Author Archives: Rashid Bahar
To flag or not to flag – A few thoughts regarding the new obligation to flag ad hoc announcements under the Listing Rules of SIX Swiss Exchange AG
Issuers listed on SIX Swiss Exchange (SIX) are, as a matter of principle, required to inform the market of any price-sensitive facts which have arisen in their sphere of activity (ad hoc publicity). SIX announced a revision of the Listing Rules as well as the Directive on Ad Hoc Publicity and the Directive on Corporate Governance, which will enter into force on 1 July 2021. Among other changes, the revision affects the way ad hoc disclosures need to be communicated and published by introducing a flagging obligation for communication deemed to be price sensitive and therefore an “ad hoc disclosure”. This article sets out certain considerations that issuers should bear in mind when making a determination on whether or not to flag corporate communication as an “ad hoc announcement”.
By Rashid Bahar / Thomas Reutter (Reference: CapLaw-2021-48)
Conflicts of Laws on the Distributed Ledger and Negotiable Instruments
The Bill on the Federal Act on the Adaptation of Federal Law to Developments of the Distributed Ledgers Technology of 27 November 2019 (the “DLT Bill“) which was sent to parliament addresses among other issues the question of conflicts of laws related to rights recorded on a distributed ledger. Considering the ubiquity of the potential users of a distributed ledger and the difficulty to localize a distributed ledger, which does not present a strong nexus to any given place, this is an absolute necessity. This article aims to present the principles of the amendments to the PILA that are being proposed by the DLT Bill.
By Rashid Bahar (Reference: CapLaw-2020-04)
Something Old, Something New: The Supervision of Financial Institutions under the Federal Act on Financial Institutions – FinIA Cleared for Takeoff
On 1 January 2020, the Federal Act on Financial Institutions of 15 June 2018 (FinIA) will enter into force together with the Federal Act on Financial Services (FinSA). The FinIA revises the regulatory architecture for financial institutions. Instead of the current sectorial approach, the FinIA proposes to introduce a regulatory pyramid with a light regulatory framework for asset managers and trustees, and an increasingly more stringent regime for managers of collective assets, securities firms – the new denomination for securities dealers – and, at the top, banks, although they will be continue to be governed by the Federal Act on Banks and Saving Banks of 8 November 1934 (Banking Act, SR 952.0) and remain out of scope of the FinIA. Furthermore, the FinIA introduces several new regulatory regimes: it subjects portfolio managers and trustees to prudential supervision and extends the current regime applicable to asset managers of collective investment schemes to asset managers of pension funds. Moreover, it recasts the existing regime applicable to securities dealers under the Federal Act on Stock Exchanges and Securities Dealing of 24 March 1995 (SESTA, SR 954.0) into a slightly modified new regime for securities firms. This article updates the previous versions now that the Federal Council passed the Ordinance on Financial Services of 6 November 2019 (FinSO) and the Ordinance on Financial Institutions of 6 November 2019 (FinSO)
By Rashid Bahar (Reference: CapLaw-2019-57)
New Rules on the Disclosure of Beneficial Owners and the Death Knell for Bearer Shares
On 21 June 2019, the Swiss Federal Assembly passed the Federal Act on the Implementation of the Recommendations of the Global Forum on Transparency and Exchange of Information for Tax Purposes (the Act) into law. The Act sounds the death knell of bearer shares for non-listed companies. It also introduces criminal law sanctions for breaches of the obligation to disclose beneficial ownership of shares and several corporate housekeeping duties regarding the share register and the register of beneficial owners. Finally, it provides for draconian sanctions for holders of bearer shares who would fail to comply with their disclosure duties and for companies who would fail to maintain the requisite corporate registries or issue bearer shares in breach of the new provisions. At the same time, the Act also introduces some clarifications around the disclosure of beneficial owners and several issues that were subject to controversy.
