SWITZERLAND Law and Practice Contributed by: Nicolas Wehrli and Melanie Wilhelm, Loyens & Loeff
4.11 Additional Governance Rights If a bidder cannot obtain 100% ownership of a tar- get company, there are several statutory governance rights depending on the exact shareholding: • a shareholding of more than 50% allows the bidder to pass shareholders’ resolutions, unless Swiss law or the company’s constitutional documents pre- scribe a qualified majority; and • a shareholding of 66⅔% allows the bidder to pass resolutions requiring a qualified majority (eg, delist- ing). In addition, Swiss law recognises the following gov- ernance instruments: • super voting shares or preference shares granting preferential dividend and liquidation entitlements; • transfer restrictions on the issued shares, allow- ing the board of directors (and indirectly the bidder through the relevant board representatives) to reject new shareholders (eg, competitors); and • veto rights at board level. 4.12 Irrevocable Commitments In Switzerland it is common to obtain irrevocable com- mitments from key shareholders of the target com- pany to support the transaction, either by tendering their shares into the offer or by selling their shares before the offer is announced. The nature of these undertakings depends on wheth- er the underlying agreement contains any conditions regarding the success of the offer. Such conditions allow the shareholder to withdraw from the tender or sale if a better competing offer is announced at a later stage. In the absence of such condition, withdrawal would not be possible. Depending on the exact timeline, the details of the agreement must be disclosed in the offer prospectus, and the price paid affects the minimum offer price (see 4.4 Consideration and Minimum Price ). 4.13 Securities Regulator’s or Stock Exchange Process Mandatory and voluntary public tender offers are reviewed by the Swiss Takeover Board prior to pub-
from publication of the merger in the Swiss Official Gazette of Commerce. 4.9 Requirement to Have Certain Funds/ Financing to Launch a Takeover Offer Upon publication of the offer prospectus in connec- tion with a public tender offer, the bidder must confirm that the funds required to finance the takeover will be available on the settlement date. Under Swiss public takeover laws, an independent review body (auditor) must confirm the availability of the necessary funds. For debt-financed offers, the executed financing doc- umentation (not just a term sheet) should be available, as the financing banks will issue their commitment letters only under such documentation. The permissibility of conditions and covenants in the financing documentation are admissible but limited and must correspond to the offer conditions. Offers conditioned on obtaining financing are not permitted, as the financing documentation must be available in executed form at the time of publishing the prospec- tus. There is no certain funds requirement in a statutory merger. 4.10 Types of Deal Protection Measures To secure the support of a transaction, the bidder and the target company may enter into a transaction agreement and agree on deal protection measures. Typical deal protection measures include: • the undertaking of the board of directors of the target company to support the deal; These measures are subject to the fiduciary duties of the board of directors of the target company and must not be overly restrictive. Break-up fees and reverse break-up fees are generally limited up to the amount covering reasonable costs incurred by the bidder. Punitive break fees are not admissible, and transac- tion agreements must contain a break right in case a better competing takeover offer is announced. • non-solicitation provisions; and • matching rights and break fees.
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