Category Archives: Regulatory

New Delegation Rules under FinSA/FinIA as well as CISA: Impact on supervised and non-supervised entities

The purpose of this article is to provide a first analysis of the key features and challenges, which will result from the shift from the current delegation rules under CISA to the new regulations on “delegation” pursuant to FinSA, FinIA and CISA. The new regulatory framework concerning the transfer of tasks to third parties covers a variety of factual and operational circumstances and set-ups. One of the main particularities of the new framework is that it is untested for the newly prudentially supervised entities under FinIA (i.e. trustees and asset managers) and that it will, at least in part, wherever financial services are provided, also impact non-supervised entities. The new rules may have consequences for both Swiss institutions delegating financial services and other tasks and international service providers with whom Swiss financial institutions will conclude delegation schemes.

By François Rayroux (Reference: CapLaw-2019-40)

New Limited Qualified Investor Fund (L-QIF) – Innovation and Deregulation as Growth Catalyst for the Fund and Asset Management Industry in Switzerland

The Federal Council aims to boost the attractiveness of Switzerland as a domicile for fund production with the proposed introduction of the Limited Qualified Investor Fund (L-QIF). The ongoing consultation period for the L-QIF was initiated on 26 June 2019 and will end on 17 October 2019. The L-QIF is an innovative financial product that may invest in all thinkable investments and will benefit from very flexible investment restrictions. To speed up time-to-market and reduce costs, the L-QIF will neither require a regulatory authorization or product approval nor will it be subject to ongoing supervision by the Swiss Financial Market Supervisory Authority FINMA. 

By Sandro Abegglen / Luca Bianchi (Reference: CapLaw-2019-41)

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)

Swiss Financial Market Supervisory Authority Publishes New Guidelines for “Stable Coins”

Against the backdrop of the growing number of projects for so-called “stable coins” since mid-2018, the Swiss Financial Market Supervisory Authority (FINMA) on 11 September 2019 published new guidelines explaining the regulatory qualification of tokens that are linked to underlying assets such as fiat currency, commodities or securities with the goal to minimise fluctuations in their market value. The new guidelines supplement FINMA’s ICO Guidelines of 16 February 2018, which continue to apply. While the stable coin guidelines are general in nature, their publication coincides with the recent announcement by the Swiss based Libra Association to launch a payment token that is backed by a basket of fiat currencies, a project that has attracted worldwide attention by governments and regulators.

By Martin Peyer / Gadi Winter (Reference: CapLaw-2019-43)

Swiss Withholding Tax – Quo Vadis?

On 26 June 2019, the Federal Council approved the objectives and key figures for a withholding tax reform. The Federal Council wants to strengthen the Swiss debt capital market and to extend the safeguard purpose for Swiss individuals. Interest payments to Swiss entities and foreign investors shall be exempt from withholding tax. For Swiss resident individuals, withholding tax shall also be applied on interest from foreign investments if held through a Swiss paying agent. The consultation draft is expected in autumn 2019.

By Alexandra Hirt (Reference: CapLaw-2019-29)

Board Composition and Ownership Structure in Switzerland – The Empirical Evidence

The theory and practice of corporate governance and capital markets suggest that certain organizational structures of listed companies are to be considered superior to others or even best practice. This article critically reviews the mainstream doctrine and reports on the results of my own empirical research on corporate governance of publicly-traded companies with access to capital markets in Switzerland.

By Valentin Jentsch (Reference: CapLaw-2019-30)

Digital Assets – Proposed Amendments to the Legal and Regulatory Framework of Distributed Ledger Technology in Switzerland

Switzerland targets adjustments of the existing legal and regulatory framework of distributed ledger technology (DLT). The Federal Council initiated consultation on proposed amendments to, inter alia, civil law (including securities law), insolvency law, financial market law, and anti-money laundering regulation on 22 March 2019. This article summarizes the key points of the suggested adjustments and analyses their potential impact on market participants. The content of the rules may still be subject to changes in the ongoing legislative process. 

By Luca Bianchi / Fabio Andreotti (Reference: CapLaw-2019-15)

Reporting of Beneficial Ownership in Unlisted Companies according to Article 697j CO – Some Open Points

On July 1, 2015, new rules regarding reporting of beneficial owners of unlisted companies entered into force in Switzerland (for general remarks on the rules see CapLaw-2015-55). Even four years after their implementation, there are still a number of open questions in practice as regards the application of these rules, both from the perspective of the shareholders (subject to the obligation to report their beneficial owners(s)) and the companies (subject to the obligation to maintain a register of beneficial owners). One reason for these uncertainties is that the relevant provisions are incomplete and in many aspects leave room for interpretation. To date there is no case law that could provide guidance. A currently ongoing revision of the disclosure rules could bring some clarity.

By Alexander Wille / Lukas Held (Reference: CapLaw-2019-16)

Corporate Tax Reform – Capital Contribution Principle for Swiss-listed Companies

On 28 September 2018 the Swiss Parliament approved the final draft bill regarding the corporate tax reform which includes major changes for Swiss-listed companies in relation to the distribution of dividends paid by repayment of capital contribution reserves. It is proposed that Swiss-listed companies may only pay withholding tax-free capital contribution reserves if in the same amount a dividend will be paid from taxable distributable reserves (so-called 50/50 rule).

By Elga Reana Tozzi (Reference: CapLaw-2019-03)

Replacement of LIBOR – An Approach for the Swiss retail lending market

The discontinuation of LIBOR, announced for the end of 2021, is foreseeable. At the same time, for lack of suitable alternatives, LIBOR is still the dominant reference rate in the Swiss retail lending market for floating rate borrowings. As a result, Swiss banks active in the mortgage lending market already now face the challenge to provide for a transition to a successor rate when entering into new contracts. And the same challenge exists generally, both in the retail and the institutional market.

By René Bösch / Benedikt Maurenbrecher (Reference: CapLaw-2019-04)