CapLaw is the first electronic newsletter providing up-to-date information on legal and regulatory developments, concise articles and reports on deals and events with particular focus on Swiss capital markets. CapLaw is addressed to all Swiss and international lawyers, in-house counsels financial institutions and corporates as well as those who are interested in the Swiss capital markets.
René Bösch, Homburger AG
Thomas Reutter, Bär & Karrer AG
Patrick Schleiffer, Lenz & Staehelin
Peter Sester, University of St. Gallen
Philippe A. Weber, Niederer Kraft & Frey AG
Thomas Werlen, Quinn Emanuel Urquhart & Sullivan, LLP
In December 2016, the Swiss Council of States as the first chamber of Swiss parliament discussed the proposed Financial Services Act. If enacted as currently drafted, the act will impose new requirements on financial services providers and introduce a new Swiss prospectus regime. Modeled largely after the EU prospectus framework, the new prospectus regime will be a veritable paradigm change to Swiss capital market regulation, introducing a number of novelties for issuers of securities in the Swiss market, such as the requirement for an ex ante approval for most financial instruments, coupled with some important long-awaited explicit exemptions from such requirement and the requirement for a prospectus for secondary public offerings. Compared to the draft proposed by the Swiss Federal Council, the Swiss Council of States made a few well-received amendments, but some important issues still remain that would warrant reconsideration.
By Christian Rehm / René Bösch (Reference: CapLaw-2017-01)
More regulation and digitization are two important trends that are currently reshaping the financial industry in Switzerland. In this context, the Swiss Federal Council has proposed the creation of a specific new FinTech regulation that shall be particularly relevant for business models in the overlapping areas of these two topics and has mandated the Federal Department of Finance (FDF) to develop a consultation draft that further specifies the “Three Element Approach” of the Swiss Federal Council. On 1 February 2017, the FDF published its related Explanatory Report on the Amendment of the BA and BO (FinTech). This article contains a short overview of the key parameters of the proposed new Swiss FinTech regulation and a first view on the Explanatory Report.
By Luca Bianchi (Reference: CapLaw-2017-02)
Liberalization of the Point of Sale– Amendments to the FIDLEG Bill’s Point of Sale Duties Proposed by the Council of States
After having been discussed throughout 2016 in various sessions of the Economic Affairs and Taxation Committee of the Swiss Federal Council of States (WAK-S), on 14 December 2016 the new Federal Financial Services Act (Finanzdienstleistungsgesetz; FIDLEG) was finally resolved on by the Federal Council of States (SR). Compared to the bill of the Federal Council (the Swiss government), the SR resolved on a number of amendments that will, in certain areas, substantially liberalize the proposed regulatory regime to be complied with at the point of sale. Starting this year, the bill is now before the other chamber of Swiss parliament, the Swiss National Council (NR), and it will be interesting to see to what degree the NR will follow the SR’s approach. The enactment of the bill is still anticipated at the earliest in 2018. The present article focuses on important amendments to the FIDLEG bill as suggested by the SR.
By Sandro Abegglen / Luca Bianchi / Edi Bollinger (Reference: CapLaw-2017-03)
In CapLaw-2016-5, Enrico Friz outlined in detail the new duty of manufacturers of financial instruments to produce a key information document (KID, Basisinformationsblatt) for all financial instruments. This duty shall be implemented by the Financial Services Act (FinSA) which will likely be set into force during the course of 2018 and is currently being debated in the Swiss Parliament. The Council of States has, with rather minor amendments, approved the draft FinSA produced by the Federal Council in December 2016. The National Council will discuss the FinSA in one of its upcoming sessions. This contribution summarizes the changes to the FinSA in respect to the KID proposed by the Council of States compared to the Federal Council’s draft FinSA outlined in CapLaw-2016-5.
