A shift of paradigm in legislation is normally triggered by flaws or loopholes in the substance of the existing legislation. Looking at the draft bill for the revision of the Financial Market Infrastructure Act (FMIA), this does not seem to apply to the Swiss government, which proposes to change the current regime of disclosure obligations of Swiss listed companies for the sake of changing it from self-regulation to government regulation.  

The draft changes proposed in the consultation on the amendment to the Financial Market Infrastructure Act (FMIA) seek to transfer issuer obligations from self-regulation by the stock exchange(s) to the FMIA and, associated with such transfer, the assignment of competencies from Swiss stock exchanges to FINMA. Among these issuer duties is the obligation to report management transactions. In addition, an explicit issuer obligation to maintain insider lists is introduced into the FMIA. The proposed changes would, if enacted, constitute a shift of paradigm in issuer regulation in Switzerland: The tradition of self-regulation of stock exchanges would cave in favor of governmental supervision along the EU model.

By Sandro Fehlmann / Thomas Reutter (Reference: CapLaw-2024-81)

The Federal Council recently concluded a public consultation on proposed amendments to the Financial Market Infrastructure Act (FMIA). The proposal consists of a wide range of amendments and modernizations covering topics and rules on financial market infrastructures, takeover law, management transactions, ad hoc publicity, insider and derivatives trading. The proposed amendments also include amendments to the Swiss regime on disclosure of significant shareholdings. Specifically, in order to reduce the administrative burden, the notification duty should in the future only apply if the threshold of 5% is reached, exceeded or fallen below (as opposed to the current 3% initial threshold). In addition, the Federal Council stated a goal that in the future only serious breaches of the disclosure obligations should be prosecuted by means of criminal proceedings, thereby relieving institutional investors and individuals in minor cases. These changes are intended to make the Swiss financial market more competitive and at the same time more even-handed. The proposed amendments thus promise to make things noticeably easier for market participants, but are by no means thought through to the end. Rather, the proposed legislative changes in the revision should be taken as an opportunity to more comprehensively rethink key aspects of the Swiss regime on disclosure of significant shareholdings.

By Patrick Schärli / Patrick Schleiffer / Charlotte Arndgen (Reference: CapLaw-2024-82)

The Swiss system for major shareholder disclosures requires investors to report holdings crossing thresholds (e.g., 3%, 5%, 10%) within four trading days. While these disclosures can significantly impact stock prices, the system is complex and prone to errors, partly due to intricate rules and limited guidance from disclosure offices. Violations are treated as misdemeanors, punishable by fines of up to CHF 10 million, though settlements are common to avoid criminal records. However, the system struggles to improve compliance, with around 5% of reports leading to complaints annually. Key issues include excessive fine ranges, a lack of preventive effects, and limited due process for accused parties. Proposed solutions include simplifying rules, reducing fine limits, and reclassifying violations as mere administrative offenses. Additionally, plans to extend this system to ad hoc and management reporting face criticism for replicating current inefficiencies. 

By Matthias Courvoisier / Yves Mauchle (Reference: CapLaw-2024-83)