Decision on violation charge Asia Offshore Driling Ltd

c/o Seadrill Management AS
Lokkeveien 111, P.O.Box 110
4001 STAVANGER

Enquiries to: Ola Aamodt Enger
Dir. Line +47 22 93 99 41
Our reference: 13/3376
Date: 23.04.2013
 

Reference is made to Finanstilsynet’s (the Financial Supervisory Authority of Norway) preliminary decision and notice of violation penalty of 13 March 2013 and the response of 20 March 2013 from Seadrill Management AS on behalf of Asia Offshore Drilling Ltd (AOD).

Pursuant to the Norwegian Securities Trading Act (STA) section 17-4 (2) Finanstilsynet may impose a violation charge if a listed company violates the statutory deadline for publishing its quarterly report, and this is due to negligence or willful misconduct.

As stated in the notice, the deadline for publication of the quarterly reports is at the latest two months after the end of the quarter; see the Norwegian Securities Trading Regulations (STR) section 5-5 subsection (5). The report for the fourth quarter 2012 should therefore have been made public by 28 February 2013. Publication must be in accordance with the STA section 5-12. According to Oslo Stock Exchange's (OSE) news service "Newsweb", AOD published the report for the fourth quarter 2012 on 1 March 2013 at 09:04 CET. The report was not published within the deadline set by STR section 5-5 section (5). The question is whether AOD's delayed reporting was due to negligence or willful conduct.

AOD uses Newsweb for regulatory company announcements and press-releases. AOD, like other listed companies, access Newsweb thorough a portal called "NewsPoint". AOD has only authorized one person as user of NewsPoint. From what Finanstilsynet understands, this user was on holiday 28 February. Another person at AOD used the login and password, but was unable to do so after three unsuccessful log-in attempts. AOD contacted OSE, but OSE could not reset the password as it had to be done through the email of the NewsPoint user. According to AOD, OSE was asked, but refused to distribute the report for the fourth quarter of 2012. The morning after AOD obtained a new password from OSE and was able to publish the report.

According to OSE, AOD called OSE's IT Support on 28 February at 20:01 CET. The department of Surveillance and Operations at OSE, which provide passwords and access to NewsPoint, was at the time closed. IT Support only provides technical services and it cannot distribute company announcements. Newsweb was operating properly, but AOD's access was closed due to the use of wrong password. AOD was told to contact the department of Surveillance and Operations the morning after.

Listed companies are expected to exercise a high level of due care in fulfilling their obligations to the market. Timely filing of periodic financial information is essential for a well-functioning market. AOD should in this matter have made the necessary precautions to ensure that it would be able to publish the fourth quarter report in accordance with STA, for instance by having several persons with access rights to NewsPoint or by attempting to access the system during office hours at OSE. Finanstilsynet finds that the company acted negligently.

STA section 17-4 (5) specify the criteria to be applied when fixing the amount of the violation charge. Additional guidance is set out in "Guidelines- violation charge related to periodic financial reporting", published by Finanstilsynet on l0 June 2009
 
AOD has stated that the violation should not be sanctioned by a fine, but a formal warning, as there was limited interest in the report because the “free float” of shares was less than 0.1 % of the shares capital. The shareholders have decided to delist the company from Oslo Axess. AOD also states that there was no news as such in the report.

The obligation to publish periodic information  in accordance with the STA applies as long as an issuer is listed and irrespective of the shares' "free float". The report is in itself “news”, and a delay may cause uncertainty in the market. AOD has earlier received a warning from Finanstilsynet for delayed financial reporting of the report for the third quarter 2012.
 
Finanstilsynet has determined that the stipulated penalty referred to in the preliminary decision dated 13 March 2013 shall be reduced. Based on the above-mentioned and with legal basis in STA section 17-4 (2) and STR section 5-5 (5), Finanstilsynet has adopted the following individual decision:

Asia Offshore Drilling Ltd has to pay a violation penalty of NOK 72 100- seventy two thousand one hundred kroner- which falls to the Treasury.

Pursuant to the Norwegian Public Administration Act section 28, Finanstilsynet's decision to impose a violation penalty may be appealed to the Ministry of Finance. The time limit for appeal is three weeks from the date of receipt of this letter.

An invoice will be sent to Asia Offshore Drilling Ltd.

On behalf of Finanstilsynet.

Anne Merethe Bellamy
Deputy Director General
 

Gaute S. Gravir
 Head of section