Amendments to the Swiss disclosure, takeover regime

By Gian-Andrea Caprez and Fiona Gao Yue, VISCHER
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On 1 January 2016, the new Financial Market Infrastructure Act (FMIA) entered into force. Apart from supervisory provisions for the operation of financial market infrastructures and rules concerning derivatives trading, the FMIA also contains provisions on the disclosure of shareholdings in companies that are listed in Switzerland, and also rules on public takeover offers regarding such companies.

The FMIA and the implementing ordinances leave the previous rules on the disclosure of shareholdings and public takeover offers largely unchanged. However, there are certain important amendments to these provisions that are summarized in this article.

Revised disclosure rules

Disclosure obligation of persons exercising voting rights of their own discretion. Under Swiss law, persons reaching or crossing a threshold of 3%, 5%, 10%, 15%, 20%, 25%, 100/3, 50% or 200/3 of the voting rights of companies whose equity securities are listed in Switzerland have to notify the stock exchange and the issuer.

As under the previous law, the beneficial owners of positions in equity securities are subject to this disclosure obligation. Pursuant to the newly introduced definition, a beneficial owner is anyone who controls the voting rights deriving from a shareholding and who bears the economic risk. This means, for instance, that traditional asset managers who choose the investment for their client’s account are not subject to this disclosure obligation.

The new law introduces a separate disclosure obligation on third parties who are entitled to exercise voting rights associated with equity securities at their own discretion, but without being beneficial owners.

This new rule is particularly relevant for asset managers holding shares for their clients if the asset manager has the discretionary power to exercise the voting rights related to these shares.

Gian-Andrea Caprez is Managing Associate, Corporate/M&A team and Fiona Gao Yue is Associate,China Desk at VISCHER
Gian-Andrea Caprez is Managing Associate, Corporate/M&A team and Fiona Gao Yue is Associate,China Desk at VISCHER

The disclosure obligations of the beneficial owner and the person having the discretionary power to exercise the voting rights apply in parallel. As a consequence, certain positions may have to be disclosed twice. Hence, for transparency reasons, the disclosing person needs to indicate whether the positions are held as a beneficial owner, or whether the person has discretionary voting power.

In order to determine whether a person has reached or crossed a threshold, the positions held by this person as beneficial owner, and the positions for which the person has discretionary power to exercise the voting rights, have to be added together.

Requirements eased

Simplifications for indirect acquisitions and indirect sales. The information needed for the notification of an indirect acquisition or an indirect sale has been simplified. The require-ment for disclosure of the entire chain of ownership, from the direct acquirer or seller to the beneficial owner, has been abolished.

This means that only the direct acquirer or seller and the beneficial owner have to be disclosed. This revision in particular leads to a simplification in groups of companies, because transfers of shareholdings within the group only trigger a disclosure of information obligation if the direct holder of the equity securities changes.

Further changes. The new law contains a conclusive catalogue of disclosed information which, if amended, requires a new notification. Further changes of a formal nature have been included:

  • Notifications to the relevant stock exchange can, as before, be conveyed by fax or email. The new law clarifies that this also applies to notifications to the issuer. Furthermore, the requirement to subsequently file the original documents has been waived.
  • The notification period for disclosure obligations resulting from inheritance will be 20 trading days compared to four trading days for the other disclosure cases.

Apart from intentional violations, negligent violations of the disclosure obligation are still prosecutable. However, the maximum imposable fine for negligent violations has now been significantly reduced, from CHF1 million (about US$1 million) to CHF100,000.

Transitional application. Disclosure notifications that have been filed in accordance with the previous law will remain valid. The new law contains certain additional transitional rules. For example, circumstances having occurred before the entering into force of the new law and triggering a disclosure obligation only due to the entering into force of the new law have to be notified by 31 March 2016.

Amended takeover rules

Abolishment of publication of offer documents in print media. Under the revised takeover regime, the offer documents (including, among others, the pre-announcement of the offer and the offer prospectus) no longer have to be published in print media in Switzerland. However, the electronic publication of the offer documents has been extended.

As under the previous regime, the offer documents have to be published on the bidder’s website or on a website dedicated to the takeover offer, they must be submitted to major electronic media that distribute financial information, and they have to be filed with the Takeover Board (TOB).

In addition, the offer documents must now also be submitted to major Swiss media and major press agencies active in Switzerland. The new circular no. 4 of the TOB defines the circle of major media and press agencies to which the offer documents must be submitted.

Notification of exemptions to TOB. As under the previous rules, the acquisition of voting rights through donation, inheritance or partition of an estate, matrimonial property law or enforcement proceedings is exempted from the mandatory offer duty. However, pursuant to the new law, an acquirer relying on the exemption must notify the TOB, which will open administrative proceedings if it has reason to believe that the requirements for the exemption are not met.

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