In a far-reaching revision of the Stock Exchange Act (SESTA), which entered into force on 1 May 2013, the prohibitions of insider trading and market manipulation were moved from the Penal Code (PC) into the SESTA. As the scope of the prohibitions is very broad, the Stock Exchange Ordinance (SESTO) has been amended to include certain safe harbor exemptions, in particular concerning share buy-back programs. By and large, these safe harbor rules mirror some of the rules developed by the Takeover Board (TOB) for share buy-backs and set out in former versions of TOB Circular No. 1. As the TOB consequently amended Circular No. 1 with the goal of eliminating duplications, the regulatory framework of buy-backs is now spread across TOB Circular No. 1, articles 33e–33f SESTA, articles 55b–55d SESTO, as well as the related FINMA Circular 2013/08 on Market Conduct Rules, and enforced by different authorities. Changes in substance include the publication and confirmation requirements or the elimination of the “safe harbour” exemption for public buy-back programs relating to less than 2% of the shares.

By Dieter Gericke / Vanessa Isler (Reference: CapLaw-2013-28)

In a recent order the Takeover Board had to rule on whether to grant an unsolicited restructurer a reorganization exemption from the statutory duty to make a purchase offer for all shares of a listed company. The decision is of particular interest because the request for the reorganization exemption was not supported by the board of directors of the potential target company. In the case at hand, the Takeover Board denied the grant of a reorganization exemption applying, amongst others, the principle of subsidiarity which precludes the grant of an exemption as long as the company is in search for an anchor investor and is implementing measures to enhance its financial situation.

By Severin Roelli (Reference: CapLaw-2013-16)

On 1 May 2013, a new set of rules governing the obligation of the bidder to offer an all cash alternative in voluntary exchange offers has come into force. The most significant change pertains to the introduction of an obligation to offer a cash alternative if the bidder purchases target shares for cash during the twelve months preceding the announcement of the exchange offer.

The Repurchase of Own Shares Outside a Parallel Buyback Offer: The Decision of the Takeover Board in re Absolute Invest

The Takeover Board is enforcing compliance of buyback programmes exempted via reporting procedure more strictly. It has used a large buyback of an investment company outside a repurchase programme to remind issuers that the fundamental principles of takeover law apply to buyback programmes as well – with some surprising twists and consequences.

Opting-out has been the most discussed topic in Swiss takeover law since its entry into force in 1998. At the core of the debate has been the question as to who should regulate the right to opt-out from the mandatory offer obligation—the civil courts, the Takeover Board or both? On 11 October 2012, the Takeover Board (TOB) issued a decision in the matter Advanced Digital Broadcast Holdings SA (decision 0518/01), whereby the TOB stated that (i) it would review itself whether the introduction of the opting-out prejudices the rights of minority shareholders by examining the votes of these minority shareholders at the general meeting introducing such opting-out (departing from the LEM Holding SA decision of 22 September 2011) and that (ii) an opting-out could also only apply to a specific transaction/shareholder, thereby allowing the introduction of the so-called selective opting-out (confirming its ESEC Holding AG recommendation of 6 June 2000, but departing from the decision of the Federal Banking Commission of 23 June 2000 in the same matter). No recourse has been filed against the decision of the TOB; it is therefore final.

On 4 May 2012, the Swiss Takeover Board has proposed a new set of rules governing the obligation of the bidder to offer an all cash alternative in qualified voluntary exchange offers. The most significant change pertains to the extension of the already restrictive rules to the twelve-month period prior to the announcement of the exchange offer. It is uncertain when and to what extent the proposed rules will become effective.

In certain situations, Swiss listed companies are required to inform the market about expected changes of their financial results. In its completely revised Commentary on the Directive on Ad hoc Publicity, SIX Exchange Regulation included a more detailed disclosure regime applicable if market expectations deviate from actually expected results. The article discusses the regime and how it affects Swiss listed companies.

In the context of a major change of the Swiss law on insider trading, market abuse and similar practices, the Federal Council has proposed an amendment of the minimum price rules in public tender offers. If adopted, the new rules will abolish the possibility to pay a control premium to controlling shareholders ahead of a public tender offer. This article summarises the proposed new rules and puts them into context.