The extensive understanding of the notion of activity as an “intermediary” in Swiss stamp duty law as interpreted by the Swiss Federal Tax Administration and confirmed by the latest case law of Swiss Supreme Court and Swiss Federal Administrative Court has significant practical consequences: Domestic M&A advisors, Family Offices as well as intragroup management companies could potentially qualify as “securities dealers” in terms of the Stamp Duty Act, as they act as “intermediary” on transactions involving taxable securities. Furthermore, Swiss securities transfer tax risks may arise if the domestic group parent company is involved as an “intermediary” in the sale or purchase of taxable securities.

By Stefan Oesterhelt / Miriam Kämpf (Reference: CapLaw-2023-05)

On 17 December 2021, Parliament concluded a legislative project that had taken more than ten years to complete. The main goal was to enable the issuance of domestic bonds free of withholding tax and thus strengthen the Swiss capital market. Further, transfer stamp duty on domestic bonds will also be abolished. The following article will discuss what the consequences of this reform are.

By Stefan Oesterhelt / Philippe Gobet (Reference: CapLaw-2022-05)

A bond issued by a foreign resident issuer which is guaranteed by its Swiss resident parent company may be reclassified in a domestic issuance subject to 35 withholding tax if the proceeds raised under such bond are used in Switzerland. Under the rules which entered into force on 1 February 2017, it was possible to use the proceeds in Switzerland up to an amount equal to the equity of the foreign issuer. New rules which entered into force on 5 February 2019 added further flexibility with respect to the permissible use of proceeds in Switzerland.

By Stefan Oesterhelt (Reference: CapLaw-2019-44)

In the recent case of ABN AMRO Bank NV v Bathurst Regional Council [2014] FCAFC 65, the Federal Court of Australia confirmed the first instance finding in Bathurst Regional Council v Local Government Financial Services Pty Ltd (No 5) [2012] FCA 1200 that, as a matter of Australian common law, a rating agency owes a duty of care to investors in a rated financial product. The principal basis on which the Federal Court reached this conclusion was that the rating agency knew that potential investors would rely on the agency’s opinion when making investment decisions.

By Thomas Werlen/Yasseen Gailani (Reference: CapLaw-2014-25)

On 3 March 2013, Switzerland’s citizens will have to vote on a proposed amendment to its constitution dealing with corporate governance and executive compensation in publicly listed companies. The proposed amendment or initiative gathered the required 100,000 signatures in support and hence a popular referendum at the national level becomes necessary. Although often referred to as “Minder Initiative” after Thomas Minder, its original promoter, the proposed amendment’s official German name is “Volksinitiative gegen die Abzockerei” meaning roughly “popular initiative against remuneration rip-off” or in its less drastic official French version: “Initiative contre les rémunerations abusives”.

A Comment from the Editors

As reported in CapLaw-2012-13, against the background of new regulatory developments in the European Union, Parliament is currently debating an important revision of the Collective Investment Schemes Act (CISA). The proposed partial revision of the CISA is intended to primarily bring the regulatory provisions regarding asset managers in line with those foreseen in the Alternative Investment Fund Manager Directive (AIFMD) which recently entered into force. The AIFMD provides for extensive regulation of managers managing EU- or third country-based alternative investment funds (such as hedge funds). In order for Swiss asset managers to still be able to access the European market it was necessary to revise the CISA. Among other changes, the draft legislation introduces a general licensing requirement for Swiss based asset managers which, in contrast to the current regulatory system, applies regardless of whether the managed collective investment scheme is Swiss- or foreign-domiciled. See also CapLaw-2012-32 below for an overview of the cornerstones of the proposed draft legislation.

Although some of the suggested regulatory changes are required to achieve market access for funds managed in Switzerland in the EU, the current draft of the revised CISA does not stop there; rather it includes topics which are not directly related to the initial goal of adjusting the CISA to the AIFMD-standard for the sake of maintaining the European market accessible and therefore in our view goes too far:

• First of all, the current draft of the CISA aims to apply the standards as set out by the AIFMD to any Swiss based asset manager regardless of whether the managed fund is an alternative investment fund or just a regular retail fund. Even worse, it doesn’t include all exemptions that the AIFMD would allow.

• Secondly, the current draft also refers to Swiss based or third-country funds which are not subject to distribution in the EU. All in all, the proposed Swiss regulation of asset managers goes further than the AIFMD-standard would provide and thereby would again introduce a “Swiss finish”—a policy we believed to be abandoned some time ago for good reasons.

• And thirdly, the draft CISA aims to completely change the system of distribution of collective investment schemes in or from Switzerland even though this topic is not related to the regulation of asset managers or the AIFMD-standard. The proposed modifications with respect to the distribution of Swiss and foreign collective investment schemes, if adopted, would fundamentally change the current market standards in fund distribution. Especially private placements of foreign collective investment schemes which are not subject to regulation in their country of domicile would severely be limited if not prohibited at all. We fail to see any reason for such a far reaching limitation which would severely and adversely impact the market for such instruments in Switzerland.

The proposed amendments to the CISA have recently been debated by the State’s Council and will be conveyed to the National Council shortly. The changes suggested until now by the State’s Council have aimed to reduce the negative impact of the proposed legislation for the Swiss market. Hopefully, the National Council will continue to work with the same goal in mind.

All in all, the proposed revision of the CISA, in its far-reaching current form, could have a very disadvantageous impact on the Swiss fund industry rather than improving the Swiss regulations in the light of the AIFMD and its requirements for foreign managers to access the European market. The Editors call on the Federal Parliament to reverse that trend and limit the revision of the CISA to the adjustments necessitated by the introduction of AIFMD. Any element that goes beyond that aim should in our view not be pursued at all or at least be considered at a later stage, e.g. in connection with the envisaged new act on services in the financial industry (Finanzdienstleistungsgesetz).

Reference: CapLaw-2012-28