Switzerland: Current Changes In Management Transactions And Ad Hoc Publicity

General information

The Regulatory Board of SIX Exchange Regulation ("SER") has announced a revision of its regulations regarding the disclosure of management transactions and ad hoc publicity, which will enter into force on 1 February 2024. While some of the changes are of a purely editorial nature, others result in some important new regulations that issuers and those subject to reporting obligations will have to observe in future. Below is an overview of the most important changes in practice:

Management transactions

One significant change concerns the disclosure of management transactions. The revised versions – in particular art. 56 para. 3 of the Listing Rules ("LR") and art. 5 para. 1^bis of the revised SIX Directive on the Disclosure of Management Transactions ("DMT") – stipulate that transactions between members of the board of directors and the executive board and related natural persons or legal entities – e.g. family members or directly controlled legal entities – must now be disclosed and also specifically identified as such.

The aim of this provision is to make the nature of these transactions clear to third parties. Anonymized methods of description are recommended, for example the term "acquisition of shares from a directly controlled legal entity". In addition, it is clarified that the reporting obligation for such transactions ends when the reporting parties concerned leave office or the relationship with the related parties is terminated.

Pursuant to art. 5 para. 2 DMT, transactions with related parties are exempt from the reporting obligation if they do not send a signal to the market (e.g. as a result of inheritance or gift). However, every subsequent related party transaction must be reported, regardless of whether the person subject to the reporting obligation is financially affected by or has influenced the transaction (art. 5 para. 3 DMT).

The second major change concerns transactions in listed and unlisted securities of an issuer. Within the scope of the new art. 1 para. 2 DMT, every transaction, including those not carried out on the stock exchange, must now be reported as long as at least one category of the issuer's securities is listed on the stock exchange. In the case of transactions involving unlisted conversion and purchase rights or financial instruments (without ISIN), the essential terms pursuant to art. 4a DMT must be disclosed. These provisions essentially correspond to those that have always applied to the disclosure of significant shareholdings.

Issuers must now also carry out a correction notification immediately after determining that a notification is incorrect (art. 8 para. 1^bis DMT). It is unclear what is meant by "immediately". In our view, a period of 24 hours or by the next trading day should in any case be regarded as reasonably prompt.

Art. 7 DMT is supplemented to the effect that the reporting obligation arises with the execution of the order (matching) in the case of on-exchange transactions. The offsetting (netting) of purchases and sales is explicitly prohibited.

In addition, a number of provisions that were previously contained exclusively in the DMT have been transferred to the LR (e.g. the issuer's obligation to be proactive against violations). In terms of substantive law, this process does not change anything for issuers; however, the transfer to the LR has a certain signal effect.

Ad hoc publicity

A further focus of the revision was on ad hoc publicity. Art. 53 para. 1^ter LR now formally states that the dissemination of price-sensitive facts per se only concerns issuers with primary listed equity securities. The new regulation therefore assumes that the price relevance of annual and interim reports does not (per se) apply to issuers of bonds or debt instruments, which is why they will in the future, as a rule, be exempt from the reporting obligation or have discretion in this regard.

Outlook

In view of these revisions, it is recommended that issuers take measures in due course to adapt their internal guidelines and processes as well as to train their relevant employees and persons subject to the reporting obligation accordingly. In addition, it should be taken into account that, according to the practice of the SIX Sanction Commission, a personal training for the administrative and management bodies is required to ensure compliance with the disclosure requirements for management transactions.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.