Borregaard is subject to both statutory obligations and internal rules for the proper management of inside information. Borregaard:
– has procedures for secure processing of inside information
– must keep a current, up-to-date list of people who have access to inside information
– must make persons who gain access to inside information aware of the obligations and responsibilities this entails, including the criminal liability that applies in the event of abuse of the information
– must be able to prove to the Financial Supervisory Authority that persons who have access to inside information are aware of their obligations
The purpose of these instructions is to meet Borregaard’s obligations. Another purpose is to raise individual awareness of the responsibility of having inside information, and understanding of the consequences of exploiting inside information or violating other rules that apply to such information.
In addition, Borregaard has decided that there shall be special procedures for information that is not inside information, but which is sensitive and important to Borregaard and that may evolve into inside information. This is discussed in the section 7 on confidentiality lists.
The insider instructions apply both to employees and persons who hold positions of trust in Borregaard and subsidiaries (board members, observers, members of the nominating committee). It also applies to subsidiaries where there are minority owners and external board members.
The Chairman of Borregaard ASA is responsible that board members, observers and members of the nomination committee are familiar with the instructions. Those responsible for Borregaard’s business areas, the factory director and the managers of staff and support functions are responsible that employees of Borregaard AS are provided with the necessary information and training on the instructions. For employees and external persons in positions of trust in Borregaard’s subsidiaries, those responsible for Borregaard’s business areas have this responsibility.
All employees and persons in a position of trust must continuously consider whether information they receive or gain access to by virtue of their position or position of trust in Borregaard, is or may become inside information. If in doubt, one must immediately contact Borregaard’s legal director or the director for Investor Relations for clarification.
If someone has received information that he or she considers to be inside information, Borregaard’s CEO and Borregaard’s Investor Relations must be notified immediately, such that Borregaard may determine whether the information should be publicly announced in the market or whether there are grounds to defer publication.
Inside information is accurate information on the financial instruments Borregaard has issued (typically listed shares and bonds), about Borregaard or about other matters, when the information may objectively be assumed to materially impact the price of the financial instruments. Such information or circumstances are inside information if not publicly accessible or generally known.
The most obvious issues that may constitute inside information are issues that Borregaard is directly involved in, for example information related to major contracts, production, market, plans for acquisitions or sales of operations, public permits and licences and information on quarterly results. Information on all types of matters may however be inside information. It is not a requirement that the information derives from, nor directly relates to, Borregaard or Borregaard’s shares, debt instruments or other financial instruments. Examples may be information on government actions or framework conditions that impact an entire sector, matters related to competitors, customers or suppliers, or knowledge on how investors plan to act (for example plans for a large purchase or sale of shares).
Information that is publicly available or generally known in the market is not inside information. There are no specific requirements to how the information has become publicly accessible or generally known, or to who must have ensured publication or disclosure. A notice to the stock exchange is clearly publication, but the same applies to a press release from the authorities or a public offer to buy shares in Borregaard.
The information is accurate when it indicates that a circumstance or event has occurred, or that it is reasonable to assume that it will occur. The information does not have to be certain, accurate or complete. It is sufficient that it indicates a circumstance or event. Nor is there a requirement to which type of event or circumstance the information must relate to. In a staggered process, information on each step in the process may be inside information. For example, information that Borregaard is negotiating an important contract can be accurate information, although it is not certain or reasonable to assume that the contract will be concluded. The conditions of the act, for example the question of whether the information is of a nature that could impact the price, must be considered in relation to the information that the company is in negotiations, not in relation to the likelihood of a contract being concluded.
It must also be possible to draw a conclusion with regard to the possible price impact the relevant circumstance or event will have. It is however not necessary that one can predict which direction the price will take.
Also the source of the information will be relevant for considering whether the information is accurate. Information from a credible source close to decision-making processes (for example a primary insider or a government agency) is a strong indication that an event has occurred or may reasonably be expected to occur. Information from others (for example an eavesdropped conversation), must be considered specifically. The presumption is against a reasonable investor choosing to emphasise rumours or information that is not especially specific.
The information must also be capable of materially impacting the price. It must then be considered whether it is information a reasonable investor would be likely to use in their decision-making process (buy, sell, secure, sit tight, etc.). It is not a requirement that the information is decisive for the investment decision. It is sufficient that the information plays a part in the decision. It is not a requirement that the price of the financial instrument is actually impacted when the information becomes known in the market. What matters is whether a provided and accurate piece of information is sensitive or important enough that it makes an ordinary, sensible investor act on it and likely use it as a part of the decision-making process.
Inside information arises at the time it is likely that the sensible investor would have used the information as a part of the basis for an investment decision. Each situation must be considered specifically. If one is dealing with issues that are evolving, the assessment must be made on an ongoing basis.
Initially, Borregaard must publish inside information immediately by issuing a notice to the Oslo Stock Exchange. It is Investor Relations who issues the notice. The notice must expressly state that it contains inside information and disclose who is issuing the notice². The notice must be published on Borregaard’s website where it must remain accessible for at least five years.
