International ECM Listings Rules, Requirements & Obligations in Switzerland

The stock exchange SIX Swiss Exchange (“SIX” Zürich) is operated by SIX Swiss Exchange Ltd. SIX is by far the largest regulated market in Switzerland.

Another regulated market is operated by the provider BX Swiss Ltd. (Bern). This market is much smaller and focuses on listings of Swiss based small and medium sized enterprises.

The traditional equity segments of SIX are the International Reporting Standard and the Swiss Reporting Standard. In addition, SIX has recently launched Sparks, a new segment for small and medium sized enterprises, and a specific segment for listings of Special Purpose Acquisition Vehicles (“SPACs”). Also, SIX has recently updated the segment for listings of global depositary receipts (“GDRs”), in particular to accommodate listings of GDRs by Chinese companies. Such listings have been facilitated by the China-Switzerland Stock Connect program, established by SIX and the Shanghai and Shenzhen Stock Exchanges.  This program allows companies listed on each of these markets to raise capital by issuing depositary receipts on the other’s market.

In addition, SIX Digital Exchange (“SDX”) has recently gone live. SDX is a fully integrated trading, settlement, and custody infrastructure based on distributed ledger / blockchain technology. SDX also allows for listings of equity securities in different segments, including an SME-segment, similar to Sparks.

The below listing criteria are those for listings according to the International Reporting Standard of SIX, which is the most relevant standard for equity securities. Larger, internationally active Swiss and foreign companies are usually listed there. However, the listing criteria are comparable when it comes to the Swiss Reporting Standard and Sparks. Also, the SPAC and the GDR segment have similar listing criteria, beyond that specific topics concerning SPACs and GDRs are addressed. The criteria for listings on SDX are ultimately also largely the same. For SMEs it is noteworthy that the listing requirements on Sparks and the respective SME segment on SDX are more relaxed compared to those of the International Reporting Standard, in particular when it comes to track record, free float and capital requirements.

Exceptions from the below listing criteria are generally possible, if the interests of the investors and the stock exchange remain protected, and the applicant can provide evidence that the purpose of the provision, from which an exception is sought, can be properly fulfilled by other means.

The criteria to obtain a SIX listing are provided for in the SIX Listing Rules (“SIX LR”). The SIX LR are detailed in numerous further regulations of the SIX, in particular so-called directives. The SIX LR explicitly refer to these regulations where appropriate. The criteria to obtain a listing on SDX are provided for in the SDX Listing Rules, which, however, largely refer to the SIX LR.

The Swiss markets, incl. SIX and SDX, are regulated and supervised by the Swiss Financial Market Supervisory Authority (“FINMA”). The most relevant legal statutes are the Federal Act on Financial Market Infrastructures and Market Conduct in Securities and Derivatives Trading (“FinMIA”) and the Federal Act on Financial Services (“FinSA”).

Generally, the shares of all companies duly incorporated under Swiss or foreign law that can issue shares, participation or dividend-right certificates or other equity securities, can be admitted.

In the case of foreign companies, it is required that their shares can also be listed in their home market.

The only Swiss legal entity suitable for public equity listings is the stock corporation. The rules governing the stock corporation are provided for in art. 620 et seqq. of the Swiss Code of Obligations (“CO”) and have been revised recently, the revised provisions entering into effect on 1 January 2023.

To obtain a listing, a prospectus prepared in accordance with the FinSA must be published. The prospectus has to be reviewed by a prospectus office before publication. Prospectus offices are FINMA licensed private law bodies assigned with the task of reviewing prospectuses. Currently there are two licensed prospectus offices. One of them is operated by SIX Exchange Regulation Ltd., a company within the SIX group.

The reported equity of the issuer must amount to at least CHF 25 million (€25 million) according to the applicable accounting standard on the first trading day.

Sufficient public float (“free float”) is deemed to have been achieved if at least 20% of the issuer's securities of the same class/category are publicly held, and the capitalisation of the publicly held securities amounts to at least CHF 25 million (€25 million).

The issuer must have existed as a company for at least three years. There are, however, special alleviations for young companies which may be relied on.

