Schindler: Opting-out with tailor-made mandatory public offer duty?

Swiss law on public tender offers provides for a mandatory offer duty if a shareholder crosses the threshold of 33 1/3% of the voting rights of a target company listed in Switzerland. This offer duty obliges the acquirer to make a public tender offer to all shareholders at a defined minimum price. The payment of a premium to individual shareholders (including controlling or other significant shareholders) is prohibited by law.

Opting-out and opting-up in a nutshell

Acting through their shareholders meeting, target companies listed in Switzerland may in their articles of incorporation either exempt acquirers of shares from the mandatory offer duty (opting-out) or increase the triggering threshold from 33 1/3% up to 49% (opting-up).

In addition, selective opting-out clauses are permissible, i.e. opting-out clauses for the benefit of a specific person in a particular transaction. Both opting-out and opting-up are unique features of Swiss law compared to international standards.

Gian-Andrea Caprez is a managing associate of VISCHER, and Fiona Gao is an associate on VISCHER’s China Desk