SWITZERLAND Law and Practice Contributed by: Christoph Neeracher, Philippe Seiler and Lukas Bründler, Bär & Karrer Ltd
Tax considerations also typically play an important role in determining the type of consideration that is eventually agreed upon. For public M&A transactions, the consideration can also be paid in cash, securities or a combination thereof. However, Swiss corporate and takeover law demands equal treatment of all shareholders, which imposes certain restrictions on the offeror. Offering cash consideration to specific majority sharehold - ers while offering securities to minority shareholders would not be allowed. In mandatory and change-of- control offers (see 7.3 Mandatory Offer Thresholds ), the offer price must meet the minimum price rule. This rule requires that the offer price be at least equal to the 60-day volume-weighted average price (VWAP) if the stock is liquid, or the highest price paid for securi - ties of the target company by the bidder(s) in the 12 months before the offer, whichever is higher. If the target shares are not deemed liquid from a takeover law perspective, the 60-day VWAP is replaced by a valuation to be provided by the review body. However, in partial tender offers or public tender offers for target companies with an opting-out provision in their arti - cles of association, the minimum price rule does not apply, and the bidder is free to set the offer price (the best-price rule, however, applies). In conclusion, the type of consideration accepted will in each case largely depend on the individual cir - cumstances of the transactions, eg, the shareholders involved and their intentions or the type of transac - tion. However, cash consideration has historically been, and is still, more frequent than a consideration in securities. 7.5 Conditions in Takeovers The permissibility of conditions that may be attached to a public takeover offer depends on whether it is a voluntary or a mandatory offer. With respect to mandatory offers, the competent authority only deems a limited number of conditions permissible, in particular a condition that there are no injunctions or court orders prohibiting the transac - tion and/or that necessary regulatory approvals will be granted, as well as conditions ensuring the ability of the offeror to exercise the voting rights (ie, entry in
the share register, abolishment of any transfer/voting restrictions). Regarding voluntary takeover offers, the legal framework for conditions is more liberal, mean - ing that voluntary takeover offers may contain condi - tions which include minimum acceptance thresholds and no MAC conditions. However, generally, it is not permitted for takeover offers to be conditional on the bidder obtaining financing, except for necessary capital increases in the bidder in connection with an exchange offer ( Umtauschangebot ). The most common conditions are that the necessary approvals from regulatory bodies will be granted, such as merger control filings with the relevant competition commission, or other specific approvals from supervi - sory authorities in regulated sectors, eg, the bank or pharmaceutical sector. 7.6 Acquiring Less Than 100% In a privately held company, a private equity buyer can, in general, secure additional governance rights by concluding a shareholders’ agreement (eg, veto rights, the right to appoint the majority of the members of the board of directors or certain rights connected to dividends, as well as rights of first refusal, call options, drag rights, etc). The extent of the governance rights under a shareholders’ agreement, however, is primar - ily subject to negotiations. In a public company, the possibilities to conclude a relationship agreement are limited, because if the shares covered by the agreement constitute an aggregate participation of more than a third, the sig - natories would generally be considered as a group, which would trigger the obligation of a mandatory offer. Moreover, it is not always necessary to formal - ise the investors’ influence further: depending on the shareholding structure, ie, if the structure is very frag - mented with many shareholders, 30% of the voting rights may be sufficient to secure decisive control in the company. Regarding a squeeze-out in a public company mecha - nism, under Swiss law an investor has two options: • under the FinMIA, a bidder holding 98% of the vot - ing rights of the company may, within three months upon expiry of the offer period, file for the cancella -
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