SWITZERLAND Law and Practice Contributed by: Marco Toni, Gilles Pitschen and Leonard Baumann, Loyens & Loeff
If a bidder is subject to a mandatory offer (see 6.2 Mandatory Offer ), offer conditions are lim- ited to regulatory approvals and registration as shareholder in the share register. 6.6 Deal Documentation In Switzerland, it is common to enter into a trans- action agreement between the bidder and the target in connection with a takeover, which is supported by the board of directors of the target company. The transaction agreement would typically con- tain the following undertakings of the target company: • co-operation undertakings with regard to access to information, publication of financial statements, notice of relevant events/violation of covenants/actions threatening the comple- tion of the transaction; • non-solicitation of other offers (no-shop undertakings); • future management structure; • information obligation with regard to compet- ing offers or related enquiries; • joint press releases; • obtaining a fairness opinion; • fulfilment of specific offer conditions; • reasonable best efforts to solicit the tender of the shares; • compliance with takeover regulations; • convocation of shareholders’ meeting to elect new board members appointed by the bidder; • registration of the bidder in the share register after completion; • conduct of business undertakings; and • payment of a break fee if certain covenants, laws, regulations or conditions are violated. It is also common to include representations and warranties in a transaction agreement. These are
normally limited to fundamental representations and warranties (due incorporation, accuracy of information, valid issuance of shares, and no vio- lation of any contractual or constitutional obliga- tions). In the case of mergers, it is mandatory to enter into a merger agreement between the merging entities, and the Swiss Merger Act prescribes a mandatory minimum content. There are no spe- cific obligations of the target company and it is not common to provide any representations and warranties. 6.7 Minimum Acceptance Conditions Minimum acceptance conditions prescribing that the bidder (after the expiry of the offer peri- od) directly or indirectly owns a certain number of target company shares are permitted and common in voluntary public tender offers (see 6.2 Mandatory Offer ). In principle, a threshold of 66.6% of the outstanding target shares is usually accepted by the Swiss Takeover Board. However, there is no specific control threshold for minimum acceptance conditions, as long as such thresholds are not unreasonably high. Based on case law of the Swiss Takeover Board, the following general rules apply, subject to a case-by-case analysis: • thresholds of 50% are reasonable for partial offerings; • thresholds of 66.6% or less are in principle reasonable; • thresholds of 66.6% or more are only reason- able in specific situations; and • thresholds of 90% are reasonable in case of holding offerings. With a 66.6% majority, a shareholder is able to control all important decisions of a Swiss target company according to Swiss law, unless the
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