Amendments to Swiss Disclosure Law

On January 1, 2016, the new Financial Market Infrastructure Act (FMIA) will enter into force. Apart from supervisory provisions for the operation of financial market infrastructures and rules concerning derivatives trading, the FMIA also contains market behavior rules. These include, inter alia, provisions on the disclosure of shareholdings in companies that are wholly or partially listed in Switzerland. These provisions have thus far been contained in the Stock Exchange Act. The standards of the FMIA regarding the disclosure of shareholdings are specified by the Financial Market Infrastructure Ordinance of the Swiss Financial Market Supervisory Authority FINMA (FMIO-FINMA), which will also enter into force on January 1, 2016. The FMIO-FINMA replaces the current Stock Exchange Ordinance of FINMA.

1. Most Important Amendments at a Glance

The key adaptation is the introduction of a disclosure obligation on third parties who are entitled to exercise voting rights associated with equity securities at their own discretion.

In addition, FINMA has revised existing provisions based on practical experience.

In the following, the most important changes, in the opinion of the authors, are being highlighted.

Exercise of Voting Rights at Own Discretion
The FMIA newly distinguishes between two types of persons who are subject to a disclosure obligation if the threshold percentages set forth in the FMIA are reached or crossed. Those are, on the one hand, the beneficial owners of equity securities and, on the other hand, third parties entitled to exercise voting rights associated with equity securities at their own discretion, but without being beneficial owners thereof. The purpose of the disclosure duty of the person entitled to exercise voting rights is to prevent the collection of voting rights of several beneficial owners who are independent of each other without having to disclose the cumulated shareholdings. Thus, two separate disclosure obligations are set forth in law.

A beneficial owner is, according to the newly introduced definition of the FMIO-FINMA, anyone who controls the voting rights deriving from a shareholding and who bears the economic risk thereof. This means, for instance, that traditional asset managers who choose the investment for their client’s account are not subject to the disclosure duty as long as they are not entitled to exercise the corresponding voting rights at their own discretion.

The disclosure obligation of a third party entitled to exercise voting rights only applies if that person is not part of the chain of control of the beneficial owner. Hence, with respect to groups of companies, there is no additional disclosure obligation on subsidiaries directly holding the equity securities and exercising the respective voting rights.

If a third party is authorized to exercise voting rights at its own discretion, the person subject to the disclosure duty is identified according to the rules for the determination of the beneficial owner. Therefore, regarding legal entities, the disclosure obligation applies to the person who directly or indirectly controls the legal entity authorized to exercise the voting rights.

No discretion to exercise voting rights exists if the beneficial owner granting the authorization to exercise voting rights influences such exercise by providing instructions.

FINMA stated in its accompanying report of December 9, 2015, that the disclosure duty of the person being entitled to exercise voting rights at its own discretion arises at the time of issuance of the entitlement. The issuance of this entitlement only triggers a disclosure obligation for the person entitled to exercise voting rights, but not for the beneficial owner. The number of voting rights covered by this entitlement must be set forth in the disclosure notification.

Derivative Holdings
FINMA adheres to the existing concept regarding the disclosure of derivative holdings. As under the existing regime, both derivative holdings with actual delivery and those with cash settlement must be disclosed. According to the new definition introduced by the FMIO-FINMA, derivative holdings are instruments whose value is derived at least partially from the value or the value development of equity securities which are wholly or partially listed in Switzerland. The disclosure duty encompasses derivative holdings regarding both the listed and the non-listed equity securities of an issuer.

Simplifications for Indirect Acquisitions and Indirect Sales
The information needed for the notification of an indirect acquisition or an indirect sale has been simplified. The requirement to disclose the entire chain of ownership from the direct acquirer or seller to the beneficial owner has been abolished. This means that solely the direct acquirer or seller and the beneficial owner have to be disclosed. This revision in particular leads to a simplification in group relationships because transfers of shareholdings within the group only trigger a disclosure obligation if the direct holder of the equity securities changes. This eliminates a frequent source of error in practice.

Group Relationships
In group relationships, the overlapping of the obligation to disclose as an organized group with the disclosure obligation regarding direct or indirect shareholdings has in practice led to uncertainties with respect to the correct notification procedure. Under the new regime, shareholdings subject to disclosure in group relationships are to be disclosed as indirect holding, which resolves ambiguities and leads to the aforementioned simplifications.

2. Further Changes

The new law contains a conclusive catalogue of disclosed information which, if amended, requires a new notification.

Further changes of a formal nature have been included:

  • Notifications to the Disclosure Office of SIX Swiss Exchange can, as before, be conveyed by fax or email. The new law clarifies that this also applies to notifications to the issuer. Furthermore, the requirement to subsequently file the original documents has been waived.
  • Content of the notification: The notification of the address of a legal entity and a contact person in charge is no longer required to fulfill the disclosure obligation. However, providing a contact person for the Disclosure Office in case of questions is required as additional information. These simplifications eliminate sources of error which in practice led to violations of the disclosure duty.
  • Notification period: The notification period for disclosure obligations resulting from inheritance will be 20 trading days.

Apart from intentional violations, negligent violations of the disclosure obligation are still prosecutable. However, the maximum imposable fine for negligent violations has now been significantly reduced from CHF 1,000,000 to CHF 100,000.

3. Transitional Application and Need for Action

Disclosure notifications that have been filed in accordance with the existing law will remain valid.

Circumstances having occurred before the entering into force of the FMIA and the FMIO-FINMA (i.e. before January 1, 2016) and triggering a disclosure duty only due to the entering into force of the new law have to be notified by March 31, 2016. Therefore, for instance, persons who have been entitled to exercise voting rights at their own discretion (and thereby a threshold was reached or crossed) must submit a notification by March 31, 2016 at the latest.

Circumstances that occur after January 1, 2016, must be disclosed in accordance with the new law. Until March 31, 2016, notifications can first be made pursuant to the previous law by providing a corresponding notice. However, such notifications have to additionally be submitted according to the new law no later than March 31, 2016 in order for the entire disclosure system to be adapted to the new provisions by April 1, 2016.

Further Information
Further information (in German and French) concerning the new FMIO-FINMA is available for download on the website of FINMA.

For questions and further information the authors are happy to assist.


Dr. Markus Guggenbühl
Dr. Markus Guggenbühl, LL.M.

Gian-Andrea Caprez
Gian-Andrea Caprez, LL.M.

Dominic Wyss
Dominic Wyss