Public takeover offers are regarded as competing offers if, at the time of their publication, another offer in relation to the target has already been launched. To guarantee freedom of choice of the recipients of the offers, and to avoid the sequence of offers influencing the shareholders' decision, the law sets forth specific rules for competing offers. In the recent LifeWatch case, the Takeover Board took its position on issues relating to multiple offerors.
Switzerland recently decided to facilitate the financing activities of groups operating in or out of Switzerland by easing some restrictions under the Withholding Tax Ordinance. The amendment of the ordinance is meant to strengthen the establishment of headquarter activities with further central corporate functions, as well as treasury activities, particularly those performed outside Switzerland.
The Swiss Financial Market Supervisory Authority (FINMA) recently published a supervisory notification on token sales and initial coin offerings (ICOs). It also announced that it was examining whether several ICOs or their corresponding business models violate supervisory provisions. A FINMA press release cited the marked increase in ICOs carried out in Switzerland in recent months as a reason for its action.
The revised Banking Ordinance of April 30 2014 regarding new financial technology (fintech) regulations recently entered into force. The purpose of the proposed revisions is to enhance the competitiveness of Switzerland as a major fintech hub and to create an appropriate regulatory framework for fintech companies providing services outside traditional banking business by taking into account the specific risk-profile of their business models and service offering.
The Federal Council recently adopted an amendment to the Banking Ordinance scheduled to enter into force on August 1 2017. Following the announcement of the revised rules, the Swiss Financial Market Supervisory Authority published a guidance note regarding the new rules on public deposits. The revision will reduce some of the barriers to market entry for financial technology firms.
The Federal Council recently announced its intention to strengthen the existing deposit protection scheme through a series of different measures. The council also intends to strengthen the regulations on the protection of securities and other assets deposited by clients with a bank or securities dealer by introducing a new obligation to keep those assets segregated from other clients' assets on a sub-custodian level, to the extent that the chain of custody is in Switzerland.
In a recent case regarding the takeover of Actelion by Johnson & Johnson, the Takeover Board expanded its case law on the permissibility of conditions in public takeover offers. In this case, the Takeover Board had to assess whether the implementation of a demerger of a business division from the target constituted a permissible condition within a public offer.
The completion of larger M&A transactions is usually conditional on the absence of material adverse changes (MAC). This can be achieved by including either a MAC clause or a condition that all warranties must be true at completion in combination with a warranty confirming the absence of a MAC. A MAC clause defines what is deemed to be a MAC of the target company and entitles the acquirer to step back from the proposed transaction in case a MAC event has occurred or is alleged to have occurred.
The Federal Council recently initiated a consultation procedure on new financial technology (fintech) regulations. The revised provisions ensure that barriers to market entry for fintech firms are reduced and that Switzerland's competitiveness as a financial centre is maintained. The consultation will end on May 8 2017. The proposed amendments to the Banking Act and the Banking Ordinance aim to ease the regulatory framework for innovative fintech companies, while taking into account potential risks.
The Appellate Court of the Canton of Geneva recently rendered three decisions ordering a bank to execute the clients' transfer and payment instructions. The latest decision leaves the door open for banks to argue that the legislation of the state where taxes ought to be paid on assets held for a foreign client's account have changed and that, as a result, they now incur the risk of criminal charges which would prevail over their obligation to execute their clients' payment or transfer instructions.
In a recent Takeover Board case, the offeror filed a request with the board for approval that it should – before the distribution of the special dividend – have the right to acquire shares outside the offer without triggering the best-price rule. In its decision, the board stressed the importance of the offer price as a reference for the best-price rule and held that any acquisition of shares for a consideration above the offer price would violate the rule.
The Supreme Court recently upheld a bank's liability for damages caused to its client by an external asset manager. While this ruling has confirmed settled case law in considering that a bank is in principle not liable for the wrongdoing of an external asset manager, it also clarifies under which conditions a bank may have a duty of disclosure regarding its clients. It appears that banks must ensure a complete transmission to the client of all information that they possess.
When the Financial Market Infrastructure Act and the Financial Market Infrastructure Ordinance came into effect, specific transitional periods were granted to fulfil new duties, as well extended record-keeping duties for banks as participants on trading venues regarding securities transactions. As organised facilities that are not subject to authorisation may be operated only by banks, securities dealers, stock exchanges or multilateral trading venues, these changes will affect banks significantly.
The Takeover Board has reviewed the methods of valuing different share categories of a target and the monetary value of additional covenants and obligations entered into by a shareholder. The decision is relevant for the interpretation of similar provisions under the Merger Act, requiring equal treatment of shareholders in the context of a merger, demerger or conversion.
Swiss M&A transactions involving public companies are mainly governed by the Financial Market Infrastructure Act, which replaced the former Federal Act on Stock Exchanges and Securities Trading. This regulates both friendly and hostile public takeovers for Swiss resident companies with at least one class of equity security listed on a Swiss exchange, and for foreign resident companies whose shares are mainly listed on a Swiss exchange.
According to the Banking Act, several financial technology business models carry out some sort of banking business where a full banking licence would be too expensive and would not reflect the business model properly. As a result, the Financial Market Supervisory Authority supports a new licensing category for financial innovators carrying out some banking activities, but with limited acceptance of client assets and no lending activity.
On January 1 2016 revised regulations for the disclosure of significant shareholdings in listed companies and amendments to takeover regulations took effect. The new regulatory framework regulates key market infrastructures and incorporates many former provisions of the Stock Exchange Act, including those on public takeovers and those relating to the disclosure of significant interests in listed companies.
In the context of a friendly public offer, the bidder will usually seek to enter into a transaction agreement with the target. Such a transaction agreement customarily includes provisions regarding the continuance of the contractual relationship between the target and its management, as well as the (dis)continuance of certain target board members' mandates as per the settlement of the public offer.
According to the Federal Act on the Swiss Financial Market Supervisory Authority (FINMA), if FINMA detects a serious violation of supervisory provisions it may prohibit the individual responsible from acting in a management capacity over any person or entity subject to its supervision. FINMA has announced that it will use enforcement action as a visible means of achieving its supervisory objectives.
The Federal Council recently enacted the Financial Market Infrastructure Act. While the act requires the formal alignment of the Takeover Ordinance with the provisions relating to takeovers, the amended ordinance brings substantive changes. By implementing these changes, the Takeover Board acknowledges that electronic publication has become the standard procedure for disseminating important financial information.