[Last updated: 1 January 2025, unless otherwise noted]

3.1 In general

1. Summary of shareholding rights and powers

   The table below provides an overview of the different rights and powers that are attached to different levels of shareholdings within a Swiss company listed on a Swiss stock exchange:

   Shareholding	Rights
   One share	Right to attend and vote at general shareholders' meetings. Entitlement to a pro rata share of the disposable profit to the extent that the distribution of such profit among shareholders is resolved by the shareholders' meeting and provided for by law or the company's articles of association. Entitlement to a pro rata share of the liquidation proceeds upon liquidation of the company, unless otherwise provided by the articles of association. Right of holders of registered shares to be entered into the shareholders' register of the company. Right to inspect and/or request a copy of the annual report and the audit report of the company to be voted on at the annual shareholders' meeting. Right to request a copy of the annual report in the form approved by the shareholders' meeting and the audit report from the company during the year following the relevant shareholders' meeting. Right to submit questions to the board of directors and the statutory auditors at the shareholders' meeting. Right to receive electronic access to the resolutions and the election results of a shareholders' meeting with details of the percentage of votes. Right to request the shareholders' meeting to have specific matters clarified by means of a special investigation, provided that (i) this is necessary for exercising shareholder rights and (ii) the ordinary rights to information and inspection have already been exercised. Right to request the court to take adequate measures in case the company does not have a required corporate body or if the composition of one of the corporate bodies does not comply with the law. Right to file a claim for the payment of damages, possibly to the company, against persons involved in the formation, drafting or distribution of a prospectus regarding the securities, management, liquidation or audit of the company in case of breach of corporate law. Right to challenge, in court, resolutions of the shareholders' meeting which violate the law or the articles of association. Various rights to file actions under the Swiss Merger Act.
   Shares in an aggregate nominal amount of 0.5% of share capital or votes	Right to request the board of directors to put additional items on the agenda of a shareholders' meeting.
   5%	Right to apply to the court to appoint a special auditor within three months following the rejection of the shareholders' meeting to designate such an auditor. Right to request the board of directors to convene a shareholders' meeting.
   More than 33 ⅓% (at a shareholders' meeting)	Ability to block: Changes to the corporate purpose clause of the company; The introduction of shares with preferential voting rights; The implementation of any restriction on the transferability of registered shares; The introduction of a capital band, a contingent capital increase or the creation of reserve capital according to Article 12 of the Federal Banking Act; A capital increase, funded by equity capital, against contributions in kind or to fund acquisitions in kind and the granting of special privileges; Any restriction or cancellation of subscription rights of the shareholders; A relocation of the seat of the company; The dissolution, a merger, a demerger or the sale of the entire or substantially the entire business of the company; and The delisting of the shares.
   More than 50% (at a shareholders' meeting)	Ability at a shareholders' meeting to pass shareholders' resolutions other than the shareholders' resolutions referred to in preceding row above.
   66 ⅔% (at a shareholders' meeting)	Ability at a shareholders' meeting to pass the resolutions referred to two rows above.
   90%	Possibility to squeeze out minority shareholders through a cash-out merger.
   More than 98%	Possibility to squeeze out other shareholders after a takeover bid.

2. Scope of Swiss public takeover rules

   The Swiss public takeover rules apply to public takeover bids for equity securities of target companies with registered offices in Switzerland and equity securities at least partly listed on a Swiss stock exchange. The rules also apply to foreign companies with equity securities at least part of which are mainly listed on a Swiss stock exchange, provided it is not a mere secondary listing. If a foreign takeover regime also applies, the TOB decides on the limits of Swiss law with a view to avoiding contradictions and maintaining protection for shareholders.

3.2 Selected aspects of the pre-acquisition phase

Several rules need to be taken into account in the pre-acquisition phase to ensure compliance with takeover and other capital market regulations (see 6 below for tactical aspects):

1. Financing of the transaction

   The review body needs to confirm at the time of publication of the prospectus that the bidder has taken the necessary measures to ensure that financing will be available on the settlement date. Therefore, in a debt financed transaction, full financing must be secured prior to the offer. In an exchange offer, preparations need to be made to have the required equity available at the time of the settlement. These steps and, in particular, the structuring of the debt financing require time to prepare (for further details on the security of funds concept under Swiss law, see 4.1 and 4.2 below).

2. Stake building and disclosure of shareholdings

   A bidder may have various reasons to build a stake in the target company before starting the bid. These may be to: (i) warn off competing bidders; (ii) obtain a level of shareholdings that gives substantial shareholder rights; or (iii) cover its costs for the bid should a competing bidder succeed.