By Thomas Müller (Reference: CapLaw-2017-04)
By Thomas Werlen / Matthias Portmann / Jonas Hertner (Reference: CapLaw-2017-05)
This article is an update of CapLaw-2016-4 in which the Dispatch on the draft Financial Services Act (FinSA) was discussed with a focus on Title 5 aimed to facilitate the enforcement of the rights of clients vis-à-vis Financial Services Providers (FSP). On 4 November 2015, the Swiss Federal Council adopted the Dispatch on the draft FinSA, sending it to parliament for consideration. With regard to the enforcement of rights, the draft proposed three elements: (1) a stricter disclosure obligation of FSP to provide documentation to clients, (2) an obligation of FSP to become affiliated with a certified ombuds body, and (3) new rules governing the allocation of costs in financial market litigation. In comparison with the original bill proposed by the Federal Council, the proposed provisions on the enforcement of rights in the draft FinSA were significantly curtailed after an overwhelmingly negative response from the financial services industry in the consultation proceeding. On 14 December 2016 the draft FinSA was discussed in the Council of States. The Council of States largely followed the draft as proposed by the Federal Council. Most recently, on 25 January 2017, the National Council’s Economic Affairs and Taxation Committee has entered into the debate on the draft FinSA. The Committee will discuss the draft in detail at its meeting on 20/21 February 2017. This will be followed by a debate in the National Council which will likely take place in Spring 2017. The proposed changes by the Council of States related to the enforcement of clients’ rights are discussed below.
After a long wait in the Committee on Economic Affairs and Taxation, the Council of States, the upper chamber of the Swiss parliament, approved in its 2016 winter session the bill for a Federal Act on Financial Institutions (FinIA) as well as amendments of other statutes, such as the Federal Act on Banks and Saving Banks of 8 November 1934 and the Federal Act on the Swiss Financial Market Supervisory Authority of 22 June 2007. This approval allows this bill to move forward to the National Council, the lower chamber of the Swiss parliament.
Overall, the bill on the FinIA and its schedules, as approved by the Council of States, remains close to the draft bill presented by the Federal Council (see CapLaw-2016-7). Most changes seek to clarify the project rather than challenge fundamentally the initial proposal. Two exceptions deserve, however, further attention: first, the Council of States refused to create a framework for a new supervisory authority solely responsible for supervising portfolio managers. Instead, it opted to draw a line between day-to-day supervision, which is due to be entrusted to a new supervisory authority, who in turn can rely on the work of audit firms or carry out their own reviews, and more supervisory actions such as licensing and enforcement action, which will remain with FINMA.
By Rashid Bahar (Reference: CapLaw-2017-06)
Under current Swiss law, portfolio managers, unless they are acting as asset managers for collective investment schemes, and trustees are not subject to a comprehensive prudential supervision, a situation that will change under the proposed new Financial Institutions Act (“FinIA”). On 14 December 2016, this proposed new act took the first parliamentary hurdle when the Swiss Council of States deliberated and passed the new act. Compared to the draft bill published by the Swiss government in November 2015 (see CapLaw 2016-8), the draft FinIA now passed by the Swiss Council of States includes a number of significant changes to the new supervisory framework applicable to portfolio managers and trustees. Most notably, portfolio managers and trustees will have to apply for a license with the Swiss Financial Market Supervisory Authority (FINMA), while the ongoing (day-to-day) prudential supervision of these financial institutions will fall within the responsibility of new private supervisory organizations.
By Patrick Schleiffer / Patrick Schärli (Reference: CapLaw-2017-07)
On 7 December 2016, Swiss Prime Investment Foundation successfully completed an offering of claims of the investment group “SPA Immobilien Schweiz” with a volume of CHF 470 million. The total equity capital of the investment group is now above CHF 1 billion.
In December 2016, Crédit Agricole Financements (Suisse) SA issued one of the first securitizations of mortgage-backed loans in Switzerland in recent years. The mortgage-backed securities were issued by a special purpose vehicle in Switzerland and placed with Swiss institutional investors. These senior debt tranches have been rated AAA by two international rating agencies.
Baloise Life Ltd (Baloise) and real-estate company Pax Anlage AG, both listed on SIX Swiss Exchange, have entered into a transaction agreement pursuant to which Baloise will launch a public tender offer for approximately 30 per cent of shares in free float, subject to customary conditions. The pre-announcement of the offer was published on 6 January 2017. Concurrently, Baloise entered into agreements with majority shareholders Pax Holding (Genossenschaft), Pax, Schweizerische Lebensversicherungs-Gesellschaft AG and Nürnberger Lebensversicherung AG to acquire the remaining approximately 70 per cent of the share capital and voting rights in Pax Anlage AG.