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22 January 2014
Swiss issuers whose equity securities are listed on a Swiss stock exchange are subject to the rules and regulations of the Swiss Stock Exchange Act, in particular the provisions on public takeover offers. Fixed-price public offers by a listed issuer to purchase its own listed equity securities or public buy-back programmes implemented by issuing put options by the issuer also qualify as public takeover offers within the meaning of the act and must therefore comply with the rules of the act (in particular, Chapter 5) and its implementing provisions set out in the Swiss Financial Market Supervisory Authority (FINMA) Ordinance on Stock Exchanges and Securities Trading and the Takeover Board Ordinance on Public Takeover Offers.
On May 1 2013 the revised Ordinance on Stock Exchanges and Securities Trading entered into force with provisions designed to combat market abuse. The ordinance specifies which behaviour is acceptable and constitutes neither insider trading nor market manipulation. Further, on June 27 2013 the Takeover Board modified Circular 1 of March 7 2013 regarding buy-back programmes. In particular, the methods for publishing transactions on the website of the offeror are now defined and the obligation to report these transactions to the Takeover Board has been abrogated. The calculation of the daily volume limit in Article 55b(1)(c) of the ordinance is outlined and the regime for confirmations of the offeror and the bank or securities dealer appointed to conduct the buy-back programme was modified accordingly.
General conditions and requirements
All buy-back programmes must fulfil the following six conditions in order to be exempted under the circular:
If all of the conditions are fulfilled and the issuer has filed an application for exemption with the Takeover Board in a timely manner, the programme is in principle exempt under the circular, as long as the issuer complies with the further general requirements which apply to the implementation of all buy-back programmes and the further specific requirements applicable to the particular type of buy-back programme. In particular, for all buy-back programmes, the issuer must ensure strict compliance with the following requirements:
Blackout periods apply:
Further programme-specific conditions and requirements
Further conditions and requirements apply depending on whether the programme is based on a fixed-price offer (including put options) or purchase transactions at market price.
Programmes based on a fixed-price offer or put options may not be subject to any conditions, if all acceptance notifications of accepting shareholders cannot be satisfied, they must be satisfied on a pro rata basis. Further, the offer period for such offers must last at least 10 trading days. In addition, if, during the period of the buy-back programme, the offeror acquires securities at a price that exceeds the offer price, it must offer that new price to all offerees. The offeror must provide confirmation that the conditions have been satisfied to the Takeover Board within three trading days of expiry of the buy-back programme.
Buy-back programmes based on purchases at market price may not provide for more than three years.
If the buy-back programme covers different classes of securities, the offeror must place simultaneous bids for each class. The scope of buy-backs on the regular trading line may not exceed 25% per day of the average daily trading volume traded during the 30 days before publication of the buy-back programme. In the revised circular, a definition of the calculation of the average daily volume traded has been included (ie, the average daily volume traded is calculated from the sum of transactions on the regular trading line both within and outside of the order book at the stock exchange, divided by the number of trading days in the 30 calendar days before publication of notice of the buy-back). The relevant price may not exceed the last price paid on the exchange or the price last offered on the exchange by a person or entity other than the offeror. The offeror, as well as the bank or securities dealer appointed to conduct the buyback programme, must confirm to the Takeover Board that the respective requirements have been satisfied, whereby such confirmations must be reported on the third day after the end of the buy-back programme and at least once a year.
Publication of transaction
According to the revised circular, by the fifth trading day following the sale, at the latest, the offeror must publish on its website:
Such information is to remain available on the offeror's website for at least 12 months after the end of the buy-back programme. The publication must be made for each equity security separately.
The reporting procedure applies if conditions and requirements have been satisfied. However, the Takeover Board has decided in the past that even when all the prerequisites have been met, it may decide to issue a decision on exemption and not apply the reporting procedure. This is the case in particular when the application contains special features and the questions thereby raised are of general interest.
When the reporting procedure applies, the offeror must report the buy-back programme to the Takeover Board at least five trading days before the proposed date on which notice of the buy-back programme is published using the applicable form, which must be accompanied by the draft of the buy-back announcement. If it appears that the conditions for an exemption from the reporting procedure have been met, the secretariat of the Takeover Board shall confirm within three trading days that it has duly taken note of the buy-back programme, and a board decision is not required.
Takeover Board decisions
The Takeover Board issues decisions in respect of buy-back programmes which are not eligible for exemption under the reporting procedure. Should this be the case, the offeror must submit an application in addition to the (standard) applicable form, in which the offeror must, in particular, provide reasons for any items that deviate from the rules laid down in the circular. Such an application must be submitted to the board no later than 20 trading days before launch of the buy-back programme.
In such cases the board can vary the requirements and conditions of the circular. If necessary, it may direct that the buy-back programme must comply with any or all of the normal rules governing public takeover offers. The buy-back programme may be launched only 10 trading days after the decision is published.
Amendments to buy-back programmes
Requests for amendments to buy-back programmes, including any amendment to the purpose, must be filed by submitting an application to the Takeover Board together with the reasons for the amendments. Amendments may be reviewed under the reporting procedure, provided that the applicable requirements are met. In all other instances the board shall issue a decision.
Termination of buy-back programmes
The offeror must publish the number of repurchased equity securities in each class on its website one trading day after termination of the buy-back programme and supply this information to the stock exchange and the Takeover Board, as well as to at least two financial information providers. The board publishes this information on its website.
In the past, purchases outside the buy-back programme for other purposes were to be reported and published as follows:
The revised circular introduces, in particular, some changes to the reporting and publication procedure. It is therefore important that all existing buy-back programmes take the revised circular into account, since amendments to the publication procedures have applied since September 1 2013.
For further information on this topic please contact Alexander Vogel or Debora Durrer-Kern at Meyerlustenberger Lachenal by telephone (+41 44 396 91 91), fax (+41 44 396 91 92) or email (firstname.lastname@example.org or email@example.com). The Meyerlustenberger Lachenal website can be accessed at www.mll-legal.com.
(1) See Takeover Board Decision 522/01, January 4 2013, concerning Absolute Invest AG, whereby the board decided that Absolute had, among other things, exceeded the trading volume as indicated in the reporting procedure and did not disclose a material change in the control over the offeror.
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