2023 was a fairly busy year for SIX Exchange Regulation (SER), the regulatory body of the SIX Swiss Exchange, in terms of enforcement and sanctions proceedings. 2023 saw a striking increase in enforcement proceedings and investigations compared to 2022. In these proceedings and investigations, SER focused in particular on breaches of the ad hoc publicity rules. While there were already a number of ad hoc publicity related investigations and decisions in 2022, SER concentrated even more of its efforts on ad hoc publicity matters in 2023 with a significant increase in sanctions decisions and newly opened investigations (many of which are still ongoing). As in previous years, SER also continued reviewing and, where necessary, investigating financial reporting of listed companies. Moreover, in 2023 SER also made use of its most far-reaching sanction tool by ordering the delisting of three companies.

By Martina Pavicic / Patrick Schärli (Reference: CapLaw-2023-58)

1) Strong focus on violations of the rules on ad hoc publicity

From January to end of November 2023, SER initiated ten investigations, all of which were due to potential violations of the rules on ad hoc publicity. As of end of November, only two of these investigations were already concluded (see the decision in the matters Alcon Inc. and Perrot Duval Holding SA below). Hence, we expect further sanctions decisions on non-compliance with ad hoc publicity rules to be announced in the coming months.

Between January 2023 and end of November 2023, SER also concluded three investigations on potential violations on ad hoc publicity that were initiated before 2023. These various proceedings resulted in fines of between CHF 25,000 and CHF 125,000 and concerned the following matters:

– Alcon Inc. (fine: CHF 100,000): Due to a human error by an external service provider, the distribution of an ad hoc announcement was delayed (i.e. operation of the e-mail distribution (push system) only by 11.25 a.m. as opposed to no later than 7.30 a.m.). The Sanctions Commission of SIX Group AG (Sanctions Commission) concluded that the delayed push e-mails constituted a violation of the SIX Directive on Ad Hoc Publicity and qualified the degree of fault as negligent, the severity of the breach as “serious but not as severe”.

– Perrot Duval Holding SA (fine: CHF 25,000): The company published its Annual Report 2021/2022 with undue delay. The Sanctions Commission qualified the degree of fault as negligent and the severity of the breach as “light”.

– Airesis SA (fine: CHF 50,000): The Sanctions Commission held that the advance disclosure of price-sensitive facts on 7 April 2022 by a subsidiary of Airesis SA via LinkedIn and the subsequent belated publication of the same price-sensitive facts by Airesis SA five days later on 21 April 2022 violated the SIX Listing Rules and the SIX Directive on Ad hoc Publicity. It qualified the degree of fault as grossly negligent and the severity of the breach as “severe”.

– Relief Therapeutics Holding SA (fine: CHF 125,000): The subject of SER’s investigation was the timing of the publication of the refusal by the newly elected member and Vice Chairman of the Board of Directors to take over this position as well as the publication timing of several other ad hoc announcements, the content of which had been published in advance by a contractual partner. The period investigated extended from March 2020 to July 2022. As regards the matter of the Vice Chairman, SER held that the SIX Listing Rules and the SIX Directive on Ad hoc Publicity have been violated intentionally, by waiting for at least three and a half months before disclosing this fact in a side note of another ad hoc announcement. The Sanctions Commission fully concurred with SER’s sanction proposal. Further, the Sanctions Commission held, that the repeated late disclosure of price-sensitive facts by one or more days after the contracting party had already published them was grossly negligent. It qualified the severity of the breach as “very severe” in the case of late notification of the refusal of the election and as “severe” in the cases of multiple late notifications of price-sensitive facts.

– Swissquote Group Holding SA (fine: CHF 75,000): The SER investigation was prompted by the ad hoc announcement published on 16 June 2021 entitled “Swissquote expects record half-year results thanks to exceptional growth”. The Sanctions Commission concluded that the delayed operation of the push system, approximately three hours after the distribution of the ad hoc announcement and during trading hours, constituted a violation of the SIX Directive on Ad hoc Publicity. The Sanctions Commission qualified the severity of the breach as “serious but not as severe” (in particular because, despite the issues encountered with the push system, the ad hoc announcement was broadly distributed to media and market participants).

By comparison, in 2022 the Sanctions Commission only imposed one fine with regards to violations of the rules on ad hoc publicity (i.e. against Interroll Holding Ltd in the amount of CHF 100,000) and SER submitted a further request for a sanction (i.e. against Evolva Holding SA) to the Sanctions Commission. SER also initiated four investigations into potential violations of the rules on ad hoc publicity in 2022. One of these investigations was already closed in 2022 (i.e. against Spice Private Equity Ltd), as SER came to the conclusion that it would not pursue the possible violation any further. Two of the investigations resulted in the Sanctions Commission imposing a sanction in in 2023 (see the decision regarding Airesis SA and Swissquote Group Holding SA above) and one investigation (i.e. against Poenina Holding Ltd) remains a pending matter at this time.

The published sanctions decisions clearly show the importance of timely and complete disclosure of price sensitive facts through all relevant channels (including submission to SIX through Connexor, publication on company’s website, distribution through push e-mail system). Many listed companies have outsourced the technical aspects of the publication of ad hoc publications (and other media releases) to third-party service providers, but it is evident from the SIX sanction decisions that listed companies remain fully responsible for timely publication of their ad hoc communications even where they use a third-party service provider. 

2) Continued focus on corporate and financial reporting

As in previous years, SER closely followed and reviewed corporate reporting, in particular financial reporting. From January to end of November 2023 the Sanctions Commission issued three decisions relating to financial reports and SER moreover reached a settlement agreement in one further case:

– Clariant Ltd (fine: CHF 150,000): The Sanctions Commission determined that Clariant Ltd negligently violated the applicable financial reporting rules and thereby its obligations pursuant to the SIX Listing Rules and the SIX Directive on Financial Reporting by booking provisions in the 2020 annual financial statements that did not comply with the IFRS requirements for the recognition of such provisions.

