www.pwc.no
A guide to
going public
Executing a successful
IPO in Oslo
Capital Markets and
Accounting Advisory
Services
Careful thought, preparation and planning
are key to a successful IPO
Pre-IPO
2
A guide to going public
IPO
Post-IPO
Content
1. The decision to go public
4
2. Preparing for a successful IPO
8
3. The process of going public
12
4. Listing in Oslo
17
5. Listing requirements of Oslo Børs and Oslo Axess
21
6. Life as a public company
25
PricewaterhouseCoopers AS (“PwC”) is the author of this publication and has got the copyrights. Without written permission
of PwC this publication may not be duplicated, copied, distributed or published. This publication has been prepared for
information purposes and general guidance on matters of interest only, and does not constitute, or may not be interpreted
as professional advice. You should not act upon the information contained in this publication without obtaining specific
professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the
information contained in this publication, and, to the extent permitted by law, PwC does not accept or assume any liability,
responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the
information contained in this publication or for any decision based on it.
Executing a successful listing in Oslo3
1.The decision to go public
What does “going public” mean? It refers to the
process of offering securities such as ordinary
shares of a privately owned company for sale
to the general public. The first time these
securities are offered is referred to as an initial
public offering, or an IPO. Through the IPO the
company can raise new equity to finance its
ambitions for growth, as well as allow the
shares to be traded in a regulated market.
As IPO market momentum increases, many
companies are assessing their readiness to
go public
Taking your company public is a transformational event,
probably one of the most important your company will
go through. Done properly an IPO not only supports your
company’s continued growth but it will likely have an impact
on the lives and fortunes of everyone involved (owners,
employees and investors).
Is going public right for your company?
A company usually begins to think about going public when
the funding required to meet the demands of its business
begins to exceed the company’s ability to raise additional
capital through other channels on attractive terms. But simply
needing capital does not always mean that going public is the
right answer. There are a number of questions that a company
should ask itself before deciding to go public.
4
A guide to going public
The following should be considered before making any decision to go public
Attractive track record?
A company that outpaces the industry average in growth will have a better chance of attracting prospective
investors than one with marginal or inconsistent growth. Here are some of the most important factors that
investors look for in companies:
• An attractive product or service, preferably one with a competitive advantage and
sufficiently large market;
• An experienced management team;
• A positive trend of historical financial results;
• Favourable financial prospects;
• A well thought-out, focused business plan;
• Strong financial, operational, and compliance controls.
Though some companies may not meet all of these criteria, investors may nevertheless perceive these
companies as having potential for growth, due to other favourable characteristics (e.g. capable and committed
management, and a product or service that is highly visible, unique, or of interest to the public).
Is the company gearing for
growth, or will it focus on
dividends?
Some companies might not focus on price appreciation after listing but instead on paying out a dividend. How
a stock is classified depends on several factors, such as where in the industry life cycle it is, what the macro
conditions are, and what industry it belongs to.
Products or services visible
and of interest to the investing
public?
The established company can answer this question with historical sales data, while the early-stage
company must use market research projections and demonstrate product superiority. An early-stage
company may also qualify as an IPO candidate due to the uniqueness of its product or service.
Do investors perceive leadership
as capable and committed?
It is vital to ensure that the board of directors and management have the right blend of experience and skills
to establish a solid corporate governance structure, and ensure that the board committees are operating
effectively. To lead a successful IPO, management must be committed to the time and effort involved in
meeting offering requirements, conducting analyst and other investor-facing meetings, and providing financial
reports to the shareholders on a timely basis.
Do the benefits outweigh the
costs of going public?
For existing shareholders, selling equity generates proceeds today in exchange for giving up at least some
degree of control of the company, and a portion of the future returns associated with corporate growth. Raising
equity capital in the public markets can also entail substantial upfront costs, such as fees to the investment
banks and other advisors’ fees and expenses. Ongoing costs arise from obligations including compliance with
market requirements, maintaining a dedicated investor relations function, and more frequent and extensive
financial reporting. Whether the benefits outweigh the costs may be difficult to judge until several years after
an IPO.
Are the market conditions right?
The demand for IPOs can vary dramatically, depending on overall market strength, the market’s current
opinion of IPOs, industry economic conditions, technological changes, and many other factors. Stock market
volatility is one of the most unpredictable aspects of going public and it makes timing of the IPO a decisive
factor in achieving the best possible result. Although it is impossible to accurately forecast the market
sentiment, a company must consider the importance of timing and be well prepared to alter its timetable.
At any point in time, an IPO window may be open for companies within certain favoured industries, and
sometimes the window may be open for companies in all industries. Missing an IPO window by as little as a few
weeks can result in a postponed or withdrawn IPO or a lower market valuation.
Executing a successful listing in Oslo5
Going public – advantages and challenges
Going public certainly has its advantages, but a listing comes with a price.
Below are the advantages and challenges set out.
Key advantages of going public
6
Access to capital
Funds are obtained to support growth, increase working capital, invest in plant and equipment,
expand research and development, and retire debt, among other uses.
Increased market value
Valuations of public companies tend to be higher than those of comparable private
companies due in part to increased liquidity, available information, and a readily ascertainable value.
Mergers and acquisitions
Once established, publicly traded shares can be used as “currency” to acquire other businesses.
Improved liquidity
Trading the shares in a regulated market will improve the liquidity of the shares, making it far easier for the
shareholders to buy or divest their shares in the company.
Provide an exit
A listing can provide the founders of the business the opportunity to divest some of their shareholdings,
in order to lock-in part of the value created so far by the founders.
Talent management
An attractive employee share scheme can help to attract and retain key talent, encouraging commitment and
long term motivation amongst employees.
Enhancing the company’s
image
Listing your business can raise its profile, create brand awareness, achieve international exposure and
increase overall confidence in the company amongst stakeholders.
A guide to going public
Challenges of going public
An IPO is a big undertaking. Miscalculating the time and complexity involved to transform a private business into a
publicly traded company is a common pitfall. Key challenges for companies considering an IPO include:
Planning and good preparation
For most companies there is a significant amount of work needed up front to get in shape for the IPO. While
market timing is outside a company’s full control, preparation is not. If an IPO is one of management’s goals,
discussions and planning sessions would be expected to begin early in the process.
Time-commitment by
management
The IPO process is very time consuming for key executives leaving less time for them to carry out their day jobs.
This can increase the risk of business issues not being addressed or not enough time being dedicated to the
offering.
Increased transparency
Reporting requirements for public companies are more extensive and transparent than those for private
businesses. Some sensitive areas of disclosure that will be available to competitors, customers, and employees
include: (1) extensive financial information, such as the results of the business segments; (2) compensation
of directors/key management; and (3) investments in company shares by the directors/key management and
major shareholders.
Performance pressure
In a private company, the business owner is free to operate independently. Once the company becomes publicly
owned, the management becomes accountable to all of the company shareholders. Shareholders may expect
steady growth in sales, profits, market share, and product innovation. Thus, in a publicly held company,
management may be under constant pressure to balance short-term demands for growth with long-term
strategies.
