SWITZERLAND Law and Practice Contributed by: Marco Toni, Gilles Pitschen, Leonard Baumann and Lara Pafumi, Loyens & Loeff
a break right in case a better competing takeover offer is announced. 6.11 Additional Governance Rights If a bidder cannot obtain 100% ownership of a target company, the following statutory governance rights apply, depending on the exact shareholding: • a shareholding of more than 50% of the voting rights allows the bidder to pass shareholders’ resolutions, unless Swiss law or the constitutional documents of the company prescribe a qualified majority; and • a shareholding of 66.6% of the voting rights allows the bidder to pass resolutions requiring a qualified majority (eg, a delisting). In addition, Swiss law recognises the following gov- ernance instruments: • super-voting shares or preference shares granting preferential dividend and/or liquidation entitle- ments; • voting restrictions (eg, limiting the percentage of voting rights of a shareholder); • restriction of “empty voting” (eg, limitation of the exercise of voting rights by persons who do not bear the economic risk of the shares they hold); and • transfer restrictions on the shares issued (eg, limi- tation of the percentage of shares a shareholder is permitted to acquire); 6.12 Irrevocable Commitments In Switzerland, it is common to obtain irrevocable commitments from key shareholders of the target company to support the transaction, either through tendering their shares into the offer or selling their shares before the offer is announced. The nature of these undertakings depends on wheth- er the underlying agreement contains any conditions with regard to the success of the offer. Such condi- tions allow the shareholder to withdraw from the ten - der or sale if a better competing offer is announced at a later stage. In the absence of such conditions, withdrawal would not be possible.
Depending on the exact timeline, the details of the agreement must be disclosed in the offer prospectus, and the price paid affects the minimum offer price (see 6.4 Consideration and Minimum Price ). 6.13 Securities Regulator’s or Stock Exchange Process Mandatory and voluntary public tender offers are reviewed by the Swiss Takeover Board prior to pub- lication of the offer. The review by the Swiss Takeo- ver Board has to be completed within “a short period of time” and normally takes around three weeks. As part of the review, the Swiss Takeover Board verifies whether the terms of the offer are in compliance with Swiss law. This includes compliance with the best price rule, the conditions of the offer and the fairness opinion on the offer price, as well as with the pro- visions of the transaction agreement with the target company. Prior to the publication of the offer, the bidder nor- mally publishes a pre-announcement. The publica- tion of a pre-announcement is not mandatory but is common. The offer prospectus has to be published within six weeks following the pre-announcement. The timeframe for the tender offer is determined by the bidder and disclosed in the pre-announcement or offer prospectus based on the deadlines set forth in the Ordinance of the Swiss Takeover Board (see 6.14 Timing of the Takeover Offer ). If a competing offer is announced during the offer period, the shareholders are free to choose between the earlier offer and the competing offer. To enable this free choice, the Swiss Takeover Board would consult the parties involved and co-ordinate the timeframes of both offers. Specifically, it may determine a maximum offer period and limit the deadlines for amendments of the offers. 6.14 Timing of the Takeover Offer Under Swiss takeover laws, the general offer period is at least 20 business days and has a maximum length of 40 business days. The offer period may be short- ened by the Swiss Takeover Board upon request of the bidder if the bidder already holds a majority of voting rights and the report of the board of directors is published in the prospectus.
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