Decision on violation charge Seadrill Limited

Enquiries to: Ola Aamodt Enger/Angela Nygaard
Dir. line: +47 22 93 99 41/22 93 97 15
Our reference: 10/5788
Filing code: 725
Date: 29.06.2010

Reference is made to Finanstilsynet’s (The Financial Supervisory Authority of Norway) preliminary decision and notice of violation charge of 31 May 2010, cf the Norwegian Public Administration Act section 16, and the response dated 14 June 2010 from Wiersholm, Mellbye & Bech (Wiersholm), representing Seadrill Limited (Seadrill).

As stated in the notice, the deadline for publication of the annual financial report is at the latest four months after the end of each financial year, cf the Norwegian Securities Trading Act (STA) section 5-5 first paragraph. Thus, the annual report for 2009 should have been made public within 30 April 2010. Public disclosure must be undertaken in accordance with STA section      5-12.

Seadrill made its annual report public 6 May 2010.

According to the above-mentioned letter from Wiersholm, Seadrill does not dispute the fact that the annual report was published after the deadline referred to in the STA. The extreme focus on the completion and follow-up of Seadrill’s listing on NYSE in April and the implementation of additional accounting and reporting requirements, is given as the main reason for the delay in the finalising and publication of the annual report. However, the following is referred in the mentioned letter:
“Seadrill reacts strongly to the indicated amount of the violation charge which appears grossly out of proportion to the seriousness of the actual violation. Further, Seadrill questions the legality of the method used by Finanstilsynet in determining the amount of the violation charge.

……All relevant information on Seadrill’s profit and loss accounts for the 2009 and its balance sheet as of December 31, 2009 was made available to the OSE market by way of Seadrill’s press release of 25 February, 2010 disclosing their results for the fourth quarter of 2009 and the whole year”. 

According to Seadrill, there was no new information of significant in the annual report, compared to the information in the press release of 25 February.

Finanstilsynet finds that Seadrill has violated STA 5-5 first paragraph. The violation must have been committed wilfully or through negligence in order for Finanstilsynet to impose a violation charge. Finanstilsynet emphasizes that high level of due care is required by listed companies concerning their obligations to the market. Finanstilsynet is of the opinion that Seadrill acted negligent by not preparing the annual report for 2009 within the deadline.

The size of the violation charge is linked to the market value of the company as of 1 January 2010. The minimum violation charge for all issuers of listed shares is normally NOK 100.000. This is principally in line with the previous practice of Oslo Børs.

To Wiersholm’s  questioning of the legality of the method used by Finanstilsynet in determining the amount of the violation charge, Finanstilsynet emphasizes that when deciding the amount of the violation charge, Finanstilsynet particularly takes into consideration the scale and the effects of the violation, the degree of guilt found as well as repeated violations. In order for the violation charge to have the intended effect on the market practice, the violation charge is somewhat differentiated depending on the market value of the company.

After making an individual assessment based on the information in the letter from Wiersholm and on the above-mentioned elements, Finanstilsynet decides to reduce the stipulated violation charge referred to in the preliminary decision 31 May 2010. With legal basis in STA section 17-4 second paragraph and section 5-5 first paragraph, Finanstilsynet has adopted the following individual decision:

Seadrill Limited must pay a violation charge of NOK 300.000 – three hundred thousand Norwegian kroner- to the Norwegian Treasury.

Finanstilsynet emphasizes that any repeated violation of the deadline for financial reporting in the future, may result in a significantly higher violation charge.

Pursuant to the Norwegian Public Administration Act section 28, individual decisions may be appealed to the Ministry of Finance. The time limit for lodging an appeal shall be three weeks from the date on which notification of Finanstilsynet’s decision has reached the party concerned, cf. the Norwegian Public Administration Act section 29. The appeal must be sent directly to Finanstilsynet.

If Seadrill does not appeal the decision to the Ministry of Finance, the payment instruction regarding the violation charge is the following:

Finanstilsynet
P.O. Box 1187 Sentrum
N-0107 Oslo

Account number: 7694 05 09641

From abroad:
IBAN NO4976940509641
BIC: DNBANOKK

When carrying out the payment, please quote our reference number 10/5788.

 
On behalf of Finanstilsynet

 

Anne Merethe Bellamy
Deputy Director General

Siw-Mette Thomassen
Head of Section