Restrictions on insider sales
Company’s existing shareholders cannot not sell their stock during a specified time following the IPO.
This is called the “lock-up” period.
Investor relations
Investors’ inquiries, investment community presentations, printing and distribution of annual financial reports
and other periodic reports require significant time commitment by management. Also they often require
additional personnel or a public relations function.
Vulnerability to hostile
takeovers
Having publicly traded shares reduces the company’s ability to control its ownership and exposes it to
unsolicited acquisition threats.
No turning back
The IPO process tends to be one-way. Taking a company private will incur costs and management
resources.
Building a financial track record
and timely financial reporting
Financial track record
Understanding the financial track record issues such as complex financial histories, transition to different
accounting standards and sourcing additional disclosure information can individually or collectively be part of
the IPO readiness process for a company.
Pressure for timely financial reporting
Public companies need to publish financial statements on an annual and quarterly basis in accordance with
relevant accounting and disclosure standards. These financial statements are due relatively soon after each
period end, so there is increased time pressure on reporting compared to that for a privately held company.
Executing a successful listing in Oslo7
2.Preparing for a successful IPO
Many companies start preparing to become a publicly listed company well before the actual
IPO process starts. In fact, advance preparation is a critical success factor in achieving a smooth
execution process – steps can be taken early to correct any potential organisational gaps or transactional issues that are identified, allowing the company to take advantage of the most favourable
IPO window. This has become even more important in recent years, as the markets are more volatile
and the window of opportunity for an IPO can emerge – and vanish – within weeks or days.
Early IPO assessment
Undertaking a readiness assessment (“IPO Readiness”) helps the company review the critical areas needed for a
successful offering. These areas include:
Group structure
Consideration as to which entity to list and which companies are to be in/out of the IPO group.
Impact to the transaction structuring through tax planning, structure of financing arrangements,
distributable reserves and share-based compensation arrangements.
Financial information
Assessment of the complex financial history of acquisitions or disposals and its alignment with the
accounting policies required for a public company, including segmental reporting and identification of other
disclosures needed to comply with IFRS or other reporting requirements.
Corporate governance
Assessment of corporate governance arrangements, including board composition and committee
structures and changes needed to meet public company requirements.
Financial reporting
procedures
Assessment of existing systems including IT systems, financial reporting systems, management
reporting, budgeting and forecasting processes to identify potential weaknesses/opportunities for
improvement in advance of the IPO.
Risk and compliance issues
Assessment of existing systems including money laundering controls, whistle blowing, code of conduct and
internal audit.
Eligibility requirements for
listing on Oslo Børs or Oslo
Axess
Analysis of the significant eligibility requirements and differences in those among the selected exchanges.
Early identification of eligibility issues.
IPO readiness
PwC has the tools and the expertise to review the
status of the company’s IPO Readiness. Based on the
PwC assessment an action plan is set out, specifying
the areas where the company needs to focus.
8
A guide to going public
Preparation is the key to success
Building an effective
management team
As a company prepares for an IPO, it must expand its management capabilities. The investment
community wants to be certain that management running a company is not a “one-man band.”
This may require adding individuals with public company experience in marketing, operations,
development, and finance. The team needs to be cohesive and share a long-term vision for the
company to obtain maximum financial return and valuation.
Developing budgets and
financial performance
assessments
Throughout the IPO process, investment banks (also referred to as IPO or lead/joint managers) will
ask for financial projections and will compare company’s historical performance to its historical budgets.
The company should get into the habit of preparing realistic budgets, updating forecasts, and articulating
why variances have occurred.
After a company goes public, budgets and projections will become an important tool for financial analysts.
Furthermore, this information and a public company’s ability to meet its own earnings estimates can have
a significant impact on its stock performance. Therefore, accurate budgeting and forecasting are critical for
a successful IPO, as the market gives little margin for error in that area and punishes the stock for any
underachievement.
Appointment of independent
non-executive directors
One of the best sources of objective advice can come from an independent director. Oslo Børs requires that the
board has at least two independent non-executive directors. A company should not wait until the last minute
to begin its search for qualified independent board members. A potential board member who is unfamiliar
with a company may be reluctant to join the board immediately prior to an IPO, since a director has personal
liability for information contained in or omitted from the prospectus. A very competent director will as well
appeal to new investors, thereby increasing the likelihood of IPO success.
Creating an audit committee
Audit committees have an essential role in ensuring the integrity and transparency of corporate reporting.
Investors expect published information to be subject to objective, board-level review.
In general, the requirements for audit committees are that they:
• have at least has one independent director;
• have and disclose at least one member who is a financial expert;
• are directly involved in the appointment, compensation, and oversight of the company’s
independent auditors;
• have authority to engage independent counsel and advisors as deemed necessary to carry out their
duties and establish procedures for dealing with concerns received from employees and others regarding
accounting, internal control, or auditing matters1.
1.The specific requirements for Norwegian companies are set out in Section V (Audit Committies) in the Norwegian Public Limited Liability
Companies Act.
Evaluating corporate
governance principles and
practices
The company will need to review whether it complies with the principles for corporate governance,
or provide an explanation of the reason for any deviation and what alternative solution the company
has selected. (Companies applying for listing on Oslo Børs/Axess must comply with the Norwegian
Code of Practice for Corporate Governance or explain any deviation therefrom. Foreign companies
can alternatively comply with the equivalent code for the country in which they are registered or the code
of practice that applies to the primary market for the shares).
The principles for corporate governance address matters such as board composition, structure, and process,
including the nomination of directors, compensation practices, and similar matters. Given the level of
interest by institutional investors and the investing public in corporate governance matters, it is important
for companies to take a close look at their corporate governance principles and practices when planning
the public offering process.
Building a positive public image
A positive image can enhance the initial sales effort and maintain the public’s interest in the stock in the market.
Companies need to enhance or create such an image with those who will buy the company’s stock and those
who influence that buying decision. Creating or enhancing a company’s image may involve hiring a public
relations firm well in advance of the public offering. This firm can help a company get their “story” out prior to
the offering and maintain positive external communications and shareholder relations after it has gone public.
Executing a successful listing in Oslo9
Establishing incentive
compensation plans
Many companies establish a long-term incentive compensation plan to help retain and motivate key
management and employees.
Audited financial statements/
interim reporting
Financial statements audited by a recognised audit firm give the company increased credibility. In connection
with the IPO process, the company may be required, for the first time, to disclose half-yearly and/or quarterly
financial statements.
Drafting management’s
discussion and analysis in
the listing prospectus
A stumbling block that many companies face is describing the affect of underlying factors on the
company’s performance. A prospectus will require the inclusion of Management’s Discussion and
Analysis (MD&A) related to the company’s operations and financial statements. This is a quantitative
and qualitative discussion of a company’s performance. The company will need to describe in-depth such
items as changes in sales volumes and cost structures, liquidity and capital resources, sources and uses of
cash flows, vendor relationships, employee compensation, unusual nonrecurring charges, significant
environmental exposures, and other risks and uncertainties. Producing a high quality, comprehensive
MD&A will expedite a company’s IPO process and be a step toward operating as a public company.
