Author Archives: Thomas U. Reutter

Insider Trading and Market Manipulation in Tokens

Trading in tokens is currently in the spotlight of the public’s and the regulator’s attention. Based on distributed ledgers-technology, blockchain technology is used to issue tokens as tradable digital units and to record ownership and transactions of the issued tokens. At present, there are no specific laws and little regulation applying to trading in tokens in Switzerland. With a view to improve market confidence as well as to ensure proper functioning and transparency of token trading, a variety of legal issues have yet to be resolved. In particular, the question of insider trading and market manipulation needs to be clarified.

By Thomas U. Reutter / Daniel Raun (Reference: CapLaw-2018-43)

EU Shareholder Rights Directive: Action required for Switzerland?

Efforts to amend the EU Shareholder Rights Directive have lost momentum. The most recent resolution of an EU institution has been passed more than a year ago by the EU parliament. The Brexit vote in the United Kingdom has cast further doubt on the directive’s future design. Nevertheless, efforts to improve the governance of European companies and to strengthen the rights of shareholders will continue and the most recent proposal to amend the directive is likely still indicative of the future form and shape of corporate governance in the EU. Third countries like Switzerland should closely monitor the EU’s next steps on the directive, analyze any gaps and decide whether such gaps should be closed.

By Thomas U. Reutter (Reference: CapLaw-2016-43)

Capital “On Demand”: Equity Lines / Share Subscription Facilities for Swiss Listed Companies

Many listed companies are seeking “on-demand” capital solutions that are tailor made to their specific needs. These companies often enter into arrangements with an institutional investor, whereby the company has the right to call specified amounts of cash from the investor against issuance or delivery of a certain amount of shares in return. Such arrangements are often referred to as “equity lines”, “equity distribution agreements” or “share subscription facilities”. This article explores how such agreements are best structured for Swiss listed and incorporated issuers from both a corporate and a capital markets perspective.

By Thomas Reutter / Annette Weber (Reference: CapLaw-2016-18)

Is a Regulation of Proxy Advisers needed in Switzerland?

Proxy adviser have now come to play an important role for listed companies in Switzerland with a significant free float. The breadth of the phenomenon is relatively recent and coincided with the enactment and entry into force of the Ordinance against Excessive Compensation for listed companies (OaEC; Verordnung gegen übermässige Vergütungen in börsenkotierten Unternehmen (VegüV)), which mandates, inter alia, a binding shareholder resolution on say on pay. The increased power of proxy advisers also gives rise to some concerns and to the question of how to address them.

By Thomas U. Reutter (Reference: CapLaw-2015-16)

SIX overhauls regulatory standards for listing

SIX Exchange Regulation, the regulatory body of the main Swiss stock exchange, has confirmed plans to overhaul its regulatory listing standards. The sub-division into Main Standard and Domestic Standard will be abolished and issuers may choose between an International and a National or Swiss Standard. The only major difference between the two new regimes will be the applicable financial reporting standard. IFRS or US GAAP must be used on the International Standard. Issuers who do not wish to report under either of these two standards, but opt for Swiss GAAP FER instead, will be listed on the National Standard. The changes are planned to become effective on 1 July 2015.

By Thomas U. Reutter (Reference: CapLaw-2015-1)

The New Rules on Delisting in Practice

On 1 March 2014, SIX Exchange Regulation’s revised Directive on Delisting came into force. The introduction of a shareholders’ right to challenge the period set between the delisting announcement and the last day of trading is probably the most significant change. Such period may be set by the SIX Exchange Regulation between 3 and 12 months with a view to providing shareholders the possibility to sell their stock on-exchange prior to delisting. The issuer is no longer obliged to provide for off-exchange trading after the delisting. A few months after entering into force, the revised Directive on Delisting has been tested in three instances which provide insight into how SIX Exchange Regulation intends to apply the rules.

By Mariel Hoch/Thomas Reutter (Reference: CapLaw-2014-22)

Alternatives and Trends on the Binding Vote on “Say on Pay”

In CapLaw-2013-14 the editors of CapLaw commented on the draft ordinance (the Draft Ordinance) for the implementation of the constitutional initiative against excessive compensation (the Minder Initiative). Following the end of the consultation period for the Draft Ordinance, the final version of the “Ordinance against Excessive Compensation in Listed Companies” (Verordnung gegen übermassige Vergütungen bei börsenkotierten Gesellschaften; VegüV) (the Ordinance) was published on 20 November 2013 and entered into force on 1 January 2014. This article comments on one of the key aspects of the new rules: the “say on pay”, i.e. the shareholders’ vote on executive compensation.

By Daniel Raun/Thomas Reutter (Reference: CapLaw-2014-2)

Prohibited Compensation Payments under the Minder Ordinance (VegüV)

The ordinance implementing the Minder Initiative also introduces new criminal offenses in connection with certain specific and now illicit compensation payments to certain senior persons associated with a listed company. The affected compensation payments encompass: severance payments, payments in advance and commissions for certain M&A transactions. This article endeavors to shed more light on scope and consequences of such prohibited payments.

By Thomas Reutter/Daniel Raun (Reference: CapLaw-2014-3)

Swiss People to Vote on Caps on Executive Compensation

On 24 November 2013, the Swiss will have to vote on whether their employment compensation regime should become more egalitarian. A popular referendum promoted by the Young Socialist Party wants to limit executive compensation to 12 times the lowest salary within the same business undertaking. While a number of issues remain unclear at this stage, it is certain that the rather flexible and internationally competitive Swiss labor market would be severely impacted if the initiative were to be adopted by the Swiss people.

By Thomas Reutter (Reference: CapLaw-2013-27)

The Repurchase of Own Shares Outside a Parallel Buyback Offer: The Decision of the Takeover Board in re Absolute Invest

The Repurchase of Own Shares Outside a Parallel Buyback Offer: The Decision of the Takeover Board in re Absolute Invest

The Takeover Board is enforcing compliance of buyback programmes exempted via reporting procedure more strictly. It has used a large buyback of an investment company outside a repurchase programme to remind issuers that the fundamental principles of takeover law apply to buyback programmes as well – with some surprising twists and consequences.