Switzerland: Disclosure Of Delegated Voting Rights

Last Updated: 13 June 2017
Article by Rashid Bahar

On March 1 2017, the Swiss rules on the disclosure of substantial shareholdings were amended. As a result, persons and entities exercising a discretionary power to vote shares based on the delegation of voting rights may now disclose either the person effectively exercising discretion or the consolidated position held by the ultimate controller.

This reform corrects the rules on the disclosure of substantial shareholdings that had been in force since January 1 2016. Those rules provide for a separate obligation to disclose substantial shareholdings for persons who effectively have the discretionary power to exercise the voting rights associated with equity securities of Swiss issuers listed on a Swiss exchange, or foreign issuers that are primarily listed on a Swiss exchange, whenever the voting rights are not exercised directly or indirectly by the beneficial owner (article 120 (3) of the Federal Act on Financial Market Infrastructures and Market Conduct in Securities and Derivatives Trading of June 19 2015, Financial Market Infrastructure Act, [FMIA], SR 958.1). This obligation was introduced in response to a ruling of the Swiss Federal Supreme Court holding that a previous incarnation of this rule with a narrower focus did not rest on a sufficient statutory basis (decision of the Swiss Federal Supreme Court 2C_98/2013 of July 29 2013). This obligation applies now in parallel to the general rules, which govern the disclosure of substantial shareholdings by persons who acquire shares directly, indirectly or in a concerted action with third parties (article 120 (1) FMIA).

Amended disclosure rules

When article 120 (3) FMIA was enacted, article 10 (2) Ordinance of the Swiss Financial Markets Authority on Financial Market Infrastructures and Market Conduct Securities and Derivatives Trading of December 3 2015 (FMIO-Finma, SR 958.111) provided that the shareholdings of persons exercising a discretionary power to vote needed to be aggregated at the level of the ultimate controller. For example, financial groups were required to aggregate voting rights that were exercised by asset management entities.

While this regime was well suited to large financial groups, it created practical difficulties for privately held groups and private banks, who advocated a change of the disclosure rules. After an initial consultation suggesting a separate disclosure by the entity effectively exercising voting rights, Finma opted to allow market participants to choose how they intended to aggregate and disclose their positions.

Under the new regime, the disclosure duty applies to persons effectively exercising a discretionary power to vote shares (article 10 (2), first sentence, FMIO-Finma), for example, an asset management entity. However, market participants will also have the option to comply by aggregating and disclosing their positions on a consolidated basis at the level of the controlling person (article 10 (2), second sentence, FMIOFinma), for example, the ultimate holding company or the controlling shareholders, if any. In all cases, the disclosure form filed with the company and the exchange will need to distinguish which shares are subject to a discretionary power to exercise the voting rights and which are beneficially owned (article 22 (a)(1) FMIO-Finma). Furthermore, if an investor opts to disclose on a consolidated basis, the disclosure form must also expressly mention this (article 22 (a)(2) FMIO-Finma).

These new rules entered into force on March 1 2017. However, market participants have until August 31 2017 to comply with them (article 50a FMIOFinma). All market participants having previously disclosed a position because of a discretionary power to vote shares will need to restate their position under the new rules and chose to disclose their positions either on an entity or on a consolidated basis. Other investors are not affected by this amendment and do not need to restate their position.

Practical impact for asset Managers

The new rules will concern primarily asset managers who can exercise the voting rights of shares held through managed accounts or private investment vehicles controlled by their clients. Asset managers will benefit from these rules as they will have the choice to disclose the position at the level of the asset manager or aggregate them with the position of the person who ultimately controls them. By contrast, holdings of investment funds and other collective investment schemes, as a matter of principle, continue to be governed by a specific regime for the disclosure of shareholdings by collective investment schemes (see article 18 FMIO-Finma), which is not affected by this amendment. However, to the extent a fund management company delegates the management of the portfolio including the discretion to exercise the voting rights to another entity, for example, an asset management company, the latter will also need to aggregate the position under article 120 (3) FMIA and either disclose the position at entity level or, consolidate it with the position of the rest of the group and delegate it as such.

Outlook

Overall, the new rules provide additional flexibility to persons subject to the obligation to disclose a discretionary power to exercise voting rights, in particular asset managers. However, all market participants enjoying a discretionary power to exercise voting rights should review their positions and, if they exceed a disclosure threshold, restate their filings by August 31 2017. By contrast, other market participants subject to the Swiss disclosure rules are not affected by this amendment.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Rashid Bahar
Similar Articles
Relevancy Powered by MondaqAI
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions