SWITZERLAND Law and Practice Contributed by: Frank Gerhard, Andreas Müller and Timo Hasler, Homburger
Mandatory Offer Threshold ). A shareholders’ agree - ment may provide for a wide range of governance arrangements. 6.9 Voting by Proxy Swiss public companies send hard copies of their vot - ing materials (ie, the agenda, the motions and a voting card) to their shareholders and nominees. Sharehold - ers of Swiss public companies who do not want to attend a shareholders’ meeting in person may give voting instructions to the so-called independent vot - ing representative (ie, an independent proxy elected by the shareholders) by returning the hard-copy vot - ing card they have received by mail or, in the case of listed companies, electronically. As an alternative, shareholders may appoint any other person as their proxy. The articles of incorporation of some compa - nies require that such proxy be a shareholder of the company. 6.10 Squeeze-Out Mechanisms After the main offer period of a public tender offer has lapsed, the target shareholders who have not tendered their shares receive a grace period (the so- called additional acceptance period) during which they may tender their shares. Often, a significant por - tion of the remaining shares are tendered during that grace period. If the bidder holds more than 98% of the target’s vot - ing rights following a successful tender offer, it may squeeze out the remaining shareholders. To that end, the bidder must petition the court at the registered office of the target company for cancellation of the minority shares within three months of the end of the additional acceptance period. The court then orders the cancellation of the remaining shares. Thereup - on, the target must reissue the shares so cancelled and allot them to the bidder against payment of the offer consideration for the benefit of the sharehold - ers whose shares were cancelled. The court does not review the adequacy of the offer consideration. As an alternative, the Swiss Federal Merger Act allows the owner of at least 90% of the outstanding shares to carry out a squeeze-out merger with another Swiss company. Typically, the bidder would merge the tar - get company into a wholly owned subsidiary of the
bidder and the minority shareholders of the target would receive the same consideration as the share - holders who had tendered their shares received. The minority shareholders may challenge the merger and/ or the adequacy of the consideration in court. Thus, a squeeze-out merger de facto triggers an appraisal remedy. 6.11 Irrevocable Commitments Potential bidders commonly seek undertakings from the target’s major shareholders to tender their shares or enter into share purchase agreements with such shareholders (which may or may not be conditional on the success of the offer) before the offer is announced. If a shareholder is actively involved in the negotiations with the target concerning a friendly bid, the discus - sions usually cover tender undertakings by sharehold - ers as well. If a shareholder is not involved in the nego - tiations with the target, the bidder would typically seek tender undertakings after it has reached an agreement in principle with the target board. Tender undertakings are not strictly irrevocable: a shareholder has the right to withdraw from its ten - der obligation if a competing offer is announced. The same is the case if a share purchase agreement with the bidder is conditional upon the success of the offer. However, if an agreement with a shareholder is not conditional upon the success of the offer, the share - holder’s obligations are enforceable even if there is a competing offer. Undertakings to tender or to enter into a share pur - chase agreement have implications on the offer terms. If such undertakings have been entered into within 12 months before the offer is announced, the agreed con - sideration for the shares (which may include elements other than the price, such as a consideration in kind or the option value of any price adjustment provisions) may set a floor on the offer price (see 6.2 Mandatory Offer Threshold ) and the details of the undertakings have to be disclosed in the offer prospectus. Furthermore, a shareholder who has undertaken to tender or sell its shares to the bidder may be deemed to be acting in concert with the bidder. As a result, any transactions by such shareholder in equity securities
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