   However, hidden stake building is limited due to the obligation to disclose major shareholdings in listed companies. The disclosure rules apply to shareholdings in Swiss companies with equity securities listed on a Swiss stock exchange and to foreign companies with equity securities with a main listing on such exchange. Reporting thresholds are 3%, 5%, 10%, 15%, 20%, 25%, 33⅓%, 50% or 66⅔% of the voting rights (a proposed amendment of the law intends to abolish the 3% threshold). A reporting obligation is triggered when the relevant reporting thresholds are reached or crossed. Holdings in financial derivatives, irrespective of whether they are cash settled or not, including call and put options, equity swaps, contracts for difference and share lending, also need to be disclosed. Securities that are acquired indirectly or by a coordinated group are to be aggregated. Shares for which a person is entitled to discretionarily exercise voting rights also need to be included with any other securities held. The thresholds apply individually to long positions, short positions and share positions. A report to the company and the disclosure office needs to be made within four trading days from the day of entering into the transaction, irrespective of when the trade is settled. A conditional purchase does not exempt the purchaser from making a disclosure. The company must publish the report within two trading days upon receipt.

   In addition to complying with the disclosure rules, a bidder also needs to comply with the price rules. As will be set out further below (see 4), the acquisition price during the 12-month period before the offer is relevant when determining the minimum price to be offered in the bid.

3. Contacting the target company
   1. In general

      If the bidder is interested in pursuing a public takeover after an evaluation of the target company's non-public information, or wishes to secure the support of the target's board, the bidder's first step will be to approach the board of the target. The approach needs to be made by notifying the contact person that it will receive insider information and that such information must not be exploited. That notification must be documented either by a file note, a taped record (if admissible) or a written notification.

      The board of the target has no obligation to react to the approach of a bidder, unless the target is not able to follow a standalone strategy anymore. In that case, the board must evaluate the proposed bid.

      If the target company rejects the approach outright or does not react at all, it is under no obligation to make an ad hoc disclosure. However, if the target starts to consider the approach by the bidder, it needs to disclose the approach made under ad hoc publicity rules. This may be avoided by promptly entering into a confidentiality agreement.

   2. Confidentiality and standstill agreement

      If both the bidder and the target are interested in evaluating the takeover bid, they will enter into a confidentiality agreement, sometimes combined with a standstill clause. In the confidentiality agreement, the target company and the bidder agree to maintain confidentiality regarding the transaction, the negotiations and all information disclosed to a party during the negotiations.

4. Due diligence

   Swiss public takeover regulations do not contain rules as to whether or not a due diligence is to be granted by the target company, nor how such due diligence is to be organized. However, the obligation of the target to treat bidders equally requires the target to grant equal access to due diligence, if due diligence access is granted at all. A due diligence review is frequently, but not always, conducted. Appropriate mechanisms have been developed in practice to organize a due diligence and to cope with potential market abuse and early disclosure concerns. As the target company is listed on a Swiss stock exchange and generally has to publish any price sensitive information, financials, corporate governance information and compensation reports, the access to information by the bidder within a due diligence is often quite limited. Further limitations arise because the target has to treat competing bidders equally and therefore must fully disclose the due diligence information to other bidders in a bidding process. Therefore, a due diligence review is usually limited in scope. It typically focuses on transaction obstacles, change of control issues, equity compensation schemes and their impact on the takeover, site visits, reviews of business plans and discussions with management.

   The board of directors decides whether or not, and to what extent, a bidder is granted a due diligence review. Such decision is based on the potential benefit for the target company, taking into account the effect of the due diligence on the offer price, whether or not the bidder is a competitor of the target company and the probability of the bidder submitting the offer. The board also takes into account whether or not there may be competing bidders that are entitled to review the same documents under the equal treatment rules.

5. Transaction agreement

   If the board of the target comes to the conclusion that a takeover is in the interest of the target and its shareholders and the bidder is willing to submit a bid, the target and the bidder typically enter into a transaction agreement. The transaction agreement is signed immediately prior to the start of the offer. This triggers the obligation on the part of the target company to notify the public of the transaction.

   Typically, the following items are covered by the transaction agreement:

   • Structure of the transaction (including price, offer conditions and timetable) and content of the offer documents;
   • Obligation of the bidder to submit the offer and of the target board to support it;
   • Conduct of business during the offer, including the trading in shares and financial instruments of the target;
   • Conditions for accepting and/or looking for competing bidders;
   • Handling of option and other incentive programs;
   • Obligation to call an extraordinary shareholders' meeting of the target company, resignations from the board of directors of the target company, support regarding regulatory filings and registration in the shareholders' register post-acquisition; and
   • Confidentiality and communication strategy.

   After entering into a transaction agreement, the bidder and the target company, including all of their subsidiaries, qualify as persons acting in concert with respect to the bid. Accordingly, the target company and its subsidiaries are subject to the same rules as the bidder (with the exception of the duty to make an offer). If further parties, such as the main shareholder of the target company, are acting in concert with the bidder, they should become a party to an agreement that sets out certain duties, in particular with respect to trading in shares.