SWITZERLAND Law and Practice Contributed by: Marco Toni, Gilles Pitschen and Leonard Baumann, Loyens & Loeff
6.12 Irrevocable Commitments In Switzerland, it is common to obtain irrevo- cable 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 whether the underlying agreement contains any conditions with regard to the success of the offer. Such conditions allow the shareholder to withdraw from the tender or sale if a better com- peting 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 mini- mum 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 publication of the offer. The review by the Swiss Takeover 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 the provisions of the transaction agreement with the target company. Prior to the publication of the offer, the bidder normally publishes a pre-announcement. The publication of a pre-announcement is not man- datory but is common. The offer prospectus
• matching rights and break fees. These measures are all subject to the fiduci- ary duties of the board of directors of the tar- get company and, therefore, must not be overly restrictive. Break-up fees and reverse break-up fees are generally limited up to the amount of coverage of reasonable costs incurred at the level of the bidder. Punitive break fees are not admissible and transaction agreements must contain 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 gov- ernance rights apply, depending on the exact shareholding. • A shareholding of more than 50% of the vot- ing rights allows the bidder to pass share- holders’ resolutions, unless Swiss law or the constitutional documents of the company prescribe a qualified majority. • A shareholding of 66.6% of the voting rights allows the bidder to pass resolutions requiring a qualified majority (eg, delisting). In addition, Swiss law recognises the following governance instruments: • super-voting shares or preference shares granting preferential dividend and/or liquida- tion entitlements; • transfer restrictions on the shares issued allowing the board of directors (and indirectly the bidder through the relevant board repre- sentatives) to reject new shareholders (eg, competitors); and • veto rights at board level.
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