SWITZERLAND Law and Practice Contributed by: Philippe Reich, Meera Rolaz, Kaspar Projer, Samantha Salsench and Anna Zellweger, Baker McKenzie Switzerland AG
Provisions with licensing grounds to enable the establishment of ring-fencing in the Ukraine Ordinance In a situation of presumed ownership or control of an entity by a designated person, the relevant restrictive measures would also apply to the non-designated entity. The Ukraine Ordinance provides for licensing grounds in Articles 15 paragraph 10 and 28e para - graph 4 in the event that the establishment, certifica - tion or evaluation of ring-fencing measures is hindered by such restrictive measures. Beneficiaries of the ring-fencing measures SECO requires that the beneficiaries of ring-fencing measures are companies or organisations established in Switzerland, significant both in terms of their market position and their employment volume, active in the sectors of food production, pharmaceuticals, fertiliz - ers, chemicals, water management and wastewater treatment or nuclear power, for being regarded as “essential” (SECO FAQ, point 1.11). This coincides with the criteria of the EU, which take into account the positioning and significance of the entity on a national market or the European market, both in terms of mar - ket positioning and employment volume, as well as its activity in any of those “essential” sectors (see EU Guidance Note – Implementation of Firewalls in cases of EU entities owned or controlled by a designated person or entity, p. 3). Types of measures The measures must prevent designated individuals or entities from exercising their rights in relation to their ownership or control and ensure that no funds or economic resources are made available directly or indirectly to the designated person (SECO FAQ, point 1.11). Such measures should accordingly: • hinder the involvement of the designated person in the day-to-day and business decisions of the entity in question; • ensure that no funds or economic resources from the entity are accrued directly or indirectly by the designated person; • ensure that the designated person cannot assert influence over the entity; and
• remove the designated person from any responsi - bility in the entity, including any executive activities like those of a director or member of the board of directors or any decision-making role or any other role that entails any responsibility in the entity. Criteria to assess the ring-fencing measures SECO follows the criteria for ring-fencing measures provided in the EU “Guidance Note – Implementation of Firewalls in cases of EU entities owned or controlled by a designated person or entity” and particularly its Annex 2 (see SECO FAQ, point 1.11). Accordingly, the entity that establishes ring-fencing measures has to resort to an external auditor that implements and/or certifies the effectiveness of the changes to the entity’s corporate governance. The audit must be able to confirm that the designated person does not exercise influence or has any respon - sibility in the entity or benefit from the assets of the entity (eg, via dividends). It is central that this external auditor acts in full independence. The audit process shall be based at least on the following information: • articles of association, by-laws, shareholder struc - ture and a description of the changes that have taken place to remove the control by the designat - ed person (eg, board minutes attesting to manage - ment changes in the entity); • interviews with the entity’s executives other than the designated person; and • written undertakings given by the non-designated chief executive, engaging their responsibility on the ring-fencing measures. Procedure followed by SECO In case of presumption of ownership or control, the establishment of ring-fencing measures is necessary to rebut this presumption and benefit from an authori - sation – eg to release the entity’s frozen assets. The process will generally include the following steps: • filing of an application before SECO for the imple - mentation of the proposed ring-fencing measures and provision of information on the significance of the entity and the compliance with the other requirements to benefit from such measures, as presented above;
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