actions to be taken by issuers with financial instruments listed on their market places if they are prevented from publishing the annual report within the stipulated deadline. The overview is available here.
Companies listed on Oslo Børs or Oslo Axess that are prevented from complying with the deadline for publishing the annual report by 30 April 2020 must notify the Norwegian Financial Supervisory Authority of the delay and the reasons for this. In addition, the company must inform of the time it expects to publish the annual report. The same information must be made available to the public through a stock exchange announcement. Further, the company must update its financial calendar in Newspoint. Any further delays beyond what has been announced must be notified again to the Norwegian Financial Supervisory Authority and to the public through a stock exchange announcement prior to the expected publication time. The financial calendar must also be updated again.
The overview from the Oslo Stock Exchange also contains information about actions to be taken by companies listed on Merkur Market, and companies with listed bonds, if they are prevented from publishing the annual report within the relevant deadline.
The Norwegian Financial Supervisory Authority has stated that it expects the companies to endeavour to publish their financial reports as soon as possible after the cause of the delay has ceased. Further, it should be noted that the obligation to inform the market on an ongoing basis of any insider information remains unaffected of these measures.
On 26 March, the Ministry of Trade, Industry and Fisheries proposed a regulation giving certain exemptions from the procedural rules in the Norwegian Competition Act as a result of the outbreak of Covid-19. The Regulation has not yet been adopted, but will enter into force one day after the Parliament has been notified of the Regulation in writing. Based on the consultation responses, the proposed Regulation may be subject to some changes before it enters into force, which will hopefully resolve the uncertainties highlighted below.
Section 2 of the proposed Regulation sets out that all deadlines related to the merger control process are extended by 15 days. The extensions will apply to both "Phase 1 and 2" in accordance with Section 20 (2) to (4) of the Norwegian Competition Act, as well as the deadlines for imposing a notification obligation in case of minority acquisitions under Section 18 (5) or other concentrations below the thresholds according to Section 18 (3). The extended deadlines will also apply to appeals against decisions and new decisions pursuant to Section 20a (1) and (2).
The proposal entails that all these deadline each are extended by 15 days. This may result in considerably longer case handling time. However, it is somewhat unclear what implications the individual deadline extensions will have on the outer deadlines which limits intervention by the Norwegian Competition Authority against a proposed transaction.
Further, the proposed Regulation grant the Ministry the authority to adopt decisions with further extensions within the 15 day extension. The proposal is not clear as to whether such general deferrals will apply to all ongoing merger cases or if is only intended for cases where it is found necessary.
According to the consultation statement, the proposed extensions of deadlines will apply both to cases that have already been notified to the Norwegian Competition Authority at the time when the Regulation enters into force, and future case.
The duration of the Regulation will follow the duration of the Norwegian Corona Act. The Corona Act entered into force on 27 March 2020 with one month's duration, however with the possibility of extensions. It is unclear how already extended deadlines in merger cases will be affected in the case of the repeal of the Corona Act.
The Regulation further provides the Competition Complaints Board competence to deviate from the rules on the composition of the Board in each case, so that decisions could be made only by the chairman, an individual member or the Complaints Board's Secretariat. The exception is conditional upon that such delegation would not hinder proper case handling.
The new state guarantee scheme for loans to small and medium-sized enterprises (SMEs)entered into force on 27 March 2020 (the "Act") after being approved by the EFTA Surveillance Authority (ESA). The Ministry of Finance has also issued supplementary regulations to the Act. The Ministry has now, after approval by ESA, made certain amendments to the supplementary regulations to also enable larger enterprises to obtain loans under the guarantee scheme.
The purpose of the Act is to provide access to necessary liquidity for enterprises suffering revenue losses as a result of the COVID-19 outbreak. Originally, the scheme was only applicable for SMEs, but the scheme has now been expanded to be applicable for larger enterprises as well.
In short, the guarantee scheme involves that lenders receive a state guarantee of 90 per cent. on new loans granted to enterprises to cover current operating expenses and necessary investments. The guarantee scheme will in total cover up to NOK 50 billion in new loans, which will enable banks to provide financing to clients who are now severely affected by loss of income.
