I. Cornerstone Elements of the New Prospectus Regime
Overview
The new regime governing equity prospectuses comprises the Financial Services Act of June 15, 2018 (the FinSA) and the Financial Services Ordinance of November 6, 2019 (the FinSO), including Annex 1 thereto setting out the required prospectus contents. The FinSA and the FinSO will come into effect in parallel on January 1, 2020.
The new prospectus regime applies in connection with (i) the public offering in Switzerland, and/or (ii) the admission to trading on a Swiss trading venue of any shares or other financial instruments. This bulletin focuses on equity securities. For the ramifications of today&#8217;s announcement in other fields of our practice, please refer to our separate publications on our website.
The term «public offering» encompasses both primary and – as a primer in the Swiss regime – secondary offerings, as well as combinations of each. However, in the case of a secondary-only offering, the duties under the new regime apply to the selling shareholder but not to the issuer.
Ex-ante approval and publication
As a rule, the FinSA and the FinSO require that an equity prospectus be approved prior to the relevant offering being conducted or the relevant equity securities being admitted to trading, as the case may be – i.e., on an ex-ante basis – by a so-called review body, an authority licensed and supervised by the Swiss Financial Market Supervisory Authority FINMA (the FINMA). The FINMA is currently expected to license two review bodies, one affiliated with SIX Swiss Exchange, the other one with BX Swiss, over the course of the first quarter of 2020.
Once approved by the review body, an equity prospectus is valid and good to be used for a period of twelve months.
Following its approval by the review body, but prior to the launch of the relevant public offering or admission to trading, the equity prospectus needs to be published. The FinSA explicitly caters for electronic-only publication of an equity prospectus, so long as a printed copy is available upon request. In the case of an IPO, the new regime introduces a minimal offer period of six business days following publication.
Pursuant to the FinSO, the ex-ante approval and publication requirements set out above will apply only following a transition period expiring six months after the FINMA has licensed the first review body, but no earlier than October 1, 2020. Before that date, the existing regime continues to apply and may be relied upon for public offerings and admissions to trading.
Approval procedure and timing
Under the future regime, the approval procedure follows the principles of Swiss administrative procedure, catering for certain constitutional standards, including in particular inspection of files, the right to be heard and judicial review.
The review body&#8217;s review focuses on completeness, coherence and linguistic comprehensibility.
&#8211; Completeness implies a rule check against the equity prospectus content requirements set out in Annex 1 to the FinSO.
&#8211; Coherence means the absence of manifest inconsistencies within the document.
&#8211; Comprehensibility is currently expected to be a somewhat more lenient interpretation of the «plain English» requirement known in other jurisdictions.
Pursuant to the FinSA, the review body is generally expected to issue its decision within a review period of ten calendar days. In the case of first-time issuers, the review period is 20 calendar days.
The FinSA, however, clarifies that a prospectus is not deemed approved if the review body fails to issue its decision within the above time-frame.
To the extent the review body finds the prospectus draft submitted for approval to be deficient, the review body may reject the draft and require for the same to be re-submitted once the deficiencies have been remediated.
In practice, we do not expect the procedure to differ significantly from today&#8217;s prospectus review by SIX and BX, respectively.
Automatic approval of certain foreign prospectuses / Passporting
Foreign equity prospectuses that have been approved in accordance with the standards of certain foreign jurisdictions – to be determined and included on a list to be published by the review body from time to time – will be deemed automatically approved by the review body. Accordingly, any foreign-approved prospectus originating from a qualifying jurisdiction may immediately be used in connection with a public offering and/or admission to trading in Switzerland once it has been published and filed with the review body as required under the FinSA.
Pricing supplement
Because the offer price and almost always the offer size are not known at the time of the launch of an equity offering – being typically determined within a bookbuilding procedure –, the FinSA acknowledges that these datapoints cannot be included in the prospectus. Nevertheless, the FinSA requires the upper limit of the price range and the criteria applied in order to determine the final number of offered shares to be disclosed in the prospectus. Once the offer price and the offer size are known, these datapoints need to be filed with the review body. A prospectus supplement setting out merely such pricing terms (pricing supplement) is not required to be approved. The same applies to disclosure relating to other events already contemplated by the approved prospectus, such as the exercise by the underwriters of an over-allotment option or the approval of the transaction by certain corporate bodies or governmental agencies.
Amendments to the prospectus
In contrast, other – unexpected – developments that are capable of materially affecting the valuation of the shares unfolding between the launch of an offering and the end of the offer period give rise to a duty to publish a prospectus amendment. As a rule, amendments to the prospectus are subject to the review body&#8217;s prior approval. The relevant review period is up to seven calendar days. A set of certain less significant events included on a list to be promulgated by the review body from time to time, while still triggering a duty to publish a prospectus amendment, are exempt from the approval requirement. Whenever a prospectus amendment (other than a pricing supplement) is published, the offer period may not expire less than two calendar days after such publication. This statutory extension is designed to allow investors to withdraw their prior subscription in light of the new developments.
II. Exemptions from the Prospectus Requirement
Absence of public offering and admission to trading
As set out in more detail in part I above, the equity prospectus requirement under the FinSA applies whenever a public offering of equity securities in Switzerland is being conducted or an admission to trading of equity securities on a Swiss trading venue is being sought. In the absence of both elements, no prospectus duty is triggered in the first place. Examples include the absence of an offer because no investment decision needs to (or can) be made (e.g., shares issued as a dividend in kind or shares awarded under employee ownership plans) or an offer that is extended only to a handful of selected individuals or entities, in each case absent an admission to trading. The prevailing view is that such constellations do not require an exemption because the prospectus requirement does not apply to them in the first place.
Exemptions under the FinSA
The FinSA provides for a set of explicit exemptions from the prospectus requirements otherwise applicable.
Irrespective of the prospectus requirement under the FinSA to apply only after the transition period has lapsed, the exemptions under the FinSA will be available to issuers, selling shareholders and underwriters immediately as of January 1, 2020.
Exemptions based on the type of the offering
Exempt from the prospectus requirement are public offerings:
&#8211; limited to professional investors (e.g., banks, asset managers, insurance companies, entities under prudential surveillance, enterprises and high net worth individuals in each case featuring a professional treasury unit);
&#8211; addressed to less than 500 potential prospective investors (irrespective of their eligibility as professional investors – i.e., the 500 may include retail investors);
&#8211; requiring a minimum investment of CHF 100,000 for each investor individually;
&#8211;      of securities with a minimum denomination of CHF 100,000; or
&#8211;      of securities that, in a twelve-month period, account for an aggregate investment amount not exceeding CHF 8 million.
Exemptions based on the type of the security
Further exempt from the prospectus requirement are public offerings of certain types of securities, including:
&#8211; equity securities issued other than within the framework of a capital increase in exchange for equity securities of the same class as already issued;
&#8211; equity securities exchanged for equity securities of the same issuer or the same group of companies;
&#8211; equity securities delivered as a result of a conversion of debt instruments of the same issuer or group of companies;
&#8211; equity securities tendered in a public exchange offer, if disclosure is equivalent to a prospectus;
&#8211; equity securities offered within the framework of a merger, spin-off or transfer of assets, if disclosure is equivalent to a prospectus; or
&#8211; securities issued by an employer to its current or former employees, executives or directors.
Exemptions in connection with admission to trading
Finally, the FinSA provides for certain exemptions from the prospectus requirement specifically in connection with the admission to trading. The most significant one relates to equity securities that are being issued within a period of twelve months (on a rolling basis) and account for less than 20% of the equity securities of the same class as already admitted to trading on the same Swiss trading venue.
* * *
We believe the new Swiss prospectus regime is a significant improvement vis-à-vis the status quo, tightening the legal framework where necessary but relaxing it where not needed. Based on the strength of our leadership and expertise in capital markets, we look forward to helping to make optimal use of the new framework at the forefront of the ECM field.