Identifying your “going-public
team” - the players
Investment bank / IPO managers
Companies can go to market without the help of an investment bank (also referred to as IPO or lead
managers), but the process is so complex and specialised that it is rarely done. The value added by having an
investment bank on board is the assurance that an IPO will be properly managed and successfully marketed
and supported, both before and after going public. An investment bank works with a company to develop
the prospectus, coordinate the road show and market the placement of securities to ensure enough new
shareholders upon listing and raise sufficient equity proceeds. It is common for there to be more than one
investment bank (“joint managers”) involved in the transaction.
Investment banks contribute other skills and support, including:
• Experience in marketing and structuring the deal;
• Experience in the pricing stock, so it will be attractive for the company but also
reap a reasonable return for the investors;
• Syndicate capabilities to cover a wide range of potential investors;
• The ability to help the company with future offerings;
• A research department with the scope to enable it to analyse the company, its competitors,
the market, and the economy as a whole.
Company’s counsel
Company’s counsel is primarily responsible for drafting of the prospectus and coordinating the review process
with Oslo Børs. They also help the company with other legal documentation.
Investment banks’ counsel
Also involved in the IPO process are the investment bank/lead manager’s counsel. They review the entire
offering documentation and any related agreements. Their principal objective in reviewing the prospectus is
to ascertain, on behalf of the investment banks, that it is complete and not misleading.
Independent auditors
As strategic and technical advisors, a company’s independent auditors play a key role throughout the listing
process. The selection of an auditing firm is typically based on its experience with public company financial
reporting and reputation, and experience with IPOs and other capital markets transactions.
Internationally it is part of the auditor’s work to provide “comfort letters” to the investment banks to
support the due diligence process. This is, however, not customary in the Norwegian capital markets.
Independent due diligence review
Prior to a listing the conclusions from a due diligence process must be presented to Oslo Børs, in order to
identify whether there are any matters that will have an impact on the shares’ suitability for listing. At a
minimum, the company must carry out financial due diligence and legal due diligence. (The financial due
diligence must be performed by auditors independent of the company’s statutory auditors).
Other professional advisors
A public relations firm experienced in offerings can help guide companies through the marketing
restrictions and make the most of the opportunities that do exist, help prepare materials for analyst
presentations, and coach management in their presentation skills.
10
A guide to going public
“Home state” versus “host state”
A company applying for listing on Oslo Børs needs to
determine whether Norway – or any other country in the
European Union/European Economic Area (EU and EEA
respectively) – is its “home member state”. This is because
the financial periodic reporting requirements for listed
companies differ for all the EU/EEA member states and the
company needs to follow the period reporting requirements
in its “home member state”. All companies listed on the Oslo
Stock Exchange must have a home state either in Norway or
in any of the other member states in the EU/EEA.
As a general rule, Norway is the home state for (i)
Norwegian companies and (ii) companies from outside the
EEA that are/will be listed on the Oslo Stock Exchange
(so-called third country issuers). Companies with Norway as
their home member state will have to follow Norwegian
periodic reporting requirements.
Furthermore, as a general rule Norway will be the host state
for EEA-companies (non-Norwegian) applying for listing on
Oslo Børs. For these companies the reporting requirements in
their European home state will take precedence, and
Norwegian requirements for periodic financial reporting will
generally not apply.
For companies with Norway as the home state, the Financial
Supervisory Authority of Norway will handle and approve
the listing prospectus.
Whether a listed company has Norway as a host or home state
has implications for take-over rules, notifications of large
shareholdings as well. A list of companies and their home
states is set out on the Oslo Børs’ website.
Executing a successful listing in Oslo11
3.The process of going public
Once the initial groundwork is complete, the IPO process can begin. It is vital to create an achievable
IPO plan for completion, and commence execution while still a private company. Doing this will help
a company stay on track and meet key IPO objectives, such as maximizing the IPO price, attracting a
high quality investor base, and developing relationships with the wider market to create liquid
trading, and with market analysts to ensure good quality research coverage is available on the
company.
Typical execution timeline
Businesses often begin their preparations for becoming a
public company well before they launch the IPO process.
Depending on the state of company readiness, an IPO
execution process can take anywhere from 4 to 12 months.
Advance preparation is a key success factor that allows for
a smooth and efficient execution process.
The actual length of this period depends, among other things,
on the readiness of the company to go public, the availability of
the information that must be disclosed in the offering
documents, and the market conditions. The formal listing
process at Oslo Børs takes a minimum of 8 weeks for a standard
listing process. The following chart illustrates a typical IPO
process (the IPO process in Oslo might be slightly different).
Impact
day
General
Prospectus
issued
Appointment of key advisers
Proceeds paid
to company
and vendors
Typically 4 - 12 months
Develop equity story
Transaction and corporate structure
Corporate governance
Financial due diligence
Reporting
Accountants
Legal
Advisors
Final
 Board meeting
 Cash flow budget
 Ancillary
documents issued
12 month CF budget prepared
Tax planning
and employee
incentives
Accountants’ opinion on financial statements
for three years
Legal due diligence
Prospectus drafting and verification
Articles of association updated
Draft listing agreement
Regulation and Confirmation of
Documentation listing eligibility
Drafting prospectus; regulator comment letters
FSA vetting and approval of prospectus
Low profile
institutional
marketing
Marketing
Final legal
documents issued
Announcement
of intention
to float
High profile
institutional
marketing
Fine tune pricing valuation model
Other
Pricing
Expert’s report*
* Some companies such as real estate or natural resource companies have to provide specific regulation or technical expert report for their IPO
12
Press
release
issued
A guide to going public
Once a company reaches a preliminary understanding with
its investment banks, the IPO process starts in full force. This
phase of the offering should start with a sense of urgency,
because the clock is ticking. At the same time as keeping
business running as usual, companies and their advisers
will need to juggle four tasks and work streams in parallel:
I.
Evaluating eligibility for listing
II. Preparation of the prospectus and financial historical
information, including review and approval by the
Financial Supervisory Authority in Norway
III. Financial and legal due diligence (investigation of the
company’s affairs, to be reported to Oslo Børs and the
investment banks)
IV. Marketing activities; i.e. monitoring of market conditions
for pricing purposes and preparation of marketing
materials for the road show, and subsequent bookbuilding
Each of these processes has the potential to derail the company
on the way to listing if not carried out properly. These work
streams are therefore set out in more detail below.
Holding the kick-off meeting
An initial step in the IPO process is arranging an
all-hands meeting. This meeting is attended by all
members of the IPO team­­ ­­­– company management,
independent auditors, lead managers, the company’s
counsel, and the lead manager’s counsel. The
purpose of this initial organisational meeting is to
discuss the nature of the offering, coordinate
responsibilities for sections of the prospectus,
establish a time-table and share information
regarding the working group’s availability.
Throughout the IPO process, additional all-hands
meetings and/or calls take place to discuss any
problems, review drafts of the prospectus, and
determine whether the process is on schedule.