The total amount of NOK 50 billion will be allocated between financial institutions (banks) based on market shares etc.
To ensure quick and efficient deployment of capital, the banks will manage the guarantee scheme on behalf of the Government and assert whether the conditions in law and regulations are satisfied. The Norwegian Export Credit Guarantee Agency (GIEK) will be responsible for receiving legally required reports from the banks and making payments under the guarantee upon request from banks suffering losses.
Enterprises should contact their bank connection for details on the scheme and how to proceed to apply for loans under the scheme.
First of all, the guarantee scheme applies to SMEs with operations in Norway, as SMEs are defined by the EU. This means that the following enterprises will qualify under the scheme:
By certain amendments to the supplementary regulation which entered into force on 2 April 2020, the guarantee scheme is now also available for larger enterprises which have the right or obligation to register in the Norwegian Register of Business Enterprises, without satisfying the requirements listed above.
In addition, the Act requires that the business has acute liquidity problems as a result of the COVID-19 outbreak. This implies that the business does not have access to appropriate financing to cover expenses and investments needed to secure continued operations during the term of the loan, unless having access to the guarantee scheme, and that the effects of the COVID-19 outbreak are the direct or indirect main cause of the current liquidity situation.
It is also a requirement that the company did not have "financial difficulties" before the COVID-19 outbreak (as of 31 December 2019). More detailed rules on what this entails is given in the regulations, however, the short version is that the company must not have lost more than half of its share capital or similar as a result of its accumulated losses, or otherwise fulfil the conditions to file for bankruptcy under the Norwegian bankruptcy legislation.
For larger enterprises, it is an additional requirement that the enterprise did not have a book value debt of more than 7.5 times of the enterprise's book value equity in any of the two proceeding years. Further, the enterprise will not be entitled to loans under the scheme if it had an EBITDA interest cover ratio of less than 1:1 in any of the two proceeding years.
Finally, the scheme only applies to companies being deemed profitable under normal circumstances.
The banks shall assess whether these conditions are met in each case based on information received from the respective clients, and the enterprises should therefore contact their banking connection for further information.
Loans under the guarantee scheme can be granted by all financial institutions with permission to conduct financing activities in Norway. It is not required that the financial institution (the bank) has a former client relationship with the company. Concerning loans from more than one bank, see below.
Both ordinary term loans and cash credits qualifies and is permitted under the guarantee scheme. The loan can be secured with a mortgage or a guarantee, however, such security is not required. Term loans can be granted with no need to pay instalments on the loan for up to twelve months.
The purpose of establishing a loan under the scheme can only be to cover current operating expenses (including expenses for servicing existing debt) or financing of investments. The company must provide details of the purpose of establishing a loan in its application to the bank, and if the purpose is one or more investments, the company must document that these are necessary to ensure continued operation during the term of the loan. The loan cannot be used for early repayment of any other debt the company may have, neither to the bank granting the loan under the scheme nor to any other financial institution, and the bank in question must ensure that the loan is not used for such purposes.
Certain specific documentation requirements will apply when granting the loan, including that the company declares to the bank that the terms of the Act and its supplementary regulations are satisfied. The company must at the same time inform the bank whether it has been granted loans under the guarantee scheme from other banks (and the loan amount granted, if any), and whether it has applied for or previously received state aid pursuant to other aid schemes or individual awards.
The loan must not exceed (i) twice the company's wage costs in 2019, including social security costs (i.e. employers' national insurance contributions, paid pension schemes, etc.), as well as wage costs and social security costs for hired/committed employees or (ii) 25 per cent. of the company's turnover in 2019.
For companies that have not approved the accounts for 2019, the annual accounts for 2018 are used as basis for the assessment. For companies established after 1 January 2019, the loan amount will be determined by the company's estimated wage costs for the first two years of operation.
Nevertheless, the loan amount may be higher if the bank has submitted, and approved, a liquidity plan where the company has quantified its need for liquidity related to operations and investments for the next 18 months. However, the loan amount can never exceed NOK 50 million, and the maximum loan amount must be calculated on a consolidated level.
