The SESTA sets the conditions for the establishment and operation of stock exchanges as well as for the professional trading in securities, in order to ensure transparency and equality of treatment of investors. Any public takeover offer must be examined by the Takeover Board, a Federal Commission with jurisdiction to apply the provisions applicable to public takeover offers.
Pursuant to Article 2 SESTA a public takeover offer shall mean any offer to purchase or exchange shares which is made publicly to the holders of shares or other equity securities of Swiss companies whose equity securities are listed on an exchange in Switzerland.
The Federal Banking Commission, the Supervisory Authority, emphasized in a decision taken last year that all public offers by a company on its own shares, including the publication of programmes to buyback on the stock exchange (second dealing line) are deemed to be public takeover offers within the meaning of Article 2 SESTA and are therefore subject to chapter 5 SESTA. The provisions under chapter 5 SESTA regulate the procedure of a public takeover offer such as publishing a prospectus with detailed information on the offeror (e.g. the offer prospectus shall provide information on the offeror's general intentions concerning the offeree company), submitting the prospectus to the Takeover Board as well as to an auditor, notifying the conducted transactions and publishing the interim results.
The Federal Banking Commission is of the opinion that the SESTA grants the shareholders wider protection of their rights in particular regarding transparency and fairness compared to the provisions of company law which refer to the buyback of own shares. The presence of the latter provisions are, however, of relevance to interpret the takeover regulation and to grant exemptions since they ensure at least partly equal treatment and good faith.
The Takeover Board may exempt the company, either in whole or in part, from the obligation to respect the provisions on public takeover offers as long as equal treatment, transparency, fairness and good faith are guaranteed, and furthermore there is no sign that the SESTA or any other legal provisions are circumvented. Exemptions will be given if the following conditions are fulfilled:
- The liquidity of the market in the shares is not substantially reduced by the buyback offer.
- The structure of the share ownership of the company, in particular the position of the major shareholders, is not substantially changed by the buyback offer.
- The buyback offer concerns a maximum of 10% of the votes and of the share capital of the company.
- At the time of publication of the buyback offer, the closing date of the last published consolidated (interim) report is not more than nine months ago.
- The company confirms in the offer that it does not possess any non-public information which could have a decisive influence on the decision of the shareholders.
- The company discloses in the offer how the shares which are bought back are to be used.
- The offer is to be published not less than ten trading days before expiry of the offer period. In the publication, the offer price may remain open. In such case, the company must disclose the offer price over the electronic media no less than three days before expiry of the offer period; the offer may be accepted only after such disclosure.
The application for the exemption of a buyback offer including the proposed text of the offer must be addressed to the Takeover Board no later than ten trading days before the intended publication of the offer.
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.
