• EFTASA sent reasoned opinion to Norway regarding the requirement for NOR financial undertakings (including banks, insurance companies) to get a quasi-authorization.
• NOR law requires them to be authorized before establishing subsidiaries or acquiring certain percentages of financial undertakings in other EEA States, breaches EEA law.

Key Aspects

• The reasoned opinion follows a letter of formal notice sent to Norway in Oct. 2022.
• Pointed out that authorization requirements for banks and other financial undertakings to set subsidiaries or acquiring certain percentages of financial undertakings in other EEA States, as laid out in the Financial Institutions Act (FIA) breach EEA rules.
• FIA requires Norwegian financial undertakings to notify NORFSA when establishing subsidiaries in other EEA States.
• In addition, they must notify if they acquire ownership of 10% or more of capital or votes in a financial undertaking in another EEA State.
• The same applies to acquisitions that increase the qualified shareholding to 20% or more of the capital votes in another undertaking.
• NORFSA may set conditions or order that establishment or acquisition cannot happen.

Assessment

• In EFTASA’s view this notification scheme entails effective veto right for NORFSA, amounting to what is effectively a de facto authorization requirement.
• In reasoned opinion ETASA maintains previous conclusion that the amended legislation is in breach of EEA rules and is an unjustified restriction on freedom of establishment.
• In both letter of formal notice and reasoned opinion, EFTASA acknowledges certain amendments have been made to the FIA, which entered into force in Jun. 2022.
• While these substantially altered structure of the relevant section of FIA, assessment remains that legislation still is an authorization requirement, banned under EEA law.
• As, in principle, such authorization under EEA rules is to be sought from the competent authority in the EEA State of establishment of the subsidiary.

Context

• A reasoned opinion is 2nd step in formal infringement case against EEA/EFTA State.
• Norway has 2 months to take necessary measures or risks case sent to EFTA Court.