For larger enterprises, the loan amount may be increased to NOK 150 million if this is done as a result of the relevant enterprise presenting a liquidity plan estimating its liquidity need for the next twelve months.
This depends on the agreement entered into between the company and the bank, however, loans granted under the guarantee scheme have a maximum duration of three years from the time of disbursement. Short-term loans can also be granted, and can be extended within the three-year limit. The state guarantee applies from the granting of the loan and until maturity.
The Act stipulates that loans granted under the scheme should, as far as possible, have the same terms as a similar loan to a similar borrower would have in a normal market situation. The point is that the economic benefit that banks receive under the state guarantee should be transferred to the borrowers to the greatest extent possible.
Therefore, when determining the terms for each loan, the bank must quantify the value of the guarantee scheme for the bank in the form of lower capital costs, lower expected losses, etc. For each loan, the bank must also quantify the value of the guarantee scheme for the individual borrower - in the form of reduced interest rates, softer security requirements or other conditions. In this calculation, the banks shall base their assumptions on the terms of a similar loan granted at the same time to the same borrower without the state guarantee. The banks must report this information to GIEK, who will administer the scheme on behalf of the State.
In addition, the bank shall demand a guarantee commission from the borrower, which the bank shall pay to the Government as consideration for the state guarantee. For loans to SMEs with a duration of up to one year, this guarantee commission constitutes 0.25 per cent. of the part of the loan covered by the guarantee (i.e. 90 per cent. of the loan amount), while for loans with a longer duration, the guarantee commission increases to 0.50 per cent. The same applies to loans granted with a term of up to one year, but with an option to extend for up to three years.
For larger enterprises, the guarantee commission is increased to 0.50 per cent. for loans with a duration of up to one year, while loans with longer duration, or loans granted with an option to extend the loan for up to three years, the guarantee commission is 1.00 per cent.
The banks will also pay an annual guarantee fee to GIEK, equivalent to 0.10 per cent. of the part of the loan amount guaranteed under the scheme.
Yes, a company can obtain several loans under the scheme, however, this must be disclosed to the bank where the borrower applies for a loan. The bank itself also has an obligation to examine whether the company has been granted other loans under the guarantee scheme from other banks or financial institutions. The loan amount limits mentioned above will then apply to these loans in aggregate.
The guarantee covers 90 per cent. of the bank's pro rata loss on each loan granted under the scheme, i.e. loss of principal amount, interest and expenses, limited to the maximum guaranteed amount reported for the respective loan. The guarantee does not cover overdue, unpaid interests beyond 90 days or interests accrued after the opening of debt negotiation or bankruptcy of the borrower. As the loan is being repaid, the Government's liability is reduced proportionally, and the Government's total liability under the guarantee is for each bank limited to the respective bank's share of the total guarantee limit under the scheme.
For the bank, this means that it can require that 90 per cent. of its losses covered by the Government. However, this requires a request from the bank to GIEK with documentation showing that the loan has been defaulted in accordance with the CRR/CRDIV-regulation.
When the bank requests GIEK for cover, it must attach a copy of the loan agreement, documentation showing that the terms of the loan satisfy the terms of the scheme, the bank statements of the loan, an overview of the bank's total engagements with the borrower in question, any securities and any other relevant information. Claims for such payment from the Government must be made by the bank no later than three months after the guarantee has expired (i.e. three years after the loan was granted).
The supplementary regulations stipulate that the Government and the bank carry the losses under the guarantee on equal terms, however, it is the bank that must recover the loan and enforce any security in accordance with the bank's ordinary recovery procedures in order to ascertain a final loss on the loan. All payments or settlements from the enforcement of security are distributed 90/10 between the bank and the Government. Before concluding on the recovery process, the bank must notify GIEK in writing and provide an overview of final losses.
The Financial Supervisory Authority will supervise and ensure that the banks are in compliance with the provisions of law and regulations, including the banks' credit practices.
It follows from the regulation that the state guarantee must comply with the terms for qualifying as credit protection under the CRR, so that financial institutions can treat the guaranteed part of loans under the scheme as an engagement with the Government as a counterparty and thus being subject to zero weighting.
