Decision on violation penalty Transeuro Energy Corp.

Enquiries to: Ola Aamodt Enger
Dir. line: +47 22 93 99 41
Our reference: 11/9033
Filing code: 722
Date: 14.10.2011

Reference is made to Finanstilsynet’s (The Financial Supervisory Authority of Norway) advance notification of 7 September 2011, concerning the imposition of a violation penalty, cf. the Norwegian Public Administration Act section 16, and the response dated 22 September 2011 from Transeuro Energy Corp. (Transeuro).

Pursuant to the Norwegian Securities Trading Act (STA) section 17-4 (2) Finanstilsynet may impose a penalty if the deadline for publishing the half-yearly financial report is violated, and this is due to negligence or willful misconduct.

According to Oslo Børs’ “Newsweb”, Transeuro published its half-yearly report for 2011 on 13 September 2011 at 08:10. As stated in the notice, the deadline for publication of the half yearly reports is "as soon as possible after the end of the relevant period, but at the latest two months thereafter,”, cf STA section 5-6 subsection (1). The half-yearly report for 2011 should have been made public by 31 August 2011. Publication must be in accordance with the STA section 5-12. Finanstilsynet finds that the company has violated STA 5-6 subsection (1). 

In order for Finanstilsynet to impose a penalty the violation must have been committed willfully or through negligence. Transeuro does not 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 to the measure of the amount of the penalty levied. Transeuro is of the opinion that the fine is too high for a company of Transeuro Energy size and Q2 market value.

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 violation 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 violation penalty is set with reference to the market value of the company as of 1 January 2011. The minimum violation 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 has been previous infractions. Finanstilsynet consider that the extent of the violation and its impact is significant. The report was published 13 days after the deadline. Transeuro has also received violation penalties for late filings of the annual financial reports for 2010, 2009 and its report for the first quarter 2009. Based on the mentioned arguments, Finanstilsynet finds it necessary to maintain the violation charge as notified in the preliminary decision.

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 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 to fulfil. Accurate and timely financial information is crucial for market participants and investors' decisions. Finanstilsynet considers delayed reporting as a serious breach of fundamental obligations for listed companies. In the interests of a well-functioning market it is necessary for Finanstilsynet to sanction cases like this.

Based on the reasoning stated above and with legal basis in STA section 17-4 (2) and section 5-6 (1), Finanstilsynet has adopted the following individual decision:

Transeuro Energy Corp. must pay a penalty fee of NOK 390,000 –three hundred and ninety thousand – which falls to the 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 Transeuro Energy Corp.

On behalf of Finanstilsynet
 

Anne Merethe Bellamy
Deputy Director General
        

Siw-Mette Thomassen
        Head of section