I. Evaluating eligibility for listing
When a formal listing process with Oslo Børs has been initiated,
the review of eligibility of the company for listing will begin. The
listing requirements are set out in more detail in section 5 –
Listing Requirements Oslo Børs and Oslo Axess. The process
starts with an introductory report and an introductory meeting,
where management of the company and its advisors meet Oslo
Børs. A team from Oslo Børs will be dedicated to the company to
follow up the listing process. On specific issues, Oslo Børs will
require – and the company will need to procure – documentation
that the company is in compliance with specific listing criteria.
Matters like board composition, by-laws, audit opinions and cash
flow projections are subject to review by Oslo Børs.
In a standard listing process the company will submit an
application for listing approximately four weeks after the
introductory meeting, and four weeks prior to a scheduled
board meeting of Oslo Børs which will handle the formal listing
application. From the point of time when the listing application
has been submitted, it is public that the company has applied for
listing and the company must comply with all legislation
relevant to a public company.
If the company instead decides to go for a fast track or flexible
track listing, the time from submitting the application until the
board meeting of Oslo Børs is reduced to only 4-5 days. The
reduced public exposure of the fact that the company has applied
for listing is considered favorable for many companies, as this can
make the timing of the IPO easier.
Executing a successful listing in Oslo13
II. Preparation of the prospectus and
financial historical information
A prospectus in line with EU requirements has to be prepared
prior to listing. The Financial Supervisory Authority of Norway
will most often be the competent authority approving the
prospectus. Such a prospectus serves mainly two purposes.
Primarily the prospectus is a document setting out the terms of
the share offering. Secondly, it ensures that all relevant
information is disseminated to the entire financial market at
once, so that when the company starts reporting all investors
are on the same footing.
As a main rule, the prospectus would include three years of
audited financial statements for the company, or less if the
company has been in existence for less than three years. Interim
financial figures may be required. In some instances pro forma
financial information will be needed, to show the effect of
material transactions witch have already taken place or are
committed to. The need for pro forma financial information
most frequently arises in connection with recent business
acquisitions.
Risk factors in relation to the company and the offering must
be spelled out. Likewise the use of proceeds from the offering,
dividend policy, the capital structure of the company and
information about the company’s business in general
(segments, products, services, markets and so forth) must
be disclosed.
Preparing the prospectus is a relatively complicated, timeconsuming, technical process requiring substantial planning
and coordination. Providing relevant information and
complying with applicable rules in the most efficient manner
possible often requires a great deal of effort by the
management team, lawyers, and independent accountants
and should not be underestimated.
14
A guide to going public
During the preparation process the scheduled timetable
for going public can slip, causing a delay in the anticipated
offering date. It is therefore imperative that the entire team be
thoroughly familiar with the requirements, be cognisant of the
deadlines set, regularly assess the status and ensure that
reviews are timely.
Prior to final approval of the prospectus by the The Financial
Supervisory Authority in Norway, every board member of the
company will have to sign a statement taking responsibility for
the prospectus.
Determine the historical financial
information to be included in the
prospectus
Historical financial information is a vital part of the
prospectus. The company has to determine what
financial information is to be included in the listing
prospectus. This might mean converting the last
two years of financial accounts into IFRS (or with
other acceptable GAAP). If the issuer has a complex
financial history over the last three years, it is
important to consider if additional financial statements
need to be included in the prospectus.
Furthermore, the company would need to prepare an
interim report to Oslo Børs prior to listing, which
would be subject to a limited scope audit. The rationale
is that the company at this stage will need to have both
the resources and competence to start reporting
quarterly. This interim report may not be required for
the prospectus but will be required to be included in
the listing application.
What is “complex financial history”?
A ‘complex financial history’ arises whenever the existing statutory financial accounts of an issuer do not
provide a comprehensive picture for investors of the financial history of the operations that it controls, or
will control.
A common example would be where a new holding company is formed specifically for the purpose of the
offering of the securities and that holding company will have either acquired or agreed to acquire a business in
which investors are, in substance, being invited to invest. In such circumstances, investors would reasonably
expect to see included in the prospectus the financial history of the underlying business in order to be able to
make an informed assessment of the assets, liabilities, profits and losses, and prospects of the issuer.
III. Financial and legal due diligence
Throughout the preparation process, procedures are performed
to provide a reasonable ground for belief that, as of the effective
date, the company complies with the listing requirements and
the prospectus contains no significant untrue or misleading
information and that no material information has been omitted.
These procedures are referred to as due diligence.
“Keeping current” procedures are performed by the
independent auditors to assist the investment banks and
underwriters in considering if any material developments have
occurred with respect to the company’s financial position or
operations since the date of the financial statements included in
the prospectus.
Due diligence procedures, both legal and financial, include a
detailed review of the company and its management. These
procedures normally include site visits, review of significant
agreements and contracts, financial statements, tax returns,
board of directors’ and shareholders’ meeting minutes, and
various analyses of the company and the industry in which
it operates. The due diligence advisors also distribute
questionnaires to the directors and officers, requesting them
to review, verify, and comment on the information contained
in the prospectus draft.
The legal and financial due diligence has to be done by independent lawyers and auditors. The company’s own auditors
cannot perform a financial due diligence. The results from the
due diligence review are presented to Oslo Børs prior to the
submission of the listing application. Any issues brought up in the
due diligence process are typically dealt with by either taking
steps to correct the issue, or by disclosing the issue in the listing
prospectus.
Executing a successful listing in Oslo15
IV. Marketing activities, roadshow and investors
For potential investors to learn about the company, the
investment bank will arrange meetings or “road shows” with
financial analysts, brokers, and potential institutional investors.
These meetings are generally attended by the company’s CEO
and key management such as the chief financial officer, and
may take place in many different locations around the world
if the company has an international offering.
The road show is intended to generate excitement and interest
in the IPO, and is critical to the success of the offering. It is vital
that the management team is well prepared for these meetings.
Whilst the prospectus must contain all material information
relevant to the offering, the company should not assume that
the prospectus is able to “stand on its own” and a company
should anticipate potential questions concerning specifics about
its business and be ready to communicate the answers. The
credibility projected by a management team in its presentation
and its ability to respond to potential investors’ questions will
be a major influence in the success of the offering. The “road
shows” represent a critical part of a company’s selling efforts,
since it is here that a management team promotes the offering
to the institutional investors.
16
A guide to going public
4.Listing in Oslo
Selecting the right market to list on is crucial. Below is an overview of the Oslo Stock Exchange.
Oslo Børs - an overview
The Oslo Stock Exchange, called Oslo Børs, has become an
important source for raising equity capital over the last decade,
especially for the oil-service, seafood and shipping sectors. Oslo
Børs has a strong market position in these areas, reflecting the
focused Norwegian industrial clusters in these fields. These
sectors span a wide range of businesses, suppliers, customers,
banks, other associated institutions, analysts and industry
experts, who all contribute to make the listed companies flourish
in these sectors.