Publication may in certain cases be deferred in order to avoid harming Borregaard’s interests. This may for example be that publication would make it impossible to carry out a project. It is the CEO, or the Board of Directors, that has the final say on deferred publication. The decision must be in writing and justified. The written justification must be prepared at the same time the decision is made. The following must be stated:
Investor Relations shall then notify the Oslo Stock Exchange of the matter, the background for the deferment and that Borregaard has commenced the keeping of insider lists. Notice must be given to market monitoring at the Oslo Stock Exchange³.
If confidentiality no longer is ensured, for example if there are specific rumours in the market, the information must be immediately published in the form of a notice to the stock exchange.
When publishing inside information pursuant to the rules regarding deferred publication, upon publication the Oslo Stock Exchange must be informed via NewsPoint that Borregaard has used its opportunity for deferred publication. This notice must be provided before the notice in question. The written justification for deferment must be forwarded if requested by the Oslo Stock Exchange.
As soon as a decision on deferred publication has been made, Investor Relations must keep a list of those who have access to inside information (insider list). The insider list is established in InsiderLog or another similar electronic list-keeping service that Borregaard has an agreement with. The selected supplier must provide a service that meets the Market Abuse Directive’s requirements. The insider list must be updated immediately if new persons gain access to inside information, if the reason for a person being on the insider list changes, or if a person no longer has inside information.
Borregaard can order external parties to keep insider lists in connection with contract assignments. This may apply to, for example, lawyers, auditors and other consultants assisting on projects. For consultants to which the Market Abuse Directive applies, the consultant’s contact is listed on Borregaard’s insider list. The consultant is responsible for keeping own insider lists if the consultant discloses inside information to others. If the consultant is not bound by the Market Abuse Directive (for example located outside the EEA), Borregaard must specifically consider whether it is appropriate to delegate the list keeping. Such delegation must always be approved by the CEO.
The person responsible for keeping the list must ensure that the persons on the list are familiar with the obligations and responsibilities associated with having access to inside information, and with the criminal liability associated with the utilisation or unwarranted use of the information. The person listed must confirm in writing that they are aware of the obligations and responsibilities associated with being listed. The person must also provide the information required to meet the Market Abuse Directive’s requirements to keeping lists. This is done by complying with the instructions included in the e-mail notification the person receives when he or she is listed in the electronic system.
The person responsible for keeping the list must ensure that the insider list is properly archived after the latest update. It must be kept for five years after the last update. When choosing a provider of a system for keeping lists, there must be a requirement that the system provider can comply with the statutory requirements to storing insider lists, including the requirements that follow from the GDPR.
In all projects that are of a scope or nature such that the project owner must assume that the information that emerges may develop to become inside information, a confidentiality list must be kept. The purpose of such a list is to raise awareness related to confidentiality. The confidentiality list also allows Borregaard to know who has received information such that the requirements to deferred publication may be met if the information develops into inside information.
The confidentiality list must be kept from the start of the project, even if there is reason to assume that important or sensitive information will only arise later. Such a list must in all cases be created no later than the time it is reasonable to expect that the information may develop to become inside information. If the information subsequently becomes inside information, keeping of a confidentiality list must be concluded. Insider lists must instead be kept.
The project owner must contact Investor Relations as soon as possible to create the confidentiality list. The person who created the list is also responsible for other follow-up, including ongoing assessment of whether the list-keeping should be stopped. Investor Relations must also be notified of changes immediately.
The confidentiality lists must be kept in the same system as the insider lists. When choosing a provider of a system for list-keeping pursuant to section 6, there must be a requirement that confidentiality lists can be kept in the system.
In addition to that which is stipulated above, every employee and person of trust that receives inside information about Borregaard has a statutory and penally sanctioned duty of confidentiality and must act in compliance with the prohibitions and duties that are described in more detail below: The ban on using inside information (section 8.1), Duty of confidentiality (section 8.2), Duty to inform when disclosing inside information (section 8.3) and Duty of proper storage and information security (section 8.4). In addition to any penalties, violations of these rules may also have consequences for the employment relationship or position of trust in Borregaard.
The subscription, purchase, sale or exchange of financial instruments issued by Borregaard must not occur if one has inside information regarding Borregaard. The ban applies to any natural person’s and legal entity’s direct or indirect trading, for both own and others’ accounts, regardless of the form of settlement. A person with access to inside information on Borregaard’s financial instruments is not permitted to advise others or in any way influence anyone to make, or avoid making, transactions in financial instruments related to Borregaard. This applies regardless of whether inside information is disclosed or that it is claimed the person providing advice actually has inside information.
The same applies to entry into, purchase, sale or exchange of an option or futures contract, or equivalent rights (including derivative financial instruments) related to the financial instruments, or the incitement to such dispositions.
