Takeover Board Becomes More Lenient Regarding Opting-Out Clause

Author:Mr Alexander Vogel and Debora Kern

Originally published on International Law Office


The Securities and Stock Exchange Act provides for a mandatory offer obligation in the event that a shareholder or a group of shareholders acting in concert exceeds a threshold of 33.3% of the voting rights in a company listed on the stock exchange. All EU member states have also introduced such an obligation based on the EU Takeovers Directive (2004/25/EC) (which also provides for a mandatory bid threshold of 33.3%), although many of them provide for a mandatory bid threshold of 30%. However, Switzerland is the only country which provides for an opting-out mechanism (ie, the shareholders of a listed company can choose to opting out from the mandatory offer obligation). This is possible, among other things, when an opting-out clause has been included in the articles of association.

Article 22 of the Securities and Stock Exchange Act differentiates between the introduction of an opting-out clause before and after the listing of shares on the stock exchange. A company may at any time – even after listing – adopt such a provision in its articles of association, provided that this does not prejudice the interests of the shareholders within the meaning of Article 706 of the Swiss Code of Obligations. Once such a clause has been validly introduced, any acquirer is generally exempt from the mandatory offer obligation for an unlimited period – irrespective of the reasons for exceeding the threshold.

The Takeover Board's latest decision on this matter, which is discussed in this update, highlights the board's recent interpretation of the rules when such an opting-out provision is introduced after the company has already been listed on the stock exchange. This expands even further the practice of the board, which had already been relaxed in two 2010 cases.1


In January 2010 Mr Weber, shareholder of LEM Holding SA, announced his intentions to increase his participation in the company together with another shareholder, Mr Wampfler, who was simultaneously a member of the board of directors. After this intended further increase in their participation, they were likely to exceed the 33.3% threshold. Therefore, Weber announced his intention to request the introduction of an opting-out clause into the articles of association.

On June 25 2010 the LEM shareholders' meeting approved the introduction of the opting-out clause by 71% of the voting rights represented (Weber held 39.84% of the...

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