SWITZERLAND Trends and Developments Contributed by: Beda Kaufmann and Alexander von Jeinsen, Advestra
Antitrust In May 2023, the Federal Council published a revised draft for an amendment of the Swiss Cartel Act which is currently under deliberation by the Swiss Parliament. It provides, inter alia, for a change in the substantive test applied by the Swiss Competition Commission (ComCo) in assessing whether to prohibit a trans - action that is subject to merger control review. This means that the currently applicable CSDP (creation or strengthening of dominant position) test would be replaced by a SIEC (significant impediment of effec - tive competition) test, which is in line with international practice. Importantly, the draft does not propose to lower the turnover thresholds that have to be met for a compulsory notification of a transaction to ComCo. These thresholds are rather high compared to inter - national standards and therefore generally favourable from a dealmaking perspective. However, it is expect - ed that transactions that do need to be notified may more frequently be subject to ComCo investigations (so-called Phase II) going forward once the revised act comes into force. Company law reform A major reform of Swiss company law entered into force in January 2023. The reform addressed a wide array of topics, and while many of these changes are not immediately relevant for M&A transactions, there are certain exceptions. Most notably, the delisting of companies now requires shareholder approval, with a qualified majority of two-thirds of the voting rights and an absolute majority of the capital represented at the relevant general meeting of shareholders being applicable. Given the typical acceptance thresholds in Swiss P2P transactions, this is not expected to make it more challenging for private equity investors to take Swiss-listed companies private. The new law makes it easier for boards of directors to issue shares by introducing the concept of a capi - tal band. It allows boards to increase or reduce capi - tal within a range of between 50% and 150% of the issued share capital. The capital band is one of several ways the revised law aims to give companies more flexibility when it comes to share capital and divi - dends; another is the possibility of non-Swiss franc- denominated share capital. Further changes include a much-needed modernisation of the rules regard -
ing shareholders’ meetings and a stronger focus on companies’ liquidity in the context of restructuring and financial distress. ESG In January 2022, Switzerland saw the introduction of new ESG regulations on non-financial reporting obligations as well as due diligence requirements in connection with child labour and minerals and met - als from conflict areas. Whereas the former are only mandatory for larger listed companies and pruden - tially supervised large financial institutions, the latter have a broader scope of application. In principle, the new due diligence requirements are applicable to all natural and legal persons as well as business partner - ships whose registered office, central administration or principal place of business is in Switzerland, and which carry out a trade. The regulations do, however, provide for certain exemptions, in particular for SMEs. Companies that fall under the scope of these new regulations had to comply with them for the first time in the financial year 2023. However, a number of com - panies have already been producing reports on non- financial matters on a voluntary basis for several years now, as this is perceived as good corporate govern - ance and viewed favourably by many investors. Additionally, gender quotas for boards of directors and executive management were introduced on a “comply or explain” basis in January 2021. They will apply to most listed companies but are subject to transition periods of five (ie, until 2026) and ten years, respec - tively. Swiss law also recently saw the introduction of disclosure duties for Swiss companies in the natural resources industry, which now have to disclose cer - tain payments to government entities since the finan - cial year 2022. Of course, the breadth of topics that fall within the scope of ESG goes far beyond single legislative developments, and ESG considerations are expected to continue to be at the top of the private equity industry’s agenda going forward for various reasons besides compliance with these regulations. Outlook While the economic outlook remains uncertain and new challenges lay ahead in particular due to the new US tariff regime, the path ahead for private equity in Switzerland looks optimistic. The Swiss economy
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