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)

On 26 June 2024, the Swiss Federal Council launched a public consultation (Vernehmlassung) on its proposals to amend the Swiss non-financial reporting obligations. The changes aim to align the Swiss requirements with the EU Corporate Sustainability Reporting Directive (CSRD). 

This article provides an overview of and comments on the proposed key changes which include, inter alia, an extension of the scope of the non-financial reporting and a broader range of topics to be covered in the reports, a mandatory external audit of the report, and a requirement to comply with the EU Sustainability Reporting Standards (ESRS) or an equivalent standard determined by the Federal Council. The consultation period ends on 17 October 2024 and companies will have a two-year transitional period to implement the changes after the new rules enter into force.

By Vera Naegeli / Marie-Cristine Kaptan (Reference: CapLaw-2024-60)

Sustainability in the financial sector has become increasingly important, both nationally and internationally. Governments and companies worldwide are stepping up their efforts and commitments to combat climate change. Switzerland is no exception to this trend and aims to achieve CO₂ neutrality by 2050. This article examines the diverse spectrum of sustainable finance instruments that are commonly utilized in Switzerland (see section 2), describes some challenges (see section 3) and provides an overview of the Swiss legal and the related regulatory framework (see section 4).

By Philipp Otto / Christian Schneiter (Reference: CapLaw-2024-61)

In 2024, most companies listed in Switzerland were obliged for the first time to publish a report on non-financial matters in accordance with articles 964a-c of the Code of Obligations. The following article describes the related issues primarily discussed in connection with this year’s AGM season and examines whether clear trends and market practice have already developed in this regard.

 By Thomas Reutter / Philippe Weber (Reference: CapLaw-2024-36)

Convertible bonds may be an attractive financing instrument for listed companies, particularly for companies with a high growth potential. Creating a share lending facility may help issuers to increase the size and improve the pricing terms of their convertible bonds. This article aims to provide a brief overview of how such facilities may be structured and typical stumbling blocks that must be considered and addressed.

By Sandro Fehlmann (Reference: CapLaw-2024-19)

In December 2021, VT5 Acquisition Company AG (VT5), the first Swiss SPAC, was listed on the SIX Swiss Exchange, raising CHF 200 million despite regulatory changes causing a nine-month delay. The subsequent ‘SPAC-winter’, characterized by regulatory scrutiny and an unfavorable economic climate, posed significant challenges, leading to VT5 disclosing difficulties in proceeding with a de-SPAC transaction. Despite these hurdles, VT5 identified R&S International Holding AG (R&S) as an acquisition target, agreeing on a CHF 274 million purchase price. The transaction process involved navigating legal and financial complexities, including securing investor commitments, adjusting to accounting standards, and coordinating a public offering of VT5 shares alongside share redemptions and a subsequently introduced debt component. This intricate de-SPAC transaction was successfully completed in December 2023, amidst challenging market conditions.

By Matthias Courvoisier / Deirdre Ní Annracháin (Reference: CapLaw-2024-01)

This article provides an overview of the legal requirements and practices concerning forward-looking statements in Swiss debt prospectuses, aiming to serve as a guideline for issuers, legal practitioners, and financial professionals navigating public offerings or listings in Switzerland of debt instruments.

By Benjamin Leisinger (Reference: CapLaw-2024-02)