Introduction
On January 1 2016 revised regulations for the disclosure of significant shareholdings in listed companies and amendments to takeover regulations took effect. Pursuant to the transitional provisions, facts that occurred before January 1 2016 but which triggered a reporting obligation under the new law had to be reported by March 31 2016.
On June 19 2015 Parliament finalised the new Financial Market Infrastructure Act. The act was implemented by the Federal Council along with the Financial Market Infrastructure Ordinance at the beginning of 2016. The Financial Market Supervisory Authority (FINMA) simultaneously issued its own ordinance on financial market infrastructure. The new regulatory framework regulates key market infrastructures, including:
- securities exchanges;
- trading platforms;
- central depositaries;
- payment systems; and
- derivatives trading.
It also incorporates many former provisions of the Stock Exchange Act, including those on public takeovers and those relating to the disclosure of significant interests in listed companies. The implementing provisions on reporting requirements for securities trading, clearing duties for derivatives and the new rules on disclosure of significant interests in listed companies are contained in FINMA's ordinance.
While in many aspects the new regulatory framework took over the regulations of the Stock Exchange Act and its former implementing provisions, it also brought some important changes with regard to the rules applicable to public offers – both in substance(1) and in form(2) – and to the rules on disclosure of significant interests in listed companies. The most important effect of these new disclosure rules is that both the owners of significant interests in listed companies and the asset manager or other persons managing such interests may have to make certain disclosures, and that persons authorised to exercise the voting rights of listed companies at their discretion – based on an asset management agreement or otherwise – must take such managed shares into account when determining their own disclosure obligations.
Under the amended rules introduced by the Financial Market Infrastructure Act, the main reporting obligation for any significant shareholding remains with the beneficial owner of such holding and the relevant thresholds remain the same (ie, 3%, 5%, 10%, 15%, 20%, 25%, 33.3%, 50% and 66.6%). Pursuant to the new provision in Section 10 of FINMA's ordinance, a 'beneficial owner' is defined as a person who controls the voting rights – for example, an individual who, at his or her sole discretion, has ultimate power to control the exercise of voting rights (including the power to authorise a third party to exercise the voting rights) and simultaneously bears the economic risk of the relevant holdings.
In addition to this reporting obligation of persons exercising voting rights of positions economically held for their own account, the Financial Market Infrastructure Act introduced a reporting obligation for individuals who, even though not qualifying as beneficial owners, have the de facto power to exercise voting rights at their sole discretion. This obligation is broadly similar to an earlier provision contained in the former FINMA Stock Exchange Ordinance. According to a mid-2013 Federal Supreme Court decision, the FINMA Stock Exchange Ordinance was qualified as overreaching for lack of a sufficient basis in the Stock Exchange Act and was subsequently invalidated. The new rule addresses only holdings in voting securities; thus, derivatives on such voting securities are not captured by this regime. As a consequence of this new rule, the individual or firm authorised to exercise the relevant voting rights must add such voting rights to its own positions when determining the relevant total positions (ie, when determining whether a relevant threshold has been reached or crossed). Conversely, financial intermediaries which only buy and sell equity positions for their clients, but which do not have the right to exercise the voting rights on a discretionary basis, have no obligation to take such equity securities into account for disclosure purposes (unless in case of a direct involvement in the framework of a takeover offer for such equity securities – such as a bidder or friendly target).
Asset managers (or in certain cases, proxy advisers) authorised to exercise the voting rights, or who cause such voting rights to be exercised in a certain way (eg, by completing the relevant voting instructions), are particularly affected by the new rules. On the one hand, the individual granting the right to exercise voting rights on a discretionary basis is not released from including the relevant equity securities in his or her own disclosure reporting (if any), and the individual obliged to report based on his or her authority to exercise voting rights on a discretionary basis (in addition to his or her own positions) must disclose the number of the voting rights reported based on such authority. In case of a group of companies active in the financial sector (eg, where one entity provides asset management services to clients and thus has the right to exercise voting rights on a discretionary basis), such equity securities need not be reported separately by the asset management entity. Instead, they must be reported by the ultimate parent together with all other aggregated group holdings. In addition, the parent must disclose the number of voting rights exercised by the asset management entity – but not held for its own account – separately.
Another important change relates to a simplified reporting regime in case of indirect share ownership (eg, in case of a group of companies). Under the previous regime, the entire chain of entities between the direct holder of the relevant position and the ultimate beneficial owner needed to be disclosed. Under the new regime introduced by the Financial Market Infrastructure Act and FINMA's ordinance on financial market infrastructure, disclosure of the intermediate entities is no longer required, it is instead sufficient to report the direct holder and ultimate beneficial owner. In addition, entities of the same group of companies (ie, those under the control of the same parent company) no longer qualify as parties acting in concert and thus have no group reporting obligation, since all positions held by the group are deemed to be held indirectly by the parent company itself (or, if applicable, by its beneficial owner(s)).
Further changes include the abolition of the former regime for the disclosure of usufruct – with the consequence that granting a usufruct no longer qualifies as a sale of the relevant shares, but such equity securities remain to be reported for disclosure purposes by the owner, while the beneficiary of the usufruct must report the relevant holdings (in addition to the owner) in case he or she is entitled to exercise the voting rights.
While the Financial Market Infrastructure Act, the Financial Market Infrastructure Ordinance and FINMA's ordinance on financial market infrastructure entered into force on 1 January 2016, under the Financial Market Infrastructure Act's new regime the transitional provisions provide that any facts from before December 31 2015 which trigger, for example, an authority to exercise voting rights granted before January 1 2016, must have been reported by March 31 2016. Should no new reporting obligation be triggered, notifications made under the former disclosure regime will remain valid to the extent that they had been made in full compliance with the former rules until a new disclosure threshold has been reached or crossed or the reported facts change. As of April 1 2016, all notifications must be made in compliance with the new rules.
For further information on this topic please contact Alexander Vogel or Samuel Ljubicic at Meyerlustenberger Lachenal by telephone (+41 44 396 91 91) or email ([email protected] or [email protected]). The Meyerlustenberger Lachenal website can be accessed at www.mll-legal.com.
Endnotes
(1) For further details please see "Act leads to amendments of public takeover law".
(2) For further details please see "New rules for publication of documents relating to public tender offers".
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