1. Federal Act on Stock Exchanges and Securities Trading

The Federal Act on Stock Exchanges and Securities Trading (also known as the Stock Exchange Law) was adopted by the Swiss Federal Assembly on 24 March 1995. It is expected to come into force during the first part of 1997. Some of the implementing provisions were still under discussion when this contribution was printed.

The Act contains 10 main chapters: general provisions; stock exchanges; securities dealers; disclosure of shareholdings in listed companies; takeover offers; supervisory authority; international relations; appeal procedure; penal provisions; final provisions (including implementing provisions and amendments of other federal laws).

The Act's scope is thus wider than what its title would suggest. It is also a law on takeovers and on the disclosure of major shareholdings. The Act's principal aim is to ensure transparency and equality of treatment of investors and to provide a framework to ensure the proper functioning of the securities markets. Being conceived as a "framework law", the Act leaves a large scope for self-regulation by stock exchanges.

In the area of listed offerings, the Act's main provisions are contained in its article 8 (admission of securities) which reads as follows:

¹The stock exchange shall issue regulations regarding the admission of securities to listing.

²The regulations shall contain provisions relating to the negotiability of securities and shall set out the information which shall be furnished to investors in order to enable them to form an opinion about the characteristics of the securities and the quality of the issuer.

³The stock exchange shall take into account internationally recognized standards.

⁴The stock exchange shall admit securities to listing upon the fulfillment of conditions set out in the regulations.

This article is the base on which the new Listing Rules have been prepared and adopted by the Swiss Admissions Board, a self-regulatory body set up by the Swiss Exchange.

2. Listing Rules

The Listing Rules regulate the admission of securities to stock exchange trading (secondary market) but not the issue of new securities (primary market). The regulation of the primary market is excluded from the scope of the stock exchange law. This matter is regulated by the Code of Obligations.

The minimum requirements for company disclosure set by the new Listing Rules as a condition for stock exchange listing go beyond those contained in the Code of Obligations. Since for practical reasons the same documents are often used for both issuing and listing. It may be assumed that there will be substantial concurrence between issuing and listing particulars.

The purpose of the new Listing Rules is to give issuers ready and equal access to the Swiss Exchange and to ensure transparency for investors regarding issues and all categories of security (debt, equity and derivative). Pursuant to the legal requirement contained in art. 8, para. 2 of the Stock Exchange Law, the new Listing Rules take into account the internationally recognized standards. In this respect, the provisions contained in the corresponding EC directives have been given great attention.

Each potential issuer is required to publish a prospectus that gives sufficient information for any investor to make well-founded decisions about the security being listed and offered. Disclosure must provide a true and fair view of the company's actual position with respect to assets, liabilities and the other aspects of its financial situation, as well as profits and losses. The accounts must be in compliance with a set of rules governing the presentation of financial statements as well as accounting standards (e.g., regarding accounting principles, consolidation, foreign exchange translation, valuation, cash flow accounting, provisions and notes to the accounts, interim reporting).

Within the broad boundaries established by the Swiss Admissions Board, companies have considerable flexibility in how they comply with reporting requirements. For instance, issuers have the option to make disclosures following non-Swiss accounting rules or guidelines (e.g., IAS, EC directives) as long as these rules meet Swiss standards. Consequently, companies have a certain liberty to select, present and structure the information they make public. Issuers can publish their prospectus either in German, French, Italian or English. (Exemptions from publication apply in cases where the increase in share capital is less than 10 per cent of outstanding nominal or market value, or equity allotments are made to employees or previous publication was made within 3 months and gives the same quality of information).

The new Listing Rules contain special provisions regarding ad hoc publicity, i.e. the obligation for issuers to disclose price-sensitive facts. The Swiss Admissions Board has published special guidelines in order to bring about better understanding of these provisions.

The new Listing Rules will enter into force as from October 1st, 1996.