What are the applicable Swiss laws for merger and acquisition transactions?
Mergers and acquisitions in Switzerland fall under the regulations of the Code of Obligations, specifically sale contracts. However, depending on the type of transaction, mergers and acquisitions may also fall under the regulations of the Stock Exchange and Securities Trading Act (SESTA) for Swiss public companies listed on the stock exchange, or by the Merger Statute in case private companies.
What are the stages of merger and acquisition (M&A) transactions in Switzerland?
The stages of Swiss merger and acquisition transactions are:
•the pre-contractual phase;
•the signing of the transaction agreement;
•the closing phase;
•the post-closing phase.
The presentation below offers more information on the manner in which mergers and acquisitions are performed in Switzerland:
In the pre-contractual phase, companies will negotiate the main terms of the M&A transaction and a rigorous review of the business will be made. A letter of intent with the conditions of the transaction and containing the negotiation terms will be drafted. In most cases, the seller is entitled to perform a thorough company due diligence prior to the sale procedure andour law firm in Switzerland can help investors in this sense.
During the second phase, companies will sign the transaction agreements that will usually be drafted according to the international standards. Most transaction contracts will contain provisions about warranties, pre-closing, closing and post-closing conditions.
The closing phase will mainly depend on the form of the M&A transaction and thelegal entity of the business. The post-closing phase will be concluded according to certain provisions contained by the transaction agreement. Usually, a non-compete clause will be mentioned in the post-closing phase.
Types of M&A transactions in Switzerland
There are three types of merger and acquisition transactions in Switzerland:
1.the share deal;
2.the asset deal;
3.the statutory merger.
The share deal is usually employed bylimited liability companiesor share corporations. Share corporations in Switzerland may issue registered and bearer shares that can be transferred under the form of certificates, or endorsement in blank for registered shares. Our team of lawyers in Switzerland can offer more details.
Asset deals in Switzerlandcan be performed under the form of statutory assets or by agreement on the transfer of assets and liabilities. In case of statutory assets, the transfer must be registered with the Swiss Trade Register.
The Swiss statutory merger usually applies in public M&A transactions and it consists in the transfer of assets, liabilities and contracts of the target company to the acquiring company. Another type of merger and acquisition transaction applied to public companies is the public offer by which the acquiring company makes a public offer to the target company.
Regulatory framework for mergers and acquisitions in Switzerland
•equal treatment of the shareholders participating in the M&A.
The main act which ensures the enforcement of the above mentioned aspects is the Federal Act on Financial Market Infrastructures and Market Conduct in Securities and Derivatives Trading (FIMA).
M&A are regulated by a set of institutions, as follows:
•Swiss Financial Market Supervisory Authority;
•Federal Competition Commission;
•SIX Swiss Exchange.
Each of the above mentioned institutions have different areas of responsibility in terms of the merger and acquisition procedures carried out in Switzerland.
Public M&A in Switzerland
It is important to know that the M&A market in Switzerland can be represented by both friendly and hostile takeovers. Each of the two options is regulated by a different set of provisions, applicable to Swiss companies registered on the exchange markets in this country. At the same time, M&A can also refer to foreign companies, but only in the situation in which the shares of the companies are listed on the Swiss exchange.
Activities which refer only to mergers in Switzerland are regulated under the provisions of the Swiss Merger Act.