ENQUIRIES TO: Ola Aamodt Enger
DIR.LINE: + 47 22 93 99 41
OUR REFERENCE: 11/15102
FILING CODE: 723
Reference is made to Finanstilsynet’s (The Financial Supervisory Authority of Norway) advance notification of 9 December 2011, concerning the imposition of a violation penalty, cf. the Norwegian Public Administration Act section 16, the response dated 19 December 2011 from Transeuro Energy Corp. (Transeuro), meeting 8 February 2012 and letter from Transeuro dated 21 February 2012.
Pursuant to the Norwegian Securities Trading Act (STA) section 17-4 (2) Finanstilsynet may impose a penalty if the deadline for publishing the report for the third quarter is violated, and this is due to negligence or willful misconduct.
According to Oslo Børs’ “Newsweb”, Transeuro published its report for the third quarter 2011 on 1 December 2011 at 13:27. As stated in the notice, the deadline for publication of the quarterly financial report is "as soon as possible after the end of the quarter, but at the latest two months after”, cf the Norwegian Securities Regulations (STR) section 5-5 (5). The report for the third quarter 2011 should have been made public by 30 November 2011. Publication must be in accordance with the STA section 5-12. Finanstilsynet finds that the company has violated STR section 5-5 (5).
In order for Finanstilsynet to impose a penalty the violation must have been committed willfully or through negligence. Transeuro does not dispute the fact that the report was published after the deadline referred to in STA, nor dispute the fact that the late publishing of the accounts was committed willfully or negligently. The company has, however, comments to the measure of the penalty levied. Transeuro is of the opinion that the fine is too high for a company of Transeuro Energy size and Q3 market value. The company emphasizes the short delay.
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 and is based on the quotation fee from Oslo Børs. The minimum violation penalty for all issuers of listed shares is normally NOK 130,000 and is based on the minimum quotation fee. This is in line with the previous practice of Oslo Børs. When fixing the penalty of Transeuro, Finanstilsynet use the minimum penalty as a starting point. The lower Q3 market value is thus not taken into consideration.
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. The deadline was clearly exceeded, and Transeuro has received violation penalties for late filings of the half yearly report for 2011, the annual financial reports for 2010, 2009 and its report for the first quarter 2009. It is also noted that the payments concerning the violation charge for the half yearly report for 2011 and the annual financial report 2010 to this date are not received by Finanstilsynet. 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 STR section 5-5 (5), Finanstilsynet has adopted the following individual decision:
Transeuro Energy Corp. must pay a penalty fee of NOK 455,000 –four hundred and fifty five 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.
With response to the letter dated 21 February 2012 where Transeuro suggest a solution where the company pays the violation penalties progressively throughout 2012, Finanstilsynet accepts the following plan:
|Report||Violation charge (NOK)||Reference number||Invoice number||Deadline for payment|
|Annual report 2010||260,000||11/5475||81109534||30. April 2012|
|Q2 2011||390,000||11/9033||81109588||30. July 2012|
|Q3 2011||455,000||11/15102||30. November 2012|
Finanstilsynet has not considered whether the above matters are subject to the securities legislation's provisions regarding the requirement to disclose inside information in accordance with the Securities Trading Act section 5-2 subsection (1) and section 3-2. Finanstilsynet expects the company to consider its requirement to disclose inside information on a continuous basis.
Finanstilsynet has forwarded a copy of this letter to Oslo Børs.
On behalf of Finanstilsynet
Anne Merethe Bellamy
Deputy Director General
Head of section