Switzerland Update: Latest Innovations in Management Transactions and Ad Hoc Disclosure

General

The Regulatory Board of the SIX Exchange Regulation (“SER”) has announced a revision of its rules regarding disclosure of management transactions and ad hoc disclosure, which will come into effect on February 1, 2024. While some of the changes are purely editorial in nature, they also result in some important new regulations that issuers or persons subject to reporting obligations will have to observe in the future. Below is an overview of the most important innovations for practice:

Management Transactions

A major change concerns the disclosure of management transactions. The new versions – in particular Art. 56 para. 3 of the Listing Rules (“LR”) and Art. 5 para. 1bis of the revised Directive on the Disclosure of Management Transactions (“RLMT“) – stipulate that transactions between members of the Board of Directors and the Executive Board and their respective related natural or legal persons – e.g. family members or directly controlled legal entities – are newly disclosed and also linguistically must be specifically labelled as such.

The purpose of this provision is to make the nature of these transactions comprehensible to third parties. Anonymized description methods are recommended, such as the term “acquisition of shares from a directly controlled legal entity”. In addition, it is clarified that the reporting obligation for such transactions ends with the departure of the reporting entities concerned from their offices or a termination of the relationship with related parties.

Pursuant to Art. 5 para. 2 RLMT, exceptions to the reporting obligation apply to transactions with related parties, provided that they cannot have a signalling effect on the market (e.g. as a result of inheritance or gift). However, any subsequent transaction of the related party is subject to reportability, regardless of whether the reporting party is financially affected by it or has influenced the transaction (Art. 5 para. 3 RLMT).

The second major innovation concerns transactions in listed and unlisted securities of an issuer. Within the scope of the new Art. 1 para. 2 RLMT, any transaction, including those not carried out on the stock exchange, must now be reported, as long as at least one category of securities of the issuer is listed on the stock exchange. In the case of transactions involving non-listed convertible and purchase rights or financial instruments (excluding ISIN), the material conditions pursuant to Art. 4a RLMT must be disclosed. These are essentially the same as those that have always applied to significant shareholdings.

In addition, issuers must now submit a correction report immediately after determining whether a report is incorrect (Art. 8 para. 1bis RLMT). It is unclear what is meant by “immediate”. In our opinion, a period of 24 hours or until the next trading day should be considered reasonably timely.

Art. 7 RLMT is supplemented to the effect that in the case of exchange-settled transactions, the reporting obligation arises with the execution of the order (matching). Offsetting purchases and sales is explicitly prohibited (netting ban).

In addition, a number of provisions that were previously only contained in the RLMT have been transferred to the KR (e.g. the issuer’s obligation to take active action against violations). From a substantive point of view, this process does not change anything for the issuers; however, the standardisation in the KR expresses a certain signalling effect.

Ad hoc publicity

Another focus of the revision was on ad hoc publicity. Here, Art. 53 para. 1ter LR formally states that the dissemination of price-relevant facts per se only affects issuers with primarily listed equity securities. The new regulation therefore assumes that the price relevance of annual and interim reports is not (per se) given for issuers of bonds or receivables instruments, which is why they will generally be exempt from the reporting obligation in the future or have discretion in this regard.

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In light of these revisions, it is recommended that issuers take timely measures to adapt their internal policies and processes, as well as to train their relevant employees and reportable persons accordingly. In addition, it should be taken into account that, according to the practice of the Sanctions Commission of SIX, a personal instruction from the administrative and management bodies is required to ensure compliance with the disclosure requirements for management transactions.

By Vischer, Switzerland, a Transatlantic Law International Affiliated Firm.

For further information or for any assistance please contact switzerland@transatlanticlaw.com

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