Switzerland Introduction
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GLOBAL PRACTICEINTRODUCTION GUIDESWITZERLAND Definitive global law guides offering comparative analysis from top ranked lawyers ContributingLAW AND PRACTICE: Editor p.p.2 ElizabethDaleContributed Cendali by Morony WalderKingZhong & Lun SpaldingWyss Law Ltd Firm CliffordKirklandThe ‘Law &Chance& EllisPractice’ LLPLLP sections provide easily accessible information Shareholders’on navigating the legal systemRights when conducting business & in the jurisdiction. Leading lawyers explain local law and practice at key Shareholdertransactional stages andActivism for crucial aspects of doing business. TRENDS AND DEVELOPMENTS: p.<OT>p.264 Contributed by LenzHogan & LovellsStaehelin (CIS) The ‘Trends & Developments’ sections give an overview of current trends and developments in local legal markets. Leading lawyers analyse Switzerland: Law & Practice particular trends or provide a broader discussion of key developments Walder Wyss Ltd in the jurisdiction. chambers.com INTRODUCTION LAW AND PRActice Law and Practice Contributed by Walder Wyss Ltd Contents 1. Shareholders’ Rights p.4 2. Shareholder Activism p.8 1.1 Types of Company p.4 2.1 Legal and Regulatory Provisions p.8 1.2 Type or Class of Shares p.4 2.2 Level of Shareholder Activism p.9 1.3 Primary Sources of Law and Regulation p.5 2.3 Shareholder Activist Strategies p.9 1.4 Main Shareholders’ Rights p.5 2.4 Targeted Industries / Sectors / Sizes of 1.5 Shareholders’ Agreements / Joint Venture Companies p.9 Agreements p.5 2.5 Most Active Shareholder Groups p.10 1.6 Rights Dependent Upon Percentage of Shares p.5 2.6 Proportion of Activist Demands Met in Full / 1.7 Access to Documents and Information p.5 Part p.10 1.8 Shareholder Approval p.6 2.7 Company Response to Activist Shareholders p.10 1.9 Calling Shareholders’ Meetings p.6 3. Remedies Available to Shareholders p.10 1.10 Voting Requirements and Proposal of 3.1 Separate Legal Personality of a Company p.10 Resolutions p.6 3.2 Legal Remedies Against the Company p.10 1.11 Shareholder Participation in Company 3.3 Legal Remedies Against the Company’s Management p.6 Directors p.11 1.12 Shareholders’ Rights to Appoint / Remove / 3.4 Legal Remedies Against Other Shareholders p.11 Challenge Directors p.7 3.5 Legal Remedies Against Auditors p.11 1.13 Shareholders’ Right to Appoint / Remove Auditors p.7 3.6 Derivative Actions p.11 1.14 Disclosure of Shareholders’ Interests in the 3.7 Strategic Factors in Shareholder Litigation p.12 Company p.7 1.15 Shareholders’ Rights to Grant Security over / Dispose of Shares p.8 1.16 Shareholders’ Rights in the Event of Liquidation / Insolvency p.8 2 LAW AND PRActice INTRODUCTION Walder Wyss Ltd has more than 200 lawyers and is one of intellectual property and information technology, as well the fastest growing Swiss full-service commercial law firms, as dispute resolution (litigation and arbitration). The client with offices in Zurich, Geneva, Basel, Berne, Lausanne and base is comprised of domestic and multinational corpo- Lugano. Walder Wyss offers services in the following areas: rations of all sizes, including financial services providers. transactional services (corporate, M&A, equity and debt Walder Wyss has been appointed as a panel firm for several capital markets, banking and finance, regulatory law), tax, listed companies. Author Theodor Härtsch is a partner in the transaction team in Zurich and heads the firm’s banking and finance department. He regularly advises on capital markets law (initial public offerings, rights issues), public M&A matters and corporate and capital markets compliance. Additionally, he advises banks and corporate clients in financing matters (debt and equity financing) and advises financial institutions on regulatory matters. In the area of collective investment schemes, Theodor supports clients in licensing and distribution matters. Before joining Walder Wyss, Theodor was a partner in the Zurich office of a large international law firm and had various roles in the banking sector. He recently obtained an MBA from IE Business School, Madrid. 3 INTRODUCTION LAW AND PRActice 1. Shareholders’ Rights • ad hoc disclosure of potentially price-sensitive informa- tion; 1.1 Types of Company • disclosure of management transactions; In Switzerland, the most common form for companies is the • preparation of annual corporate governance report. stock corporation. An overwhelming share of all companies takes this form. According to the Swiss Federal Office of Sta- All of the above disclosure requirements aim at ensuring tistics, there were approximately 118,500 stock corporations full transparency for shareholders. The information allows as of 31 December 2017. shareholders to form an informed judgement about the busi- ness and the prospects of any corporation. The information Swiss laws and regulations do not, with few exceptions, dis- contained in the corporate governance report is often the tinguish between large or small stock corporations. General- basis for activist shareholders to form their strategy in rela- ly, all stock corporations are subject to the