If someone receives inside information after an transaction order has been placed, it is generally not permitted to withdraw the order.
If someone places an order to carry out or actually completes a transaction with a financial instrument while he or she has access to inside information, the authorities will assume that inside information has been exploited. This can be refuted if, after an objective assessment, it can be proven that the transaction is not in contradiction with the purpose of the rules, for example because it can be proven that the inside information did not give the insider an unwarranted advantage compared to someone who was not in possession of the same information. One should expect that it will be difficult to prove this.
The ban only affects trade that can be characterised as exploitation (abuse) of inside information. Whether a transaction is abuse or not must be considered on a case by case basis. As a general rule, the ban does not prevent that one concludes a previous contract regarding the security the day the contract expires.
Inside information is confidential information and must not be disclosed to or otherwise made available to anyone without an official need to receive the information.
The information may only be disclosed or made available to others as a part of the normal exercise of an employment relationship, occupation or other obligation. A strict “need to know” principle shall be applied, which means that as few as possible must have access to the information, and as late as practically possible. The information may always be disclosed to public authorities that have a statutory right to receive the information, for example the police, the tax authorities, the Financial Supervisory Authority or the Competition Authority.
The person disclosing the inside information or making the information available to others has an independent responsibility that the one receiving the information at the same time is made aware of the obligations and responsibility involved in having access to inside information, see section 6. This applies regardless of whether the recipient is one of Borregaard’s employees, someone in a position of trust or an external consultant.
If someone is disclosing inside information or making it available to others pursuant to section 8.2 above, Investor Relations must be notified immediately in order to update the insider list. Ordinarily, such notification must be given before the information is disclosed.
Strict adherence to this duty of notification is important. It is a condition in order for Borregaard to comply with its statutory obligation to keep lists, and to ensure that the persons who gain access to inside information are made aware of the responsibility associated with receiving the information.
The person responsible for keeping the list must immediately add the person receiving the information to the insider list. Through the list-keeping system, those who are listed are given information on the obligations and responsibilities associated with having access to inside information. They are also informed of the criminal liability if the information is abused (also see section 6 above).
The person in possession of inside information must exercise due care in processing the information such that unauthorised persons do not gain access to the information or abuse it. Pursuant to “Borregaard’s instructions for information security,” inside information is classified as confidential information.
Improper management of inside information may be a breach of the statutory duty of confidentiality.
For the detailed rules on proper storage, electronic security and distribution of confidential information, see “Borregaard’s instructions for information security.”
The abuse of inside information is a criminal offence. The same applies to breaches of duty of confidentiality rules. Violations are punishable by fines or imprisonment. The abuse of inside information usually results in a sentence of immediate imprisonment. This applies to both intent and negligence. Aiding and abetting and attempts are also punishable. In addition, one risks incurring personal liability for damages to both Borregaard and others. Employees also risk termination or dismissal.
For non-consolidated financial results at the business area level, in the same manner as with other sensitive information pursuant to section 4 above, a specific assessment must be made of whether results may be deemed to be inside information in each individual case.
With regard to consolidated financial results in connection with quarterly reporting for the Borregaard group, this will always be considered inside information. The information must be treated in accordance with obligations stipulated in these instructions, but with the adjustments and clarifications that follow from section 9.1 to 9.3.
The rule of thumb is that the conditions for deferred publication are met for consolidated financial results that appear in connection with quarterly reporting for the Borregaard group. The information may therefore not be published outside of the established plan. The Oslo Stock Exchange shall not be notified confidentially of such deferment unless the financial results also reveal other issues that may constitute other inside information, for example a need for a private placement⁴.
Borregaard’s CFO must continuously assess whether the results for the period significantly deviate (significantly worse or better) from the expectations Borregaard has created in the market, i.e. expectations that can be traced back to information Borregaard has disclosed. The assessment must be made in consultation with the director for Investor Relations, and possibly also with the legal director. In cooperation with the CEO, the CFO must then decide whether a profit warning must be issued.
The CFO is responsible that insider lists are kept for financial reporting as soon as the quarterly accounts are compiled in such a way that a clear picture emerges of the financial situation for the group and/or consolidated quarterly information becomes otherwise available.
In addition to these instructions, primary insiders are subject to the Rules for primary insiders in Borregaard, which is published as a separate document.
¹ Emission quotas and associated instruments are financial instruments for “market players on the emission quota market.” Borregaard is not a market player. This follows from the Market Abuse Directive Article 3, section 1 (20), together with Article 17, Section 2, second paragraph and Commission Regulation 2016/522 Article 5 relating to minimum volume.
² Commission Implementing Regulation (EU) 2016/1055 Article 2, see https://www.lw.com/admin/Upload/Documents/Market%20Abuse/eu-2016-1055-english.PDF.
³ Oslo Rule Book II section 18.104.22.168 (2) (3) (entry into force 1 March 2021)
⁴ Oslo Rule Book II section 22.214.171.124 (2) in new paragraph (3)