The issuer must have prepared its financial statements for the three full financial years preceding the listing application in accordance with the accounting standard applicable to it. The financial statements have to be confirmed by a state regulated audit firm meeting the applicable requirements under the Swiss Auditor Oversight Act (which may also be a foreign audit firm, state regulated abroad).

Generally, issuers must ensure that the securities can be properly traded. Securities whose transfer is subject to restrictions may be listed if tradability is ensured and the fulfilment of transactions is not jeopardised. Also, a listing must include all issued securities of the same class/category.

There is no requirement that the issuer be independent from controlling shareholders.

There are no lock-in requirements under the Listing Rules, however, major shareholders of the issuer are usually required to agree to lock-ups of 6 or 12 months.

For primary listings of equity securities, the recognised representative of the issuer must be a regulated Swiss or foreign bank or securities firm.

Furthermore, issuers must ensure that services pertaining to dividends and further corporate actions are provided in Switzerland. The related services may be delegated to a Swiss bank or securities firm.

There are no legal requirements to hire a market-maker or broker for listing shares on the market.

Advertising materials for financial instruments, including equity securities, must be clearly identified as advertising. Furthermore, the prospectus for the financial instrument and where it can be obtained, must be mentioned in such advertising materials, and the content of the advertising materials must be in line with the contents of the prospectus.

The listing process can broadly be divided into a preparatory phase and a marketing and implementation phase. The first phase (incl. due diligence, preparation of prospectus, compilation of equity story, pre-marketing, and, as the case may be, preparation of additional audited financials, etc.) usually takes approximately 4-5 months and the second phase (incl. approval of prospectus and listing application by competent authorities, marketing (roadshows), bookbuilding, etc.) usually takes approximately 1-2 months.

The public float requirements do not apply in case of an increase in the number of securities already listed. Depending on the details of the secondary offering, potentially also an exception from the duty to publish a prospectus is available (e.g. if less than 20% of shares are listed within 12 months after the initial listing).

Securities of foreign issuers that are not listed on a stock exchange in their home state or the state of their primary distribution may only be listed if a confirmation is provided (e.g. by an independent law firm) that a listing in these states has not been omitted because of local investor protection regulations.

1. The prospectus must be published in one of the Swiss official languages (German, French or Italian) or in English; and
2. Prospectuses approved in certain jurisdictions, such as the EU, the UK and the US, are considered approved in Switzerland as well. Such prospectuses must also be published in one of the Swiss official languages or English.

SIX: https://www.six-group.com/en/products-services/the-swiss-stock-exchange.html

SIX LR: https://www.ser-ag.com/dam/downloads/regulation/listing/listing-rules/lr-en.pdf

SPARKS: https://www.six-group.com/en/products-services/the-swiss-stock-exchange/listing/equities/sme-ipo/sparks-sme-stock-exchange.html; https://caplaw.ch/2022/a-few-thoughts-concerning-sparks-and-its-chances-of-success/#more-2868

China-Switzerland Stock Connect program: https://www.six-group.com/en/products-services/the-swiss-stock-exchange/listing/equities/ipo/gdr.html

SDX: https://www.sdx.com/

FINMA: https://www.finma.ch/de/

The continuing obligations concern companies with securities listed according to the International Reporting Standard. However, they are very similar when it comes to listings on the other segments of SIX and on SDX.

The continuing obligations are provided for in the SIX LR and in the case of SDX Listings in the SDX Listing Rules.

Exceptions are possible in the same circumstances as exceptions from the listing criteria are possible (see above).

The matters requiring shareholder approval are not provided in the SIX LR, but – regarding Swiss stock corporations – in the CO.

According to the revised CO, entering into effect on 1 January 2023, the following matters require shareholder approval:

• adoption or amendment of the articles of association;
• election of the members of the board of directors and the external auditors;
• approval of the management report and the consolidated accounts;
• approval of the annual accounts and resolutions on the allocation of the disposable profit, and in particular to set the dividend and the shares of profits paid to board members;
• approval of an interim dividend and approval of the interim financial statements required for this purpose;
• pass resolutions on the repayment of the statutory capital reserve;
• discharging the members of the board of directors;
• delisting of the company’s equity securities;
• election of the chairman of the board of directors;
• election of the members of the compensation committee;
• election of the independent proxy;
• voting on the compensation of the board of directors, the executive board and the advisory board (if applicable); and
• pass resolutions concerning the matters reserved to the general meeting by law or the articles of association.