Furthermore, many foreign companies find listing in Oslo very
attractive, currently about one third of the over 200 companies
listed on Oslo Børs and Oslo Axess are non-Norwegian. Through
listing in Oslo, these enterprises gain access to both European and
US institutional investors, for equity as well as bond financing.
International investors account for two thirds of the share trading
and one third of the ownership of the listed companies. A strategic
cooperation between Oslo Børs and the London Stock Exchange
ensures that the trading of shares is carried out on the same
trading platform as in London. More than 50 broker firms trade
through Oslo Børs, about half of these are foreign firms.
Oslo Børs has a strong focus on energy, shipping and seafood (source: Oslo Børs’ website).
Executing a successful listing in Oslo17
Oslo Børs has a long history that dates back to 1819.
The role of the investment bank; “placing power” and “underwriting”
Typically a company that has decided to go public engages an investment bank (or several) to help
with the listing. This bank is often referred to as “lead manager”, as it coordinates the listing
activities (and the syndicate of other banks) and plays the primary role in the launch offering and
sale of the issue of securities. The investment banks have access to a pool of potential investors
that would in due course be contacted and offered shares in the up-coming listing. This capacity
to help the companies issue shares (in the IPO or subsequent to listing) is referred to as the
investment banks’ “placing power”.
The investment bank can also act as an “underwriter”, where the bank “underwrites” to take the
responsibility and risk for guaranteeing the IPO proceeds from new shareholders just prior to
listing, against an underwriting fee – a so called “hard underwriting”. In case the shares are not
fully subscribed by investors, the underwriters bear the risk to have to subscribe for the remaining
shares.
Underwriting is less common in the Norwegian capital markets but is common practice abroad.
Delivery of shares; “if” or “when issued”
In a typical Norwegian IPO the shares are admitted to listing after they have been subscribed, allotted,
fully paid and registered with the Register of Business Enterprises and the Central Securities
Depository (VPS).
This means that subscribed investors are exposed to a market risk for a few days before trading can
commence. To reduce this risk especially for foreign investors Oslo Børs does, however, allow new
shares in an IPO to be listed after they have been subscribed and allotted but prior to being paid and
registered, if certain strict conditions are met (referred to as “If issued” or “When issued” IPO listings).
In such situations the investment bank will prepay the equity proceeds to the company on behalf of the
subscribers – a “soft underwriting”.
18
A guide to going public
Two market places
Three routes to listing
Oslo Børs offers two market places for listing of shares: Oslo Børs
and Oslo Axess. Oslo Børs is the main list, while the junior list
Oslo Axess has less stringent listing requirements. Both lists are
fully regulated marketplaces.
Oslo Børs has three routes to listing, irrespective of whether the
listing is aimed at Oslo Børs or Oslo Axess. It should be noted that
Oslo Børs internationally is considered to have a very efficient
and speedy listing process, and can provide a confidential listing
process just up to a few days before listing.
Oslo Børs is generally the choice for larger, commercial
companies which have a track record of 3 years or more and a
minimum of 500 relevant shareholders. This market place has a
number of different share indices, many of which are tradable
and with derivative trading as well.
Oslo Axess is the listing option for smaller and medium sized
companies that may not meet the requirements for the main
market, such as those in the pre-commercial phase. It should be
noted that a company listed on Oslo Axess is subject to almost
identical reporting requirements and trade monitoring as for
companies listed on the main list, as well as enjoying many of the
same advantages of access to equity and bond markets, the
same trading platform, analyst coverage and so forth. Since the
inception of Oslo Axess in 2007, more than 60 companies have
been listed here and many have later moved on to Oslo Børs,
when the more stringent listing criteria have been met.
Standard listing process – minimum eight weeks
The standard listing process starts with an introductory report
filed by the company to Oslo Børs, in line with deadlines set by
the Exchange. In this introductory phase it is confidential that
the company is contemplating a listing. This marks the start of
the Oslo Børs’ review process of the company’s eligibility for
listing. Concurrent with this initial phase the company will
prepare the listing prospectus and to some extent wrap up
areas where the company has not yet fulfilled the listing
criteria. Four weeks after the introductory report, the due
diligence advisors (legal and financial) will present their
results and findings to the Exchange. Shortly after the due diligence meeting, the company will submit
the formal application for listing, and the Exchange
will make it public that the company has applied for listing.
However, should the market conditions not be suitable, the
company can still decide to delay the listing application for a
month and keep the potential listing under wraps.
The Board of Oslo Børs will consider the application of listing at its
monthly board meeting.
In all, the formal listing process, from introductory meeting to
Oslo Børs’ approval for listing, takes eight weeks. Subsequent to
the approval for listing, the company has a period of 45 days
where it has to fulfill any outstanding criteria for listing, including
raising capital, getting sufficient shareholders etc. More specific
listing conditions can also be set by the Exchange.
Oslo Børs’ listing approval
The board of Oslo Børs will approve the company for listing subject to the company fulfilling
relevant listing conditions as set by the Board. Below is an example of such a board
resolution:
At its meeting on 23 May 2012, the Board of Directors of Oslo Børs resolved to admit the
shares in Selvaag Bolig ASA to listing on Oslo Børs. The Board stipulated that prior to the
first day of listing the company must satisfy the requirement for the number of shareholders
as specified in Section 2.4.2 of the Listing Rules and publish an approved prospectus. In
addition the company must raise at least NOK 500 million of new capital through a planned
share issue prior to listing. The Board authorised the Chief Executive Officer of Oslo Børs to
fix the date of the first day of listing, which is to be no later than 6 July 2012.
Executing a successful listing in Oslo19
Flexible track – eight weeks, but listing
application submitted just prior to listing
Fast track – four weeks, but demanding
and costly
The listing process is still eight weeks and consistent with the
ordinary process, but the company can delay the listing
application until just a few days prior to the board meeting of
Oslo Børs. The company can also agree with Oslo Børs on a
specific date for the board meeting.
Fast track is the option for companies that are well prepared for
the IPO process and that aim to get listed in half the time of an
ordinary listing. This process involves the same review and due
diligence as the standard process, but more resources are spent
by Oslo Børs to follow up on the company. All milestones and
deadlines are agreed in advance between the Exchange and the
company. As with the flexible track alternative, the company can
delay the listing application up to just a few days prior to the
board meeting, meaning that the company can reduce the
exposure to the market of the fact that it is applying for listing to
just a few days, just as with the flexible track option.
While the listing fee for this route is higher than the standard
listing process, it is favoured by many companies as the company
can reduce the exposure to the market and hold confidential the
fact that the company is seeking listing to only a few days prior
to an Oslo Børs board meeting.
Foto: Bård Gudim
As fast track involves considerable more resources on the part of
Oslo Børs, this route is quite expensive.
20
A guide to going public
5.Listing requirements
Oslo Børs and Oslo Axess
The following table sets out the main listing criteria for Oslo Børs and Oslo Axess. Many requirements
are similar for the two lists, however, some listing requirements are less stringent for Oslo Axess.
