SWITZERLAND Law and Practice Contributed by: Nicolas Wehrli and Melanie Wilhelm, Loyens & Loeff
8.3 Producing Financial Statements In a stock-for-stock transaction, bidders must dis- close the last three years’ financial statements of the company whose stocks are being offered. Companies listed on a stock exchange and larger undertakings must prepare financial statements in accordance with a recognised financial reporting standard. 8.4 Disclosure of Transaction Documents The prospectus for a public tender offer needs to be submitted to the Swiss Takeover Board for review and clearance. In general, the directors of a Swiss company: • have a duty of loyalty towards the company; • must always pursue the company’s best interest with due care; and • must apply equal treatment to all shareholders (so- called fiduciary duties). These fiduciary duties apply in the event of a business combination and other forms of M&A transactions. There is no general definition of what constitutes the “best interest of the company”. In recent years, Swiss scholars have debated whether such definition includes only the shareholders’ interests (shareholder approach) or whether the interests of other stakehold- ers must also be considered (stakeholder approach). Despite these discussions, in business combinations, a company’s interests should encompass not only value growth and fair shareholder compensation but also the interests of other stakeholders. Directors have discretion to weigh these different interests as they deem appropriate. 9. Duties of Directors 9.1 Principal Directors’ Duties The principle of equal treatment of the sharehold- ers must always be observed, as long as it does not contradict the company’s best interest. For Swiss companies whose shares are at least partly listed in Switzerland, the Swiss takeover rules already take this
principle into account (eg, by stipulating the best price rule so that all shareholders may sell their shares for the same price). The Swiss takeover law further stipu- lates the principle of equal treatment of different bid- ders. Extensive exclusivity agreements with individual potential buyers that prevent the board of the target company from negotiating with other potential buyers are likely to be unlawful in light of this principle. 9.2 Special or Ad Hoc Committees Swiss listed companies often establish a special or ad hoc committee in the context of M&A transactions. This approach helps to avoid conflicts of interest and can streamline the transaction process. While certain tasks may be delegated to the special or ad hoc com- mittee, important strategic decisions (eg, granting due diligence to a party or deciding to defend the com- pany) must be made by the full board, excluding the principal directors with conflicts of interest. 9.3 Role of the Board Prior to the launch of a public takeover offer, the board is actively involved in the negotiations with potential buyers. It is the board’s responsibility to review the proposal of a potential buyer. At this stage, the board is guided by whether it is in the best interest of the company to continue the takeover process. If the board concludes that the offer is not in the best inter- est of the company, it may abandon the negotiations. However, if the board decides to proceed, the share- holders will have the final decision on whether or not to accept the offer. The Swiss takeover law further specifies the role of the board of a listed target company once a public tender offer has been made. The board must prepare a report for the shareholders outlining its position on the offer. In addition, the board is prohibited from entering into legal transactions that might signifi- cantly alter the company’s assets or liability (eg, the sale or acquisition of assets representing more than 10% of the total assets or contributing more than 10% to the company’s profitability). This restriction limits the board’s ability to take defensive measures at this stage. However, certain defensive measures may still be taken, such as actively seeking a “white knight” (while considering the principle of equal treatment of different bidders), conducting PR communications or
386 CHAMBERS.COM
Powered by FlippingBook