Category Archives: Regulatory

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)

The Proposed Strengthening of Group Action in Swiss Civil Procedure

In Switzerland, plaintiffs are forced to litigate their claims in court individually, even if they are part of a group that is affected by the same underlying damaging event. In the context of the ongoing partial revision of the Civil Procedure Code the Swiss Federal Council is seeking to facilitate actions for damages for large groups. To this end it is proposing amendments to the existing mechanism of a group action through an organization and the introduction of a novel group settlement method.

By Thomas Werlen / Remo Decurtins (Reference: CapLaw-2018-44)

Revised FINMA Anti-Money Laundering Ordinance

On 18 July 2018, FINMA published its revised Anti-Money Laundering Ordinance (the AMLO-FINMA). The revised AMLO-FINMA is noteworthy not so much for what it contains, but rather for what it does not contain.

By Katrin Ivell (Reference: CapLaw-2018-45)