The Swiss Exchange has recently published REVISED LISTING RULES which shall enter into force on 1 October, 1996. They will apply to the listing on the Swiss Exchange (where currently only foreign bonds are traded) and to the listing on the exchanges of Basle-Stadt, Geneva and Zurich until the Swiss Exchange will take over the activities from the mentioned traditional exchanges.
The following gives a short overview of the Listing Rules.
I. Harmonisation with EC Law
The Listing Rules follow the corresponding EC Directives closely, i.e. the Admission Directive (Directive co-ordinating the conditions for the admission of securities to official stock exchange listing; 79/279/EEC), the Listing Particulars Directive (Directive co-ordinating the requirements for the drawing up, scrutiny and distribution of the listing particulars to be published for the admission of securities to official stock exchange listing; 80/390/EEC) and the Interim Reports Directive (Directive on the information to be published on a regular basis by companies, the shares of which have been admitted to official stock exchange listing; 82/121/EEC).
II. Requirements regarding the issuer
As to the company law principles the Listing Rules are not restrictive. It suffices that the establishment, the articles of association or the deed of partnership of the issuer comply with the national law to which it is subject.
The issuer must have presented accounts covering three complete financial years but the Admission Board may allow exemptions under a directive which has not yet been published. The issuer must have capital resources of at least SFr. 25 mio. The capital resources are calculated on a consolidated basis for parent companies.
Deviations from the above requirements may be allowed if a third party that fulfils the listing requirements provides a guarantee commitment (e.g. a guarantee, surety or keep-well agreement) with respect to the obligations attached to the securities.
III. Requirements regarding the securities
A minimum capitalisation of SFr. 25 mio. is required in the case of EQUITY SECURITIES to be listed for the first time. In the case of equity securities of the same issuer already listed in another category, a minimum of SFr. 10 mio. is adequate for the listing of further equity securities. The minimum capitalisation for LOAN SECURITIES amounts to SFr. 20 mio. (nominal value). Specific rules cover the minimum capitalisation for derivatives.
The listing requires an adequate distribution of the securities amongst the public to enable them to be traded on the market. In the case of equity securities, adequate distribution is considered to have been reached when the security for which listing is being requested is in the hands of the public to the extent of at least 25% (or if the applicant can show evidence that a lower percentage is unlikely to affect the proper operation of the market). Evidence that adequate distribution of the securities will be reached shortly after listing may suffice. In the case of loans and derivatives, a declaration from the lead manager that the placing in the public allows a proper market operation is sufficient evidence of adequate distribution.
Permanent global certificates and uncertificated securities can be listed.
Equity securities of an issuer which are not listed in its home state (state of incorporation or where a majority of its shares are held) may be listed provided that the issuer proves that the absence of a listing in such state is not due to the need to protect investors.
IV. Documentation and publication obligations
1. Listing particulars (prospectus)
The listing particulars must be published in either German, French, Italian or English no later than the day of listing.
The listing particulars shall mention any special risks and set forth:
- the persons or companies bearing responsibility for the contents of the listing particulars;
- the securities;
- the issuer, including its annual accounts and auditors' report; and
- the guarantor (if any);
so that an informed assessment of the assets and liabilities, financial position, profits and losses and prospects of the issuer, as well as the rights attached to the securities by a sophisticated investor is ensured. Important information shall be emphasised in a prominent place by being printed on the first page.
An exemption from drawing up listing particulars may be granted (i) if listing particulars relating to the issue of the securities in question were published within the last three months, (ii) if the issuer has published an information memorandum which is equivalent to listing particulars within the last three months, (iii) if the equity securities result from a capital increase by less than 10% (or the issue volume being less than 10% of the market capitalisation of the securities already listed) or (iv) if equity securities are allotted to employees and the same class of securities is already listed. Furthermore, abridgements of the listing particulars are admitted in certain circumstances.
Information regarding the issuer may be omitted from the listing particulars if such information was contained in listing particulars published within the three months preceding the listing application. By contrast, all information relating to the securities and the issue must be provided in full in the listing particulars.
The disclosure obligations must be fulfilled by both the issuer and the guarantor.
2. Listing notice (advertisement)
The listing particulars need not necessarily be printed in newspapers. It suffices that they are obtainable from the applicant. However, in the latter case, the issuer must publish a notice referring to the listing. Such listing notice shall inform about the listing applied for (description of the issuer, the securities, the conditions attached to the securities, the exchanges where the securities are already listed or listing has been applied for and, above all, any factors materially departing from normal market practice), the availability of the listing particulars and any material changes in the information contained in the listing particulars.
V. Listing procedures
A listing application must be filed in either German or French. Among others it shall contain a declaration of the issuer that there has been no material deterioration of its assets and liabilities, financial position, profits and losses and prospects since publication of the listing particulars. The annexes to the application must be provided in either German, French, Italian or English (in the case of translations accompanied by the original texts).
The application shall be made no later than one month prior to the proposed listing date. The applicant may demand a preliminary decision. A provisional admittance to stock exchange trading may be granted for debt securities and derivatives; such provisional trading starts at the earliest three business days after application for provisional admission.
VI. Financial reports and ad hoc publicity
The issuer is obligated to publish, apart from the annual reports, interim reports. The listing rules detail the accounting principles and refer to the Generally Accepted Accounting Principles.
Ad hoc publicity is dealt with by a specific clause which obliges the issuer to inform the market of any price sensitive facts which have a reason in its sphere of activity and are not public knowledge. The issuer must provide information without delay. It may postpone the disclosure of such information, however, if the new facts are based on a plan or decision of the issuer and its publications is likely to prejudice the legitimate interest of the issuer. In this event, the issuer must ensure the confidentiality of such facts. This clause on ad hoc publicity has been commented in quite comprehensive notes published by the Swiss Exchange.
The Listing Rules of the Swiss Exchange bring this part of the Swiss capital market law in line with market standards generally accepted in Europe.
The content of this article is intended to provide general information on the subject matter and is not a legal advice. An individual matter requires legal advice according to the specific circumstances.