Category Archives: Securities

Swiss Capital Markets: New Rules regarding Swiss Withholding Tax

A bond issued by a foreign resident issuer but guaranteed by its Swiss resident parent company is reclassified as a domestic issuance and subject to 35 percent withholding tax if the proceeds raised under such bond are used in Switzerland. According to new rules which entered into force on 1 April 2017, it is possible to use the proceeds in Switzerland up to an amount equal to the equity of the foreign issuer and to still avoid a reclassification.

By Stefan Oesterhelt (Reference: CapLaw-2018-01)

Cross-Border Transactions in Intermediated Securities: Switzerland Maintains its Lead (Part 2/2)

“The transnational nature of collateral goes beyond the mere (but important) fact that the parties to a swap are often incorporated in different jurisdictions. Collateral may be posted in different currencies, or in the form of government bonds issued by different governments. The collateral is held with intermediaries often incorporated in yet other jurisdictions, with places of business in still other locales. These intermediaries book the collateral in computerized ledgers maintained on servers that may be located elsewhere in the world. And if, as is permitted under the law of some countries, the pledgee (the party that receives the collateral) “repledges” the collateral to yet another party to satisfy its own obligations, which then repledges it again, then lawyers are left to make sense of a constant global movement of collateral in and out of accounts in many jurisdictions in terms of legal rules created to address a far more stationary and localized conception of property and contract rights.”

Annelise Riles, Collateral Knowledge: Legal Reasoning in the Global Financial Markets, p. 43 (University of Chicago Press, 2011)

By Thomas Werlen / Matthias Wühler / Jonas Hertner (Reference: CapLaw-2018-02)

Cross-Border Transactions in Intermediated Securities: Switzerland Maintains its Lead (Part 1/2)

On 1 April 2017, the Hague Convention on the Law Applicable to Certain Rights in Respect of Securities held with an Intermediary entered into force. The entry into force of the Convention coincides with renewed efforts by the European Commission at modernising the conflicts rules for the third-party effects of transactions in book-entry securities and financial claims in the overall context of the Capital Markets Union action plan.

By Thomas Werlen / Matthias Wühler (Reference: CapLaw-2017-43)

The Extraterritorial Reach of the New EU Share Trading Obligation

The new Market in Financial Instruments Regulation (MiFIR) will introduce a share trading obligation which requires EU investment firms to trade shares on an EU trading venue, an EU systemic internaliser or on an equivalent third country exchange only. Should the Swiss legal framework not be considered equivalent to the EU regulation as of the date of the launch of MiFID II/MiFIR (3 January 2018), EU investment firms would be required to trade dual-listed shares outside of Switzerland, even if the deepest pool of liquidity is in Switzerland. This article briefly describes the EU equivalence regimes in general, the requirements and effects of the relevant equivalence provision with regard to the share trading obligation, as well as its effects on Swiss trading venues.

By Marco Toni / Lea Hungerbühler (Reference: CapLaw-2017-15)

Current market practice of subsequent prospectus review for bonds and derivatives can be maintained under article 53 FinSA

Article 53(1) FinSA introduces a pre-review of prospectuses by a reviewing body, while article 53(2) FinSA allows the Federal Council to provide for exemptions. The Federal Council should continue to allow subsequent reviews substantially in the same way as the regulatory board allows provisional trading. The confirmation pursuant to article 53(2) FinSA is addressed to the reviewing body and confirms formal completeness against the prospectus content lists. Only administrative consequences imposed by FINMA are attached to an incorrect confirmation.

By Matthias Courvoisier (Reference: CapLaw-2017-16)

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)

Amended Swiss Rules regarding Disclosure of Significant Shareholdings in Listed Companies in Switzerland

On 1 January 2016, revised regulations regarding the disclosure of significant shareholdings in listed Swiss companies or non-Swiss companies with their primary listing in Switzerland entered into effect. In most respects, the new law restated the former regulations. However, the legislation also introduced some significant changes and imposes important new disclosure obligations, in particular upon asset managers who discretionarily exercise the voting rights of the shares held or managed on behalf of their clients.

By Hans-Jakob Diem (Reference: CapLaw-2016-19)

New Transparency Rules in Respect of Holders of Bearer Shares and Qualified Beneficial Owners of Unlisted Shares of Swiss Companies

On 12 December 2014, the Swiss Parliament adopted the Federal Act Implementing the Revised Financial Action Task Force (FATF) Recommendations of 2012. The Act provides new and revised provisions in the field of anti-money laundering and criminal law which were discussed in CapLaw No. 3/2015 (p. 6 et seqq.). The Act also introduced new reporting obligations of acquirers of bearer shares and in respect of beneficial owners of 25% or more of the share capital or voting rights of unlisted Swiss companies. These changes, which entered into effect on 1 July 2015 and affect shareholders and companies alike, are discussed in this article.

By Hans-Jakob Diem / Tino Gaberthüel (Reference: CapLaw-2015-55)

The European Capital Market Union

Only two years ago the European Union adopted two regulations that serve as the pillars of the European Banking Union. In October 2015, the Commission launched an ambitious plan to establish a European Capital Market Union until 2019. Although both “unions” go in the same direction – an even more integrated and centralized European financial market – and use the same institutional instruments, they are based on a different motivation.

By Peter Sester (Reference: CapLaw-2015-56)