Listing requirements
Listing criteria
Oslo Børs
Oslo Axess
Required market capitalisation
of company
Minimum NOK 300 million
Minimum NOK 8 million
Years of operation
The company must have operated the major part of
its activities for at least three years (Oslo Børs may
grant an exemption)
As a minimum, the company must have an
organisation (including a board of directors
and executive management, alternatively with
a management contract). In addition, the
company must have a specified business plan and
launched activities on a certain scale in respect of
its business activities.1)
Commerciality of
company's activities
The main part of the company’s activities must not
be in a pre-commercial phase (Oslo Børs may grant
an exemption in special circumstances – also see
the “Financial liquidity” requirement below).
The company can be pre-commercial.
Free float
At least 25% of the shares for which listing is sought must be distributed among the general public
(Oslo Børs may waive the 25% threshold in special circumstances)
Shares held by persons who hold, individually or together with their close associates, more than 10% of
the share capital or voting capital of the company are excluded.
Number of relevant
shareholders
Minimum 500 shareholders (for Oslo Børs) or minimum 100 shareholders (for Oslo Axess), each holding
shares with a value of at least NOK 10,000.
Shareholders that are associated with the company, cannot be included.
Management
1)
Company management should not have acted in such a manner as to make them unfit for management
of a listed company. The management must have sufficient expertise for handling and distribution of
information. The company must have procedures in place and be organised to ensure that the company’s
management and the officers responsible for disclosing information to the market become aware of essential
information without undue delay. The company must have sufficient expertise to produce relevant, timely
financial information. The company should also be organised so that Oslo Børs has access at all times to the
officers of the company responsible for contact with Oslo Børs or some other representative of the company’s
management, and should ensure that the persons in question can be reached without undue delay.
This requirement appears in section 2.2.3 in the appendix to Oslo Børs’ Circular 4/2007
Executing a successful listing in Oslo21
Listing requirements
Listing criteria
Oslo Børs
Board of directors
Required
market capitalisation
of company
Members of the board should not have acted in such a manner
as to make them unfit to be on the
MinimumNOK8million
MinimumNOK300million
board of a listed company.
Years of operation
Audit committee
Commerciality of
company's activities
Financial liquidity
Free float
Number of relevant
shareholders
Equity
Oslo Axess
At least two of the shareholder elected members should be independent of the company’s executive
management,
material
contacts
andpart
company’s
larger
The
board of
directors
should
The
company must
havebusiness
operated
the major
of
As ashareholders.
minimum, the
company
must
have an
notactivities
include members
the company’s
If required
by specialacircum-stances,
its
for at leastofthree
years (Osloexecutive
Børs maymanagement.
organisation
(including
board of directors
representatives
of the company’s executive management may
represent
upmanagement,
to one-third of
the shareholder
grant
an exemption)
and
executive
alternatively
with
elected members of the board. Oslo Børs may grant exemptions
(from the above)
in special
circumstances.
a management
contract).
In addition,
the company
musthaveaspecifiedbusinessplanandlaunched
activities on a certain scale in respect of its
1) company is a Norwegian
The company must have an audit committee or equivalent corporate
body. If the
business activities.
public limited company, it must have an audit committee with the duties and composition mentioned in
the Public Limited Liability Companies Act. (Some exceptions exist).
The main part of the company’s activities must not
The company can be pre-commercial.
be in a pre-commercial phase (Oslo Børs may grant
The company must provide a liquidity forecast showing that it has sufficient liquidity to continue its
anexemptioninspecialcircumstances–alsosee
business
activities
in accordance
withbelow).
its planned scale of operation for at least 12 months from the
the
“Financial
liquidity”
requirement
planned listing date.
Loan
agreements
are crucial
forlisting
the liquidity
forecast
must
be in place
prior the
to application
for listing.
At
least
25% of thethat
shares
for which
is sought
must be
distributed
among
general public
(Oslo Børs may waive the 25% threshold in special circumstances)
If the company
applies to
be hold,
exempted
from theorrequirement
totheir
be “commercial”
(see more
the listing
Shares
held by persons
who
individually
together with
close associates,
than requirement
10% of
“Commerciality
activities”
above), itare
must
demonstrate that it has access to sufficient liquidity
the
share capitalof
orcompany’s
voting capital
of the company
excluded.
to continue its business activities in accordance with its planned scale of operation for at least 18 months
from the planned listing date.
Minimum 500 shareholders (for Oslo Børs) or minimum 100 shareholders (for Oslo Axess),
eachholdingshareswithavalueofatleastNOK10,000.
The company’s equity capital situation must be satisfactory. When evaluating the company’s equity capital
situation, Oslothat
Børs
will
take intowith
account
the normal
situation
for companies in the same industry,
Shareholders
are
associated
the company,
cannot
be included.
covenants set out in the company’s loan agreements and any other relevant matters.
Management
Annual financial accounts
Companymanagementshouldnothaveactedinsuchamannerastomakethemunfitformanagementofa
The company must have produced annual
The company must have produced at least one
listedcompany.Themanagementmusthavesuffi
cientexpertiseforhandlinganddistributionofinformation.
accounts
and annual
reports
(IFRS orinequivalent)
annual
or interim
report
in accordance
with
The
company
must have
procedures
place and be organised
to ensure
that the
company’s
management
for the lastthree
years prior to the application for
the accounting legislation that will apply to the
andtheoffi
cersresponsiblefordisclosinginformationtothemarketbecomeawareofessentialinformation
listing. The annual accounts and annual reports cientexpertisetoproducerelevant,timelyfi
company’s annual accounts following
admission
withoutunduedelay.Thecompanymusthavesuffi
nancial
must be audited.
to listing. Such annual or interim report must
information.ThecompanyshouldalsobeorganisedsothatOsloBørshasaccessatalltimestotheoffi
cersbe
subject
audit.
of the company responsible for contact with Oslo Børs or some
othertorepresentative
of the company’s
management, and should ensure that the persons in question can be reached without undue delay.
Interim reports
Board of directors
The company must have produced an interim report for the most recent quarter before the application for
admission to listing is submitted.
Membersoftheboardshouldnothaveactedinsuchamannerastomakethemunfi
ttobeonthe
board of a listed company.
This report must be subject to a limited scope audit. However, this will not be necessary if the most recent
interim
period
is part
of the period
covered
by theshould
audited
accounts.
At
least two
of the
shareholder
elected
members
beannual
independent
of the company’s executive
management, material business contacts and company’s larger shareholders. The board of directors should
not include members of the company’s executive management. If required by special circum-stances,
A company will of
notthe
normally
be admitted
listing if the auditor’s
reportup
ontothe
most recent
representatives
company’s
executivetomanagement
may represent
one-third
of annual accounts
expresses
a qualified
opinion.
If the
report
a qualified opinion
but
includes
the
shareholder
elected
members
ofauditor’s
the board.
Oslo does
Børs not
mayexpress
grant exemptions
(from the
above)
emphasis
of matter, Oslo Børs will consider whether these comments are of such a serious character that the
in
special circumstances.
company cannot be deemed suitable for listing.