same legal regime. tion to a particular target corporation. The basis for potential It does not matter whether they are closely held corporations action or areas to increase shareholder value is determined or listed on one of Switzerland’s stock exchanges, in particu- from the financial reporting and the compensation report. lar the SIX Swiss Exchange (SIX) and the BX Swiss (BX). The basics are contained in Article 620 and following of the Swiss Given that Switzerland is not a member state of the Euro- Code of Obligations (the CO). The respective provisions deal pean Union or the European Economic Area, respectively, among others with the following topics: the Directive (EU) 2017/828 amending Directive 2007/36/ EC as regards the encouragement of long-term shareholder • incorporation; engagement (Shareholder Rights Directive II) has not been • capital structure; transposed into Swiss law. • changes to the capital structure; • corporate governance; As a general rule, Swiss law does not restrict foreign per- • shareholders’ rights; sons from investing into Swiss companies. Again, there are • annual reporting; and a few exceptions to this rule. Most notably, corporations may • liquidation. foresee transfer restrictions in their articles of incorpora- tion. While the transfer restrictions in case of publicly listed Nevertheless, in the past decades Switzerland has adopted companies are very limited, closely held companies enjoy a specific rules applicable to listed companies only. These rules broader freedom when it comes to defining reasons why not are very often related to shareholders’ rights or the result of recording a shareholder in the share register as a shareholder shareholder activism. We would like to mention two sets of with voting rights. Typically, companies that invest in resi- rules applicable to listed companies: dential real estate foresee investment restrictions for foreign- ers, as the acquisition of residential real estate by foreigners • rules relating to the disclosure of significant sharehold- is subject to detailed regulations in Switzerland. Generally, ings (Article 120 and following of the Swiss Federal non-Swiss and EEA nationals are not allowed to acquire resi- Financial Infrastructure Act, FMIA) and takeover offers dential real estate at all (so-called Lex Koller). Accordingly, (Article 125 and following, FMIA); and even listed real estate companies will endeavour to exclude • rules on the excessive compensation in listed companies. foreigners from becoming a shareholder in the respective corporation. Both sets of rules apply to listed companies only. As a general rule, the rules set out in the FMIA (disclosure of significant 1.2 Type or Class of Shares shareholdings, takeover offers) apply to Swiss corporations Currently, there are various ways to define the capital struc- and to foreign corporations with a primary listing in Switzer- ture of a corporation and the shareholder structure. The first land. The rules contained in the Ordinance on the Excessive and most important distinction is the distinction between Compensation in Listed Companies apply to Swiss corpora- registered shares (with or without transfer restrictions) and tions listed on any (domestic or foreign) stock exchange. bearer shares. It is expected that the latter will be abolished from 1 January 2020, with a transitory period of 18 months. Listed companies are subject to the listing rules of the exchange on which the securities are listed, with SIX Swiss Swiss shares represent part of the share capital. They must Exchange being the most important exchange in Switzer- have a nominal value (expressed in Swiss Francs or a frac- land. Its listing rules foresee a number of additional obli- tion thereof, with the minimum nominal value per share gations which are relevant for the exercise of shareholder being CHF0.01). Also, Swiss law allows for the possibility to rights, including: create voting shares. The legislator has enacted some restric- tions applicable to voting shares with the aim of protecting • annual and semi-annual reporting; the ordinary shareholders. These restrictions can be sum- marised as follows: 4 LAW AND PRActice INTRODUCTION • The nominal value of the voting shares must not be less Not all of the above participation rights are equally available than one tenth of the nominal value of ordinary shares to all shareholders, but they may depend on reaching a cer- (Article 693, paragraph 2 CO). tain threshold (see 1.6 Rights Dependent Upon Percentage • The fundamental resolutions of the shareholders’ meeting of Shares). require not only the approval of a majority of two thirds of the votes represented at a shareholders’ meeting but in Alternatively, it is possible that shareholders enter into agree- addition the approval of more than 50% of the nominal ments among themselves (eg, members of a family holding a values represented at such shareholders’ meeting. For a controlling stake in a listed corporation). Even though very list of resolutions, see 1.8 Shareholder Approval. common in Switzerland, these shareholders’ agreements are typically not available to the general public.