IIEffective Insolvency and Creditor Rights Systems
According to the 2005/2006 PricewaterhouseCoopers (PWC) report, Norway's primary insolvency legislation comprises the Act on Debt Arrangements and the Bankruptcy and the Creditors Recovery Act (Bankruptcy Act), passed in 1984 and effective since 1986. Both were amended in 2000. Norway's formal insolvency procedures include voluntary composition, compulsory composition, and actual bankruptcy, involving the liquidation of the debtor's assets. The laws treat both individual and corporate bankruptcy under the same provisions, but in the case of corporate bankruptcy the board of directors stands in the position of the individual debtor. According to the PWC report, the insolvency regime's biggest shortcoming is that the debtor firm is legally required to cover the cost of insolvency proceedings. This has the effect of short-circuiting composition or restructuring efforts, which revert to simple liquidations if the debtor runs out of funds. PWC also found Norway's application of insolvency law to be inflexible, allowing no procedural distinction to be made between the restructuring needs of a large enterprise versus those of a small company. The 2000 amendments to Norway's insolvency legislation were an attempt to facilitate the use of the restructuring option and to extend protection to unsecured creditors. The PWC report suggests that these revisions have achieved only limited success. Overall, however, there is insufficient publicly available information regarding Norway's compliance with the World Bank's Principles and Guidelines for Effective Insolvency and Creditor Rights Systems.
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IDInternational Financial Reporting Standards
Norway is a European Economic Area (EEA) member and therefore adheres to European Commission (EC) regulations. In line with the EC regulation No. 1606/2002, listed companies in Norway are required to use the International Financial Reporting Standards (IFRSs) in their consolidated accounts, as adopted by the European Union and promulgated by Norwegian bylaws, states the 2006 EC report on the implementation of the Regulation No. 1606/2002. Further, Norway permits IFRSs in the annual accounts of listed companies and in the annual and consolidated accounts for all other companies. As stated on the website of the National Accounting Standards Board, companies that are not required or choose not to use IFRSs, follow the Norwegian Accounting Standards (NASs) or a simplified standard for Small and Medium-size Enterprises in the case of small companies. A survey of IFRS adoption around the world by PricewaterhouseCoopers points out that NASs are similar to IFRSs, and it is envisioned that they will continue to converge towards IFRSs.
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ENPrinciples of Corporate Governance
The IMF in its 2005 FSSA finds that Norway has a sound corporate governance regime which is governed by provisions contained in primary legislation, secondary legislation, and a comply-or-explain application of the Code of Practice for Corporate Governance, most recently updated in 2007. The IMF's assessment team found that the enforcement of corporate governance in Norway is sufficient to provide financial integrity and market discipline. A 2009 U.S. Department of Commerce report states that Norway's financial regulatory system is transparent and consistent with international norms and that the Oslo Stock Exchange is well established. Owning nearly thirty-five percent of listed companies in Norway, the Norwegian government has published a white paper and 10 principles on good ownership, to ensure market confidence in the state as a shareholder. However, a more specific assessment of Norway's compliance with the Organization for Economic Cooperation and Development's Principles of Corporate Governance is not publicly available, thereby preventing Norway from achieving a potentially higher level of compliance with this standard.
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IDInternational Standards on Auditing
According to the Norwegian Institute of Public Accountants' self-assessment prepared as part of the International Federation of Accountants Member Body Compliance Program, International Standards on Auditing (ISAs) are adopted as Norwegian auditing standards (RSs) although with adaptations to reflect the local legal environment. Differences with ISAs are described in the Preface to RSs. Norway is a European Economic Area member and as such must adhere to the European Commission (EC) regulations. In the area of auditing, the Directive 2006/43/EC of the European Parliament and Council requires all statutory audits of annual and consolidated accounts to be carried out in accordance with international auditing standards as adopted by the EC. Although the international auditing standards are not defined, it is widely anticipated that ISAs as issued by the International Auditing and Assurance Standards Board will be adopted.
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CPAnti-Money Laundering/Combating Terrorist Financing Standard
The Financial Action Task Force (FATF) in its Third Mutual Evaluation Report for Norway on Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) released in June 2005, finds Norway compliant or largely compliant with thirty one of FATF's 40+9 recommendations and special recommendations. It is either only partially compliant or non-compliant with sixteen of the recommendations and two are not applicable in the Norwegian context. The most significant shortcoming identified by the FATF assessors was that the country's customer due diligence (CDD) requirements did not fully conform to FATF requirements. Norway was assigned a compliance level of partially compliant for recommendation 5 on CDD. In 2009, the FATF published a follow up to Norway's mutual evaluation, in which it concludes that Norway is now largely compliant with R 5 owing to recent measures passed by the Norwegian authorities. Similarly, the report notes that as a result of such recent reforms as "legislative amendments, allocating additional budgetary resources, and strengthening supervisory routines and practices" Norway has become largely compliant with twelve of the sixteen recommendation rated partially or non compliant by the 2005 mutual evaluation. The financial intelligence unit (FIU) of Norway is housed in the National Authority for Investigation and Prosecution of Economic and Environmental Crime (ØKOKRIM). The Financial Supervisory Authority of Norway (FSAN) in its "Strategy 2006-2010" notes that it supervises financial institutions in line with the European Union requirements as well as international best practices. The new Money Laundering Act which entered into force on April 15, 2009 increases the number of institutions that have to observe preventive measures against money laundering and terrorist financing, and it also stipulates more comprehensive and detailed requirements for customer due diligence. According to ØKOKRIM's 2008 report, the Ministry of Finance considered the FATF's recommendations when drawing up the new act.
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CPCore Principles for Systemically Important Payment Systems
There are three systemically important payment systems identified in Norges Bank's (NB) 2007 Annual Report on Payment System: Norges Bank's settlement system (NBO), the Norwegian Interbank Clearing System, and DnB NOR Bank's interbank system. The 2006 NB Annual Report on Payment Systems assessed the three systems against the Committee on Payment and Settlement Systems' Core Principles for Systemically Important Payment Systems (CPSIPS), and concluded that they all met international standards, with very minor shortcomings. The International Monetary Fund (IMF), in 2005, released a report on the NBO's compliance with the CPSIPS and concluded that the system observes all the principles. The report also observed that the oversight of payment systems in Norway is generally sound and that the law bestows on the NB the responsibility for oversight of payment systems in Norway. The IMF also found that the NB has the requisite resources and tools to carry out this role. However, the IMF assessment calls for transparency in oversight and recommends that the NB's Payment System Department be charged with monitoring the NBO's compliance with the CPSIPS. It also recommends that the rules governing payment systems supervision be codified and published on the NB's website. The NB has responded to these recommendations, as is evident from its 2006 Annual Report, according to which the oversight responsibility of the NB is spelled out in Section 1 of the Norges Bank Act. The 2007 NB Report on Payment System notes that most shortcomings pointed out by the 2006 assessment have been addressed. The same report also states that the NB is in the process of implementing a new settlement system to be named the New Interbank Settlement System (Nytt Interbank Oppgjørssystem, or NIBO) to replace the NBO, and address concerns of potential operational risks in the aging NBO.
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