Audit report
Audit committee
Financial liquidity
Thecompanymusthaveanauditcommitteeorequivalentcorporatebody.IfthecompanyisaNorwegian
Additional
listing
requirementmentioned
only for Oslo
public limited company, it must have an audit committee with
the duties
and composition
in
Axess:
If the company has produced only an
the Public Limited Liability Companies Act. (Some exceptions
exist).
interim report, the above applies similarly to the
audit on the interim report.
Thecompanymustprovidealiquidityforecastshowingthatithassufficientliquiditytocontinueits
business activities in accordance with its planned scale of operation for at least 12 months from the
planned listing date.
Loan agreements that are crucial for the liquidity forecast must be in place prior to application for listing.
22
A guide to going public
If the company applies to be exempted from the requirement to be “commercial” (see the listing requirement
“Commercialityofcompany’sactivities”above),itmustdemonstratethatithasaccesstosufficientliquidityto
continue its business activities in accordance with its planned scale of operation for at least
Listing requirements
Listing criteria
Oslo Børs
Due diligence
Required
market capitalisation
of company
A written financial and legal due diligence is required from independent
legal advisors and auditors.
MinimumNOK8million
MinimumNOK300million
Listing prospectus
A listing prospectus (for companies with Norway as home state) has to be approved prior to listing by the
Norwegian FSA (Finanstilsynet).
The company must have operated the major part of
As a minimum, the company must have an
its activities for at least three years (Oslo Børs may
organisation (including a board of directors
grant
an
exemption)
Stock exchange listed shares should be freely transferable. Ifand
theexecutive
company management,
in any way hasalternatively
been given awith
a
management
contract).
In
addition,
company
discretionary right to bar a share acquisition or to impose other trading restrictions, such right maythe
only
be
edbusinessplanandlaunched
exercised if there is sufficient cause to bar the acquisition ormusthaveaspecifi
to impose other trading
restrictions, and such
activities on a certain scale in respect of its
imposition does not cause disturbances in the market.
business activities.1)
Years of operation
Free transferability, share
classes, voting rights, minimum
value of shares and VPS
registration
Commerciality of
company's activities
Free float
Oslo Axess
The application for listing must include all shares issued in the same share class. If the company has more
than one class of shares, the criteria for admission to listing must be satisfied for each class of shares for
The main part of the company’s activities must not
The company can be pre-commercial.
which listing is sought. Oslo Børs may grant an exemption from this provision.
be in a pre-commercial phase (Oslo Børs may grant
anexemptioninspecialcircumstances–alsosee
If the company in any way has been given a discretionary right to bar the exercise of voting rights, such
the “Financial liquidity” requirement below).
discretionary right may only be exercised if there is sufficient cause.
The shares must have an expected market value at least NOK 10 for listing on Oslo Børs and NOK 1 for
At least 25% of the shares for which listing is sought must be distributed among the general public
listing on Oslo Axess.
(Oslo Børs may waive the 25% threshold in special circumstances)
The company’s shares must be registered with a Central Securities Depository authorised pursuant to
Shares held by persons who hold, individually or together with their close associates, more than 10% of
Section 3-1 of the Securities Register Act.
the share capital or voting capital of the company are excluded.
Reporting on Corporate
Number of relevant
Governance
shareholders
Companies applying for listing on Oslo Børs and Axess must comply with the Norwegian Code of Practice
Minimum 500 shareholders (for Oslo Børs) or minimum 100 shareholders (for Oslo Axess),
for Corporate Governance or explain any deviation therefrom. Foreign companies can alternatively comply
eachholdingshareswithavalueofatleastNOK10,000.
with the equivalent code for the state in which they are registered or the code of practice that applies to the
primary market for the shares.
Shareholders that are associated with the company, cannot be included.
For oil and natural gas
Management
companies as well as mining
companies
A reserve report is to be prepared prior to application for listing, and to be included in the
Companymanagementshouldnothaveactedinsuchamannerastomakethemunfitformanagementofa
listing prospectus.
listedcompany.Themanagementmusthavesufficientexpertiseforhandlinganddistributionofinformation.
The company must have procedures in place and be organised to ensure that the company’s management
andtheofficersresponsiblefordisclosinginformationtothemarketbecomeawareofessentialinformation
withoutunduedelay.Thecompanymusthavesufficientexpertisetoproducerelevant,timelyfinancial
information.ThecompanyshouldalsobeorganisedsothatOsloBørshasaccessatalltimestotheofficers
of the company responsible for contact with Oslo Børs or some other representative of the company’s
management, and should ensure that the persons in question can be reached without undue delay.
Board of directors
Membersoftheboardshouldnothaveactedinsuchamannerastomakethemunfittobeonthe
board of a listed company.
At least two of the shareholder elected members should be independent of the company’s executive
management, material business contacts and company’s larger shareholders. The board of directors should
not include members of the company’s executive management. If required by special circum-stances,
representatives of the company’s executive management may represent up to one-third of
the shareholder elected members of the board. Oslo Børs may grant exemptions (from the above)
in special circumstances.
Audit committee
Thecompanymusthaveanauditcommitteeorequivalentcorporatebody.IfthecompanyisaNorwegian
public limited company, it must have an audit committee with the duties and composition mentioned in
the Public Limited Liability Companies Act. (Some exceptions exist).
The list above sets out the main listing criteria. Note that a company can apply for exemptions from some of these listing
requirements. For the full set of listing conditions please see Oslo Børs’ website (http://www.oslobors.no/ob_eng/Oslo-Boers/
Financial liquidity
Thecompanymustprovidealiquidityforecastshowingthatithassuffi
cientliquiditytocontinueits
Listing/Shares-equity-certificates-and-rights-to-shares
).
business activities in accordance with its planned scale of operation for at least 12 months from the
planned listing date.
Loan agreements that are crucial for the liquidity forecast must be in place prior to application for listing.
If the company applies to be exempted from the requirement to be “commercial” (see the listing requirement
Executing a successful listing in Oslo23
“Commercialityofcompany’sactivities”above),itmustdemonstratethatithasaccesstosufficientliquidityto
continue its business activities in accordance with its planned scale of operation for at least
Foreign companies
In general, the listing requirements as set out above, apply
equally to primary and secondary listings of foreign
companies. However, there are some additional requirements
for foreign companies.
Registration of shares with a Central Securities
Depository
The company’s share capital listed on Oslo Børs will need to be
registered with a Central Securities Depository authorised by
Oslo Børs, usually the Norwegian Central Securities
Depository (Verdipapirsentralen – “VPS”).
Accounting standards for financial reporting
IFRS, US GAAP2) and Japanese GAAP are accounting standards
accepted for listing on Oslo Børs and Oslo Axess. The option to
report in line with US GAAP and Japanese GAAP might,
however, only be possible for third country issuers.
For non-EEA issuers with Norway as home state with financial
statements with a closing prior to December 31, 2014 the
following GAAPs are also allowed: China, Canada, SouthKorea and India.
For primary listing in Oslo
For foreign companies applying for primary listing the
requirements of required market capitalisation, free float
and number of relevant shareholders (see listing criteria
page 21) have to be fulfilled for the proportion of the share
capital that is (or will be) registered with the VPS.
