20 Are there any other current developments or emerging trends that should be noted?
The Swiss financial market regulatory framework is currently undergoing fundamental and comprehensive reforms. The main purpose of these reforms is to harmonise Swiss regulations with existing and new EU regulations and to ensure access of Swiss financial institutions to the European market by fulfilling the equivalence requirements under Directive 2014/65/EU on markets in financial instruments.
These new financial market regulations are predominately set out in the:
- FMIA (which came into force on 1 January 2016);
- FinSA; and
The FMIA is of particular relevance in the context of equity capital markets in Switzerland, because it primarily regulates financial market infrastructure, disclosure of shareholdings, insider trading, market manipulation and public takeover offers. In addition, the FinSA includes, among other things:
- a new prospectus regime for public offerings of securities in Switzerland;
- the codification of exemptions from the duty to publish a prospectus; and
- provisions on prospectus liability.
The Swiss Parliament adopted the FinSA and FinIA in the final votes on 15 June 2018. After the referendum period expired on 4 October 2018, the Federal Council initiated the consultation on the three ordinances containing the implementing provisions for the FinSA and the FinIA (ie, the Financial Services Ordinance, Financial Institutions Ordinance and the Supervisory Organisation Ordinance) on 24 October 2018. The deadline for submissions was 6 February 2019. The definitive ordinances are expected to be approved by the Federal Council in autumn 2019, and both laws are expected to enter into force together with the implementing ordinances at the earliest on 1 January 2020 (with certain provisions only coming into force thereafter). Specifically, there will be a transition period in relation to full compliance with the final legislation as set out therein.
New prospectus regime
To establish a level playing field with internationally comparative prospectus disclosure standards across all types of financial instruments, FinSA sets out, among other things, content and prior approval requirements for all public offering prospectuses (eg, primary as well as secondary offerings prospectuses). These requirements are substantially modelled on the EU prospectus regime, which has also been subject to revision, culminating with the enactment of the EU Prospectus Regulation on 14 June 2017, which comes into full effect across the EU from 21 July 2019. Under the current regime in Switzerland, only stock exchange listing prospectuses must be approved before the first day of trading, and only in respect of equity securities.
Pursuant to the new legislation, subject to certain exemptions (such as eligible debt offerings), all public offering prospectuses will need to be reviewed and approved by the approval authority or reviewing body with respect to completeness, coherence and comprehensibility before the publication of the offering or the admission to trading on a Swiss trading platform. The prospectus approval process is, thus, expected to be split into:
- an approval process (ie, by the reviewing body); and
- an admission to trading process (ie, by the exchange admission body, such as SIX Exchange Regulation).
It is expected that Swiss stock exchanges will also amend their listing rules so that these two processes can operate in parallel and be coordinated. According to the accompanying draft ordinance to FinSA, this review will largely focus on the prospectus requirements outlined in the legislation and the formal compliance with the content guidelines annexed to the ordinance, which are significantly based on the well-established schemes under the SIX Listing Rules. Additionally, first-time issuers will be required to submit their prospectus for approval at least 20 calendar days (all other issuers at least 10 calendar days) before the publication of the offering or the admission to trading on a Swiss trading platform. It is expected that SIX and BX will apply to be competent reviewing bodies pursuant to the FinSA. In addition, in the context of IPOs, the approved prospectus will also need to be published at least six business days before the end of the offering period, therefore implementing a new minimum statutory requirement for the duration of IPOs.
To the extent that the issuer is required to publish a supplement to the prospectus prior to the end of the offering period or prior to the start of trading on the relevant trading platform (ie, in the event that new facts arise or are established that could have a significant influence on the assessment of securities), a supplement to the prospectus must be prepared and published. Subject to the nature of the event, the supplement may also require the approval of the relevant reviewing body prior to its publication, with the approval to be provided within a maximum of seven calendar days. If such new facts occur or are established during a public offer, the offer period cannot end sooner than two days after publication of the supplement.
Codification of exemptions from the duty to publish a prospectus
There are currently no express safe harbours from the duty to publish a prospectus in public offerings under Swiss law. The FinSA, however, includes express exemptions from the duty to publish a prospectus, which are largely consistent with the exemptions under the current EU regulations and existing SIX regulations.
The list of exempt transactions includes, among other things, offerings limited to investors classified as professional clients (eg, financial intermediaries under the meaning of the Banking Act, the FinIA and the Collective Investment Schemes Act), offerings addressed to fewer than 500 retail investors and offerings not exceeding a total value of 8 million francs over a period of 12 months. Regarding such offerings that do not require a prospectus, the FinSA further provides that offerers or issuers must treat investors equally when sharing essential information on an offer.
Under the FinSA, the existing prospectus liability regime will largely remain intact. In addition, with regard to information in summaries (required under FinSA), liability is limited to cases where such information is misleading, inaccurate or inconsistent when read together with the other parts of the prospectus. Furthermore, with regard to false or misleading information on the issuer’s prospects (also required under FinSA), liability is limited to cases where such information was provided or distributed against better knowledge or without reference to the uncertainty regarding future developments. The FinSA also introduces criminal liability in the event of intentional violation of the Swiss prospectus rules and regulations.
The FinSA will introduce a new era of securities regulation in Switzerland and a redesigned harmonised prospectus regime that aims to establish a level playing field with corresponding EU prospectus regulations. While parts of the new regulation will be manageable and consistent with well-established Swiss market practice (eg, content of prospectuses), other areas will require special attention from market participants and advisers.
Back to top