On Mar. 27, 2025, NOR GVT submitted for consultation a NORFSAproposal to open up revenue-sharing agreements between management companies and unitholders.
Norwegian law should allow management companies for securities funds to enter into revenue-sharing agreements in line with what is common in other EEA countries.
And within the framework of EEA law; revenue-sharing agreements must be negotiated individually within the framework of good business practice and the provisions on fees.
The proposed amendment to the Securities Trading Act, section 4-5, means that the right to enter into income-sharing agreements will apply with EEA law's restrictions.
It will allow the possibility of combining unit classes and income-sharing agreements.
The proposal will improve the competitiveness of Norwegian management companies in an international market, and could lead to more cost-effective operations.
Comments on the consultation note can be submitted until May 23, 2025.
On Jan. 22, NOR VFF issued letter to NORFSA seeking more flexibility.
NOR VFF published letter to NORFSA, dated Jan. 20, 2025, regarding greater flexibility in distribution of mutual funds, following meeting held with NORFSA on Dec. 20, 2024.
Letter Summary
A topic raised at the meeting was challenge associated with Norwegian management companies and Norwegian-registered funds having less flexibility than foreign funds.
This is due to specific Norwegian rules and Norwegian interpretation of EU regulation. The consequence is that businesses in Norway are disadvantaged, which now means that the funds are moving out of Norway, as had seen in a number of cases recently.
The ability to enter into revenue-sharing agreements is one piece of this puzzle, and so is the interpretation of the possibility to pay, and possibly pass on, return commission.
NOR VFF now has an impression that there is now a clear desire from in the Ministry of Finance to facilitate some more competitive conditions for the Norwegian fund industry.
In light of this, it is positive that Ministry of Finance, in a letter to NORFSA of Dec. 18, 2024, asked it to assess need for regulatory change allowing management companies to enter in revenue-sharing agreements with professional investors in some conditions.
Norwegian management companies currently have strong need for increased flexibility and room for manoeuvre related to the distribution of Norwegian-registered funds in order to meet competition with foreign management companies in effective manner.
The EC has, within an interpretative opinion in ESMA's Q&A Application of the UCITS Directive, published in Nov. 2021, expressed its view on use of fee rebate agreements in the EU, and what conditions such agreements should meet, to provide safeguards.
The Ministry has asked NORFSA to prepare a draft consultation paper, including drafts of legislative or regulatory amendments for revenue sharing process, by May 1, 2025.
NOR VFF asked NORFSA to be aware access to revenue sharing must be seen in larger context, where overall goal is to ensure that Norwegian management companies and Norwegian-registered funds receive just as good conditions as alternative jurisdictions.
Mar. 2025 Revenue-Sharing Agreement Consultation
On Mar. 27, 2025, NOR GVT submitted for consultation a NORFSAproposal to open up revenue-sharing agreements between management companies and unitholders.
Norwegian law should allow management companies for securities funds to enter into revenue-sharing agreements in line with what is common in other EEA countries.
And within the framework of EEA law; revenue-sharing agreements must be negotiated individually within the framework of good business practice and the provisions on fees.
The proposed amendment to the Securities Trading Act, section 4-5, means that the right to enter into income-sharing agreements will apply with EEA law's restrictions.
It will allow the possibility of combining unit classes and income-sharing agreements.
The proposal will improve the competitiveness of Norwegian management companies in an international market, and could lead to more cost-effective operations.
Comments on the consultation note can be submitted until May 23, 2025.