For secondary listing in Oslo
The requirements for free float and number of relevant
shareholders (see listing criteria page 21) apply to the
company’s entire share capital. However, a minimum
of 100 (for listing on Oslo Axess) or 200 (for listing on Oslo
Børs) shareholders holding shares with a value of at least
NOK 10,000 must have their shares registered with the VPS.
For secondary listings a limited scope audit of the most recent
interim report might not be requested. Depending on the
circumstances, Oslo Børs might not require a due diligence of
companies applying for secondary listing in Oslo.
Social responsibility
Depending on their domestic rules, foreign companies might
be required to report on their social responsibility policy.
The report must include a consideration of human rights,
employee rights and social conditions, external environment
and actions against corruption.
The report must, at a minimum, disclose the guidelines,
principles, procedures and standards that the company employs
in regard to the points mentioned above. In addition, the
company shall disclose how they plan to implement these
principles, as well as give an assessment of the results achieved
as a consequence of the work performed. Companies that don’t
have a social responsibility policy must state that fact.
“On-site” listing meetings
Oslo Børs offers “on-site” meetings with companies
that intend to list, which means that the pre-listing
meeting between the company and Oslo Børs as well
as the compulsory introductory course are both held
at the company’s premises, against an additional fee.
2)
24
Generally Accepted Accounting Principles
A guide to going public
6.Life as a public company
The IPO is not the end result, it is the beginning of a new era for the company.
Questions to ask after the
IPO include:
•
Is the company demonstrating a sustained or increasing growth
rate that is high enough to attract and satisfy investors?
•
Are the company ‘s products or services highly visible and of
interest to consumers and investing public? The company
should project a positive image to its investors, customers, and
community. This is important, since the attitude of the public
may sway the share price.
•
There is growing interest in corporate social responsibility,
including sustainability and climate change issues. Companies
should have a strategy to address such concerns.
•
Is management capable and committed? Management plays a
key role in the way a company performs; therefore, it is essential
that management remains innovative, committed, and capable
of delivering value to the company shareholders.
The first months as a public company are critical. There may be
uncertainty among investors and analysts because the company
is relatively unknown. The newly established public company
may also be less familiar with forecasting results and
performance. The consequences of not meeting expectations
can be severe. An inability to communicate effectively and
manage expectations of the analysts and investors can be
damaging to shareholder value and compromise credibility.
As a result, having the right finance function, with the right
capabilities to deliver quality financial reporting at the right
time, is an important factor in a successful IPO. This is typically
achieved by first focusing on getting the monthly financial close
process in shape to deliver results within an accelerated
timeframe, and then preparing the quarterly, half yearly and
annual financial information with the level of detail and
accuracy that is expected of a public company. A good IPO plan
will identify the critical aspects of the finance function that
need to be in place before starting the IPO preparation process
- for example, the CFO and financial controller functions. Other
functions, such as investor relations, can be built up during the
IPO preparation process, perhaps initially relying on external
resources, and migrating to an internal investor relation
function as the IPO launch date approaches. The key is getting
the appropriate balance of resources in place at the right time,
without overdoing it before the IPO is certain.
Once a company is public, considerable effort must be expended
to maintain the momentum from the listing. A flow of positive
news to the investors is preferable. If investor enthusiasm for a
company is not maintained, trading will decline. If company’s
shares are thinly traded, many of the benefits sought from the
IPO (such as liquidity through a future secondary offering) may
not be realized. Effective distribution and support of the stock,
as well as continuing interest from financial analysts, is
therefore necessary after the IPO. Company management
should continue to meet investors at least quarterly, and follow
up with financial analysts.
Executing a successful listing in Oslo25
A public company performance, as perceived by the market,
is reflected in the value of its shares. Management faces the
pressure of balancing short-term productivity with long-term
strategic goals. Negative developments, such as the release of
lower-than-expected earnings, may adversely affect the share
price. Management may need to ensure that communications
with external parties fully explain the results of the company
performance, so that this transparency in reporting will in
turn create greater market trust. Clearly, earnings are not the
only factor that affect public perception of a company. Even
after a company goes public, it should strive to maintain or
improve performance and other indicators that it was aiming
to achieve prior to going public.
Meeting reporting requirements
Listed companies are required to report financial information
quarterly. Companies should focus on these requirements and
discuss their obligations with their legal counsel and
accountants to ensure they can be met. A public relations firm
can assist companies with issuing annual reports to
shareholders.
Timely disclosure of material information
Public companies are required to disclose all material information both favourable and unfavourable, as promptly as
possible (unless there is a legitimate reason for not doing so).
Information that is generally considered material includes:
significant financial transactions, new products or services,
acquisitions or dispositions of assets, dividend changes, and
top management or control changes. This information is
usually disseminated directly via the reporting system at
Oslo Børs, www.newsweb.no.
What’s next?
The IPO is not the end of the story – it is only the beginning.
Once listed, a company will be under far greater public
scrutiny and will have a range of continuing reporting and
other obligations with which to comply. Any weakness in
systems or failure to comply with regulations could cause not
only decrease in share price, but also management public
embarrassment, reputational damage, and the potential for
corporate fines. The benefits of careful preparation and
planning are realised following the IPO.
26
A guide to going public
Reporting to Oslo Børs – “continuing
obligations”
A company listed on Oslo Børs (or Oslo Axess) will
have to report in line with the so-called “continuing
obligations”, which are the reporting requirements
for listed companies. These requirements are very
much in line with EU requirements.
For companies with Norway as “home state”,
quarterly reports (Q 1, Q 2, Q 3 and Q 4) are due
within 2 months of each quarter end. The full,
audited financial statements are due within
4 months of year end. Quarterly reports issued after
listing do not need to be subject to audit or review.
Foreign companies can apply to the Exchange to
report in English.
What PwC can offer in relation to an IPO
IPO readiness
assessment
Strategic review
IPO Project
management
KPI and management
reporting
Modelling and
business planning
IFRS Conversion
Initial Public Offering
Reports and discussions
with Oslo Børs
BoD / Audit Committee/
Nomination Committee
Capital structure/
Group structure/ tax planning
Insider Trading Policies
Vendor assistance
(VA) / Vendor Due
Dilligence (VDD)
Prospectus support
Valuation
Contact
PwC Capital Markets and Accounting Advisory Services:
Lori Næss
Tlf. 952 60 570
[email protected]
Sjur Holseter
Tlf. 952 60 278
[email protected]
Per Fossan-Waage
Tlf. 952 60 126
[email protected]
Owen Lewis
Tlf. 952 60 209
[email protected]
Executing a successful listing in Oslo27
© 2014 PwC. All rights reserved. In this context, “PwC” refers to PricewaterhouseCoopers AS, Advokatfirmaet PricewaterhouseCoopers AS,
PricewaterhouseCoopers Accounting AS, PricewaterhouseCoopers Skatterådgivere AS and PricewaterhouseCoopers Services AS which are
member firms of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity.