Act on Securities Trading (Securities Trading Act)

Part 3. Investment firms

Chapter 10. Investment firm activities etc.

II. Client classification

Section 10-6.Professional clients
(1) The following clients shall be regarded as professionals in relation to all investment services, all investment activities and all financial instruments:
1.entities which are authorised or regulated to engage in activities in the financial markets in the EEA or a third country and are deemed to be, or are engaged in activities corresponding to those of:
a.credit institutions,
b.investment firms,
c.insurance undertakings,
d.other authorised and regulated financial institutions,
e.collective investment undertakings and management companies for such undertakings,
f.pension undertakings and management companies of such undertakings,
g.commodity and commodity derivatives dealers,
h.local undertakings,
i.other institutional investors,
2.large undertakings meeting at least two of the following size requirements at the company level:
a.balance sheet total of no less than the equivalent of EUR 20,000,000 in Norwegian kroner,
b.annual net turnover of no less than the equivalent of EUR 40,000,000 in Norwegian kroner,
c.own funds of no less than the equivalent of EUR 2,000,000 in Norwegian kroner,
3.national and regional authorities, including authorities responsible for public debt management at the national or regional level, central banks and international and supranational institutions,
4.other institutional investors whose main business is to invest in financial instruments, including entities engaged in securitisation of assets or other financial transactions.
(2) Investment firms shall inform any client as mentioned in subsection (1) in writing that the client is deemed to be a professional client, that the client has the right to request a different categorisation, as well as the implications of the categorisation for the degree of investor protection.
(3) If a professional client requests treatment as a retail client, and the investment firm consents thereto, the investment firm and the client shall enter into a written agreement to that effect. The agreement shall specify whether it applies generally or in relation to one or more specified transactions, investment services or types of products.
(4) Investment firms shall have in place written internal policies and procedures for the categorisation of clients. Professional clients are responsible for keeping the investment firm informed on an ongoing basis of any change that may affect the classification. Should the investment firm become aware that the client no longer meets the conditions for categorisation as a professional client, the investment firm shall take appropriate action.
(5) The ministry may make regulations to supplement this section.
Section 10-7.Retail clients
(1) Any client who is neither regarded as a professional under section 10-6, nor reclassified as a professional under section 10-8, is considered a retail client.
(2) A retail client may request treatment as a professional client if at least two of the following three criteria are met:
1.the client has carried out transactions, in significant size, on the relevant market at an average frequency of ten times per quarter over the previous four quarters,
2.the size of the client's financial portfolio (cash deposits and financial instruments) exceeds the equivalent of EUR 500,000 in Norwegian kroner,
3.the client works or has worked in the financial sector for at least one year in a position that requires knowledge of the relevant transactions or investment services.
(3) The ministry may make regulations to supplement this section.
Section 10-8.Procedural requirements for waiving protection as a retail client
(1) In the event of a request as mentioned in section 10-7 subsection (2), the client shall state in writing to the investment firm that it wishes to be treated as a professional client. The client shall also state whether this applies generally, or only in relation to a specific investment service, transaction or product. The investment firm shall give the client a clear written warning of the investor protection and the rights the client is waiving. The client shall, in a separate document from the client agreement, state in writing that the consequences of waiving such investor protection are understood.
(2) The investment firm shall take all reasonable steps to ensure that a client requesting to be treated as a professional client meets the requirements of section 10-7 subsection (2) before deciding to accept such request.
(3) An investment firm may only accept a request as mentioned in section 10-7 subsection (2) if the firm is able to conclude, with reasonable confidence, that the client has the experience, knowledge and expertise necessary to make investment decisions in relation to relevant investment services, financial instruments or transactions and understands the risk associated therewith.
(4) The ministry may make regulations to supplement this section.