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Alexander Vogel
Samuel Ljubicic
As of 1 January 2016, revised regulations for the disclosure of significant shareholdings in listed companies and amendments to takeover regulations took effect. Pursuant to the transitory provisions, facts that occurred before 1 January 2016, but trigger a reporting obligation under the new law, must be reported by 31 March 2016.
On 19 June 2015, the Swiss Parliament finalized the new “Financial Market Infrastructure Act” (FMIA) which was enacted by the Federal Council together with the implementing regulation, the Financial Market Infrastructure Ordinance (FMIO), at the beginning of 2016. At the same time, FINMA issued its own ordinance on financial market infrastructure (FMIO-FINMA). The new regulatory framework regulates key market infrastructures in Switzerland, such as securities exchanges, trading platforms, central depositaries and payment systems as well as trading in derivatives. It also incorporates many former provisions of the Stock Exchange Act (SESTA), among others those on public takeovers and those relating to the disclosure of significant interests in listed companies. The implementing provisions on reporting requirements for securities trading, on clearing duties for derivatives, as well as the new rules on disclosure of significant interests in listed companies are contained in the FMIO-FINMA.
While in many aspects, the new regulatory framework took over the regulations of the SESTA and its former implementing provisions, it also brought some important changes not only with regard to the rules applicable to public offers, both in substance (see Act leads to amendments of public takeover law) and in form (see New rules for publication of documents relating to public tender offers), but also with regard to the rules on disclosure of significant interests in listed companies. The most important effect of these new disclosure rules is that on the one hand both the owners of significant interests in listed companies as well as the asset manager or other persons managing such interests may have to make certain disclosures and that persons authorized to exercise voting rights of listed companies in their discretion – based on an asset management agreement or otherwise – have to take such managed shares into account when determining their own disclosure obligations.
Also under the amended rules introduced by the FMIA, the main reporting obligation for any significant shareholding remains with the beneficial owner of such holding and the relevant thresholds (3, 5, 10, 15, 20, 25, 331/3, 50 and 662/3%) remain the same. Pursuant to the new provision in Section 10 FMIO-FINMA, a beneficial owner is defined as a person who controls the voting rights, i.e. who has the ultimate power to control the exercise of the voting rights in his or her sole discretion (including the power to authorize a third party to exercise the voting rights) and bears at the same time the economic risk of the relevant holdings. In addition to this reporting obligation of persons exercising voting rights of positions economically held for their own account, the FMIA introduced a reporting obligation of persons who, even though not qualifying as beneficial owners, have the de facto power to exercise voting rights in their sole discretion. This reporting obligation is broadly similar to an earlier provision contained in the former SESTO-FINMA, which was, however, qualified as overreaching for lack of sufficient basis in the SESTA by a decision of the Federal Supreme Court in mid 2013 and as a consequence thereof invalidated. The new rule only addresses holdings in voting securities and thus, derivatives on such voting securities are not captured by this regime.
As a consequence of this new rule, the individual or firm authorized to exercise the relevant voting rights has to add such voting rights to its own positions when determining the relevant total positions, i.e. when determining whether a relevant threshold has been reached or crossed. Conversely, financial intermediaries who only buy and sell equity positions for their clients but do not have the right to exercise the voting rights on a discretionary basis have no obligation to take such equity securities into account for disclosure purposes (unless in case of a direct involvement in the framework of a takeover offer for such equity securities, e.g. as bidder or friendly target).
Mainly affected by this new rules are, for instance asset managers (or in certain cases proxy advisors) authorized to exercise the voting rights or cause to have such voting rights be exercised in a particular way, e.g. by completing the relevant voting instructions. It is important to note that on the one hand the person granting the right to exercise voting rights on a discretionary basis is not released from including the relevant equity securities in its own disclosure reporting (if any) and the person obliged to report based on his or her authority to exercise voting rights on a discretionary basis (in addition to his or her own positions) has to disclose the number of the voting rights reported based on such authority. In case of a group of companies active in the financial sector, where e.g. one entity provides asset management services to clients and thus has the right to exercise voting rights on a discretionary basis, such equity securities need not to be reported separately by the asset management entity but have to be reported by the ultimate parent together with all other aggregated holdings of the group and in addition, the parent has to disclose the number of voting rights exercised by the asset management entity – but not held for its own account – separately.
Another important change relates to a simplified reporting regime in case of indirect share ownership, for instance in case of a group of companies. Under the previous disclosure regime in force up to the end of 2015, the entire chain of entities between the direct holder of the relevant position and the ultimate beneficial owner needed to be disclosed. Under the regime introduced by the FMIA and the FMIO-FINMA, the disclosure of the intermediate entities is not required any longer, but it is enough to report the direct holder and the ultimate beneficial owner. In addition entities of the same group of companies, i.e. under the control of the same parent company, do no longer qualify as parties acting in concert and thus have no longer a group reporting obligation, since all positions held by the group are deemed to be held indirectly by the parent company itself (or, if applicable by its beneficial owner(s)).
Further changes include the abolition of the former regime for the disclosure of usufruct – with the consequence that the granting of a usufruct does no longer qualify as a sale of the relevant shares, but such equity securities remain to be reported for disclosure purposes by the owner, while the beneficiary of the usufruct needs to report the relevant holdings (in addition to the owner) in case he or she is entitled to exercise the voting rights.
While the FMIA, the FMIO and the FMIO-FINMA entered into force, as mentioned above, on 1 January 2016, the transitory provisions provide that any facts dating back to the period before 31 December 2015 triggering under the new regime of the FMIA (e.g. an authority to exercise voting rights granted before 1 January 2016), such fact must be reported by 31 March 2016. To the extent no new reporting obligation is triggered, the notifications made under the former disclosure regime, i.e. before the end of 2015, will remain valid to the extent made in full compliance with such former rules until a new disclosure threshold has been reached or crossed or reported facts change. If a notification after 1 January 1 2016 was made in accordance with the old disclosure regime (which is permissible until 31 March 2016) an amended notification complying with the new rules needs to be submitted by 31 March 2016. As of 1 April 2016, all notifications will have to be made in compliance with the new rules.