As a main rule the employer may, by virtue of their management prerogative, decide when the employees will conduct their holidays. However, the Holiday Act provides the framework for the employer's management prerogative. The Act stipulates that, inter alia, the employer must well in advance discuss the fixing of holiday dates with employees. However, employees may demand that the main holiday of three weeks to be laid between 1 June and 30 September, cf. section 7 of the Holiday Act. Please not that the employers' access to change holiday time that has already been set, is limited.
The limitations of the Holiday Act also applies when the employer experiences downtime and has a need to reduce workforce as a result of COVID-19. Instructions to take holiday as an alternative to temporary lay-offs can be problematic in relation to the duty of discussion and is also not in line with the purpose of the Holiday Act.
The rules for the determination and holiday period may be waived by collective agreement or by individual agreements with employees. Such agreements must be in writing in order to be invoked by the employer. Hence, the employer and the employees can agree individually that employees take out holiday as an alternative to temporary lay-offs.
Section 15-3 (9) of the Norwegian Working Environment Act provides that, in the event of termination of employment by the employee, the notice period is 14 days' notice regardless of the original contractual or legislative notice period of the employee. If the employer wants to terminate employments of temporary laid-off employees, employees are entitled to resume work throughout the contractual notice period, or provided in their employment contract or the notice period according to mandatory law.
For companies that are bound by the Main Agreement between LO and NHO, the employee will not be obliged to work for the entire period of notice (upon termination by the employer) if the employee has received new employment. In that case, the employer's duty to pay also lapses, cf. § 7-6. Further, Section 7-6 (3) of the Main Agreement provides that where an employee has been temporary laid-off for at least 3 months continuously or "until further notice", the employee may resign without notice period, provided the employee has received new employment.
It is unclear whether the special rules from the NHO-LO Main Agreement can be used as a "background right" in other tariff conditions, including for the Main Agreement between Virke-LO (which is reticent on this point).
With effect from 20 March 2020, the Government has repealed the rule that unemployment benefits are not normally paid during public holidays. The National Labour and Welfare Administration (Nw. NAV) will provide unemployment benefits as normal during Easter holidays.
After the employer's period of two working days has expired, the employees will receive unemployment benefits from the National Labour and Welfare Administration (Nw. NAV). Temporary laid-off employees will receive full salary up to 6G (approx. NOK 600 000), from day three to day 20 of the temporary lay-offs.
Subsequently, unemployment benefits will be paid according to the ordinary rules. The basis for unemployment benefits are calculated by the highest of the following:
With effect from 20 March 2020, unemployment benefits constituted 80% of the basis for unemployment benefits up to 3G (approx. NOK 300 000) and 62,4% of the basis for unemployment benefits between 3G (approx. NOK 300 000) and 6G (approx. NOK 600 000). Income over 6G is not included in the basis for unemployment benefits.
In our view, if a partial temporary lay-off is extended, new consultations with employee representatives must be conducted, and new notice of temporary lay-offs must be sent with 14 (possibly 2) days' of notice.
If you already have used the National Labour and Welfare Administration's (Nw. NAV) method of calculating the employer's period during temporary lay-offs, no new employer's period will accrue. The employee have been paid "full salary" for 2 working days (converted to the employees' working hours).
Please refer to question "How is the employer's period for salary calculated in temporary lay-offs?" to read more about NAV's method of calculating the employer's period during temporary lay-offs.
As a main rule, temporary laid-off employees may perform work for a shorter period of time (up to six weeks), without considering the temporary lay-offs to be ended. If the employees work for more than six weeks, the temporary lay-offs are terminated and a following period of temporary lay-offs will be considered as a new temporary lay-off. The consequences of having a new temporary lay-off, is that the material and procedural requirements for temporary lay-off employees must be completed fulfilled before completing the temporary lay-offs, including, consultations with employee representatives, notice period, notification to NAV, notice of temporary lay-offs to be sent etc.
Please note that employees' work within the six week period, will have an effect of their right to receive unemployment benefits from the National Labour and Welfare Administration (Nw. NAV). Temporary laid-off employees must every 14 days report to NAV on the number of hours work in their report card, and will receive unemployment benefits accordingly.