Issuers with a primary listing on SIX must comply with the Directive on Information relating to Corporate Governance, which provides for information duties on the corporate governance structure of the company.

Furthermore, the industry association “Economiesuisse” has issued the Swiss Code of Best Practice for Corporate Governance (“SCBP”). The SCBP provides for a list of recommendations for listed Swiss stock corporations on corporate governance topics (including executive compensation). It offers companies the option to deviate from such recommendations, in which case they shall provide a suitable explanation for the deviation, in accordance with the “comply or explain principle”. The SCBP is a soft law code, and compliance with it is not a strict legal requirement.

The rights and obligations of shareholders are not provided in the SIX LR, but – regarding Swiss stock corporations – again mainly in the CO.

The most noteworthy (minority) shareholders rights under the revised CO, entered into effect on 1 January 2023, are the following:

• shareholders with at least 5% of the share capital or votes may request a special examination;
• shareholders with at least 5% of the share capital or votes may request the convening of a shareholder's meeting;
• shareholders with at least 0.5% of the share capital or votes may request the inclusion of items on the agenda and inclusion of motions for items on the agenda of a shareholders' meeting;
• several decisions of the shareholders’ meeting require a majority of 66⅔% of the votes and 50% of the share capital present, including the withdrawal of subscription rights and any decision to de-list; and
• as regards mandatory offers, which are another means of (minority) shareholder protection, see below

The main obligation of shareholders in listed companies is the duty to disclose major shareholdings provided for in the FinMIA. According to such duty, anyone who directly, indirectly or acting in concert with third parties acquires or disposes of shares or rights relating to shares, and thereby reaches, falls below or exceeds the thresholds of 3%, 5%, 10%, 15%, 20%, 25%, 33⅓%, 50% or 66⅔% of the voting rights, whether exercisable or not, must notify the company and the SIX.

The issuer must publish both an audited annual report and an unaudited half-yearly report in accordance with an accounting standard recognised by the regulatory board of SIX (“SIX Regulatory Board”), including IFRS and US GAAP.

The annual report must be published within four months of the end of the financial year and the half-yearly report must be published within three months after the end of the first half (there are usually extensions available upon application).

Beyond the publication of such periodic reports, there is, in particular an ongoing obligation to disclose price sensitive information (ad hoc publicity).

An issuer with a primary listing on SIX must ensure that the members of its board of directors and its executive committee report transactions in the issuer’s equity securities, or in related financial instruments, to the issuer no later than on the second trading day after the transaction has been concluded.

Apart from the listing prospectus, which has to be approved by a prospectus office (see the Key Documents section above), the prospectus concerning a (voluntary or mandatory) takeover offer and, as the case may be, further publications need to be examined by the Swiss Takeover Board.

Anyone who directly, indirectly or acting in concert with third parties acquires equity securities which, together with the equity securities already owned, exceed the threshold of 33⅓% of the voting rights, whether exercisable or not, must make an offer to acquire all listed equity securities of the target company. Target companies may raise this threshold to up to 49% of the voting rights (opting up) or waive it completely (opting out) in their articles of association.

Under Swiss stock corporation law, a de-listing will require shareholders' approval with a majority of 66⅔% of the votes and 50% of the share capital present as of 1 January 2023.

Furthermore, a (voluntary) de-listing pre-supposes a written application by the listed company to the SIX Regulatory Board. The SIX Regulatory Board will generally take into account the interests of the stock exchange, the investors and the issuer when rendering its decision. It may, in particular, require a timely announcement and sufficient time until the de-listing, but will not prohibit the de-listing per se.

Foreign issuers with a main listing abroad are not subject to Swiss takeover law, and their shareholders are not subject to the duty under Swiss law to disclose major shareholdings. Furthermore, foreign issuers with a listing abroad are not subject to the duty to disclose price sensitive information and foreign issuers with a primary listing abroad are not subject to the duty to disclose management transactions under the SIX LR.

SCBP: https://www.economiesuisse.ch/en/publications/swiss-code-best-practice-corporate-governance