SWITZERLAND Trends and Developments Contributed by: Daniel Raun, Andreas Hinsen and Rashid Bahar, Advestra
• undertakings active in the areas of pharmaceuti - cal and medical devices, vaccinations or personal medical protective equipment; • undertakings operating or controlling domestic (a) harbours, airports or hubs for the transporta - tion of goods and people, (b) railway infrastructure, (c) food distribution centres, (d) telecommunication networks, or (e) important financial market infrastructures; or • systemically important banks. In addition, the Swiss Federal Council may add addi - tional criteria for a maximum of twelve months if this is required to ensure public safety. Overall the definition of critical activities is limited and covers sectors that are already today currently integrated in the public sector or otherwise in state- ownership, the main exceptions being large undertak - ings providing critical IT services to the government, pharmaceutical and medical device producers, finan - cial infrastructures and systemically important banks. An undertaking is “domestic” or Swiss if it is regis - tered in a Swiss commercial register. Swiss beneficial ownership is neither required nor relevant. In fact, also foreign-owned undertakings are subject to the new approval regime if they are registered in a Swiss com - mercial register. Hence, Swiss subsidiaries of foreign groups of companies will also be subject to the new ISA, even if the change of control occurs at parent level. Beyond this, the ISA will not have an extrater - ritorial effect, eg, on foreign undertakings providing on a pure cross-border basis critical goods or services to Switzerland. Foreign state-controlled investors The Swiss FDI regime focus on protecting Swiss criti - cal activities from state-controlled investors. From this perspective, the following persons or entities fall under the definition of foreign state-controlled investor: • foreign government body; • undertaking with its head office outside Switzer - land;
• company with legal capacity that is directly or indi - rectly controlled by a foreign governmental body; and • a natural or legal person acting on behalf of a for - eign governmental body. Whilst the wording of the statute remains somewhat unclear, the legislative materials reveal a rather broad scope with respect to the aspect of foreign control. Therefore, the new law could even capture cases where a government merely provides funding for a takeover or where an acquisition is subject to govern - mental approval in another jurisdiction. Under the ISA, control is generally understood as the ability to exert significant influence on the busi - ness affairs and management of a target undertaking, whether or not such influence is actually exercised. Typically, control is obtained through the acquisition of 50% or more of the shares or other voting securities, directly or indirectly. However, the legislative materials clarify that in the case of a widely held share owner - ship (eg, in a public company), a target may already be deemed controlled if an investor acquires a share ownership of 20 or 30%. Procedure and sanctions regime From a procedural perspective, the ISA provides for the possibility of requesting a preliminary decision on whether a takeover falls under the notification duty from the Swiss State Secretariat for Economic Affairs (SECO). The ordinary procedure is separated into two stages. • In phase I, SECO will decide within one month whether (i) the takeover will be approved or (ii) a full review phase (phase II) will be initiated. • If the procedure moves to phase II, SECO will decide within three months of receipt of a complete filing whether the takeover will be approved. The sanctions regime provides that, first and foremost, until the approval is granted, the effectiveness of the takeover is suspended. In addition, the Federal Coun - cil may order the necessary measures if a takeover was completed without authorisation. Such measures explicitly include the disposal of the respective target. Further, in such a case, the combined entity may be
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