Norway looks forward to new funds law
A new funds law is being welcomed as a way to make the domestic industry more efficient, and to open up export potential.
Changes to Norwegian funds law have been a long time coming. The current regulations stem from a law introduced in 1981
Finanstilsynet, the Financial Supervisory Authority of Norway, put together a working group to develop recommendations for the country’s Ministry of Finance.
These, in turn, are meant to serve as the basis for introducing new law. A vote at Stortinget, Norway’s Parliament, may take place as early as September, depending on how quickly the Ministry puts forward the legislation.
The working group was established in October 2009. Members were drawn from the Authority, the Ministry, and industry association Verdipapirfondenes Forening, the Norwegian Fund and Asset Management Association.
The group’s mandate was to drive the relevant changes necessary to reflect the latest EU Ucits Directive coming into effect on 1 July 2011; to make the Norwegian law simpler in its structure and links to other regulations, and consolidate the various prescriptive rules affecting the industry; and to ensure that investors receive relevant and timely information.
Other considerations included Norway’s membership of the European Economic Area (EEA) – which gives Norway access to EU markets, the AIFMD (Alternative Investment Fund Manager Directive) and PRIPs (Packaged Retail Investment Products).
The prime objective was to develop proposals for a new funds law with reference to the implementation of the latest Ucits Directive.
Foreign Ucits funds can market themselves in Norway by following regulatory notification procedures, but only Norwegian asset managers can establish new funds in Norway through statutory instruments.
The proposed changes would make it possible for foreign asset managers to establish local funds.
Finanstilsynet is looking to speed up the registration process, while the working group is proposing that funds marketing be allowed in English if directed at professional investors.
One of the main benefits for domestic manufacturers of the proposals is to make it easier to market their funds in other EEA markets.
Another change relates to making the industry more efficient by allowing mergers of funds, something existing Norwegian fund law prohibits.
Allowing mergers builds on the Ucits objectives. In the case of Norway, however, the working group has gone further to propose that not only should Norwegian Ucits funds be allowed to merge, but also domestic non- Ucits funds. Any mergers would require the approval of Finanstilsynet.
The new law should also act as a catalyst to encourage certain product types such as fund of funds, and as the Ucits master-feeder structure. It will also become easier to offer more share classes.