By Rashid Bahar (Reference: CapLaw-2019-39)
FINMA Grants Banking Licenses to New Swiss Crypto Banks, Introduces New Strict AML Rules regarding Payments on Blockchain
On 26 August 2019, the Swiss financial regulator FINMA granted full banking and securities dealer licenses to two new financial institutions focusing on services in the area of crypto currencies and other digital assets. At the same time, FINMA issued new guidance on its interpretation of Swiss anti-money laundering regulation in respect of digital token transfers. The practice adopted by FINMA is very strict, especially in the light of international standards, and will challenge regulated financial services providers, new and old alike, intending to offer services regarding digital assets.
By Daniel Flühmann / Rashid Bahar (Reference: CapLaw-2019-42)
Something Old, Something New: The Supervision of Financial Institutions under the Federal Act on Financial Institutions – FinIA Update
On 15 June 2018, the Federal Act on Financial Institutions was passed into law. The FinIA revises the regulatory architecture for financial institutions. Instead of the current sectorial approach, the FinIA proposes to introduce a regulatory pyramid with a light regulatory framework for asset manager and trustees, and an increasingly more stringent regime for managers of collective assets, securities firms – the new denomination for securities dealers – and, at the top, banks, although they will be continue to be governed by the Federal Act on Banks and Saving Banks of 8 November 1934 (Banking Act, SR 952.0) and remain out of scope of the FinIA. Furthermore, the FinIA introduces several new regulatory regimes: first of all, it subjects portfolio managers and trustees to prudential supervision. Second, it extends the current regime applicable to asset managers of collective investment schemes to asset managers of pension funds. Third, it recasts the existing regime applicable to securities dealers under the Federal Act on Stock Exchanges and Securities Dealing of 24 March 1995 (SESTA, SR 954.0) into a slightly modified new regime for securities firms. Fourth, it amends the Banking Act to introduce a new regulatory status for persons who hold public deposits of a total amount of less than CHF 100 million without engaging in commercial banking by lending the funds on (article 1b Banking Act). Finally, it also amends other regulations, including the Federal Act on Consumer Credits of 23 March 2001 (SR 221.214.1).
By Rashid Bahar (Reference: CapLaw-2018-64)
Outsourcing: FINMA Publishes a New Circular 2018/3 on Outsourcing for Banks and Insurance Companies
On 5 December 2017, the Swiss Financial Market Supervisory Authority FINMA published its new circular 2018/3 Outsourcing – Banks and Insurance Companies. In contrast to the current rules, the new circular not only covers banks and securities dealers but is also applicable to insurance companies. The main changes are a more flexible definition what constitutes outsourcing based on a case-by-case analysis factoring in the business model and risk profile of each institution, a more differentiated approach to intra-group outsourcing, and a focus on supervisory issues, leaving data protection and banking secrecy out of the scope of the FINMA circular. The new rules entered into force on 1 April 2018.
By Rashid Bahar / Martin Peyer (Reference: CapLaw-2018-16)
Something old, something new and some things change – FinIA Update
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)
Bail-in Recognition Clause
This paper intents to outline the purpose and scope of article 55 of the European Bank Resolution and Recovery Directive, to present, as an example, the Bail-In Recognition Clause suggested by the Loan Market Association, and to discuss the legal nature of such a clause in a Swiss law governed agreement or document.
By Rashid Bahar (Bär & Karrer), Jürg Frick (Homburger), Theodor Härtsch (Walder Wyss), Marco Häusermann (Niederer Kraft & Frey), Patrick Hünerwadel (Lenz & Staehelin), Stefan Kramer (Homburger), Patrick Schleiffer (Lenz & Staehelin), Bertrand Schott (Niederer Kraft & Frey), Roland Truffer (Bär & Karrer) and Lukas Wyss (Walder Wyss (Reference: CapLaw-2016-44)
Something Old, Something New: The Supervision of Financial Intermediaries under the Draft Federal Act on Financial Institutions
On 4 November 2015, the Federal Council published a Bill to parliament for a Financial Services Act (FinSA) and a Financial Institutions Act (FinIA). As expected, the FinIA proposes to revise the regulatory architecture for financial institutions. Instead of the current sectorial approach, the FinIA proposes to introduce a regulatory pyramid with a light regulatory framework for asset manager and trustees, and an increasingly more stringent regime for collective asset, securities houses and, at the top, banks.
By Rashid Bahar (Reference: CapLaw-2016-7)