– Tornos Holding AG (fine: CHF 300,000): In its decision of originally 26 March 2020, the Sanctions Commission concluded that Tornos Holding AG violated Swiss GAAP FER by improperly retaining and partially reversing a provision for employee benefit obligations and that, as a result, the 2016 and 2017 financial statements did not present a true and fair view of the company’s net assets, financial position and results of operations. Due to these violations of the regulations on financial reporting and thus the SIX Listing Rules as well as the SIX Directive on Financial Reporting the Sanctions Commission imposed a fine of initially CHF 500,000 against Tornos Holding AG. Tornos Holding AG subsequently filed an appeal against this decision with the Federal Administrative Court, in which it was argued that the Federal Administrative Court and not the Court of Arbitration of SIX Group AG was the competent court for the review of the sanction decision. The Federal Administrative Court did not accept the appeal. In addition, Tornos Holding AG had simultaneous initiated proceedings before the Court of Arbitration of SIX Group AG, which were initially suspended until the decision of the Federal Administrative Court. After the arbitration proceedings were resumed, the Court of Arbitration in its final award confirmed the conclusions of the Sanctions Commission, but reduced the fine to CHF 300,000, inter alia due to the sensitivity of Tornos Holding AG to monetary sanctions. Tornos Holding AG subsequently filed an appeal against this arbitration decision with the Federal Supreme Court, which the Federal Supreme Court dismissed.

– IGEA Pharma N.V. (fine: CHF 100,000): SER initiated an investigation against IGEA Pharma N.V. due to its failure to publish the annual report 2021 within the regulatory and repeatedly extended deadline. Following SER’s sanction proposal, the Sanctions Commission held that, IGEA Pharma N.V. had failed to publish and file the Annual Report 2021 with SER within the deadline set out in the regulations and extended several times, the last of which ended on 31 August 2022 and only published and filed its Annual Report 2021 on 20 October 2022, in violation of the SIX Listing Rules, the SIX Directive on Regular Reporting Obligations and the SIX Directive on Financial Reporting).

– Phoenix Mecano AG (settlement agreement: restatement and a donation of CHF 20,000): In its 2022 half-year financial statements Phoenix Mecano AG disclosed that an internal investigation had been opened due to irregularities in connection with customer orders, external sales and trade receivables at a U.S. subsidiary. As a consequence, the operating result of the half-year financial statements was reduced by EUR 5.6 million. Out of this amount, expenses of EUR 4.7 million related to corrections from previous periods that rather should have been recognized as a restatement. Due to the fact that these errors were not corrected on an accrual basis, including a restatement of the previous period, but instead were fully charged against the current results, the 2022 half-year interim financial statements were misstated. As part of the settlement agreement with SER, Phoenix Mecano AG has undertaken to correct and disclose the errors by means of a restatement of its financial statements and to make a donation of CHF 20,000 to the Foundation for Accounting and Reporting Recommendations (Stiftung für Fachempfehlungen zur Rechnungslegung).

In comparison, in 2022, the Sanctions Commission also imposed fines on three listed companies in connection with the violation of financial reporting regulations, with the amount of the fines being CHF 50,000 (against Evolva Holding SA), CHF 100,000 (against Rapid Nutrition PLC) and an undisclosed amount in one case (against Blackstone Resources AG).

3) Three delisting sanctions

Although delisting of a company’s shares is probably the most severe sanction available under the listing rules and the SIX sanctions regime, there were a total of three enforced delistings in 2023 to date (i.e. Talenthouse Ltd, Baar ZG, IGEA Pharma N.V., Hoofddrop NL and Achiko Ltd, Zurich, all of which originally became listed companies by way of so-called direct listings). These three delisting proceedings were initiated due to serious doubts about the solvency of the respective issuer or, in the case of Achiko Ltd, due to the opening of liquidation proceedings. Both Talenthouse Ltd and IGEA Pharma N.V. have appealed against the delisting decision. The Appeals Board of SIX Group Ltd (Appeals Board) granted Talenthouse Ltd’s appeal against the delisting suspensive effect until the end of November, meaning that the delisting of Talenthouse Ltd has been postponed until further notice. In contrast, the Appeals Board dismissed the appeal by IGEA Pharma N.V. and confirmed the original delisting decision of the Regulatory Board and thus the delisting of the shares of IGEA Pharma N.V. and 3 November 2023 as the last trading day. The formal delisting of IGEA Pharma N.V. will not take place, while the deadline for filing an appeal against the Appeals Board’s decision is still running. 

In comparison, there was only one enforced delisting in 2022 (Blackstone Resources AG, Baar), which the Regulatory Board decided to delist at SER’s request due to the lack of an auditor. However, the company itself had also submitted a delisting application a few days after SER’s request, which was then no longer considered.

4) Conclusion

In 2023, SER made active use of its various enforcement options, particularly in comparison to previous years, and in particular did not shy away from using even its most significant sanction, the delisting, in case a company no longer meets the expectations that investors have for a listed company. In particular, the published sanctions decisions and investigations show that there currently is a strong focus on compliance with ad hoc publicity rules; a trend which is likely to continue in 2024 due to a number of outstanding investigations and also in light of the recently revised directive and newest communications from SIX on this topic.

Martina Pavicic (martina.pavicic@lenzstaehelin.com)
Patrick Schärli (patrick.schaerli@lenzstaehelin.com)