New Equity Prospectus Regime to be Phased In Starting January 1, 2020

Gesellschaftsrecht / M&A

Kapitalmarkt

On July 8, 2021, the SIX Swiss Exchange announced the launch of SPARKS, a dedicated new equity segment on the Swiss stock exchange targeting small and medium enterprises (SMEs). The new segment is designed to allow SMEs to raise capital in public offerings, whilst enabling investors to tap the growth potential of SMEs.
With somewhat more relaxed listing requirements compared to the SIX main market &#8211; track record of only 2 years, shareholder base of minimum 50 investors, equity capital of minimum CHF 12 m, and a capital increase of at least CHF 8 m as part of the IPO unless the equity capital is higher than CHF 25 m &#8211; SPARKS targets companies with a market capitalization of less than CHF 500 m. Annual (audited) and semi-annual (unaudited) financial reporting and corporate governance reporting will be applicable, as well as disclosure of important shareholdings, management transactions and events that could affect the share price (ad hoc publicity).
Catering for anticipated lower secondary market trading liquidity, SPARKS will operate a proprietary trading model specifically tailored to companies with smaller market capitalization to give investors the best possible execution. The model will feature a condensed trading window with continuous trading every day, with an opening auction at 3.00 p.m., trading until 5.20 p.m. and a closing auction until 5.40 p.m. SPARKS listed companies can request a transfer to the SIX main market after a certain period, but must transfer to such main market if their average market capitalization exceeds CHF 1 bn over a period of 12 months.
Pursuant to the announcement, the new equity trading segment will go live upon approval by relevant authorities. All necessary applications have been filed.
We believe SPARKS will be an interesting proposition for a number of parties: for SMEs, allowing them to efficiently raise capital whilst taking advantage of less onerous listing requirements, and for their investors, allowing for enhanced liquidity, effective price formation and best execution. We expect the new segment to address an actual need of both companies and investors, by establishing and extending to SMEs an ecosystem for raising public capital for growth. Based on the strength of our leadership and expertise in capital markets, we look forward to helping our clients make optimal use of the new framework at the forefront of the ECM field.

SIX Swiss Exchange to Launch SPARKS, a New Equity Segment for SMEs

Steuern

Molecular Partners

June 18, 2021. Homburger advised Molecular Partners AG, a clinical-stage biotech company developing a new class of custom-built protein drugs known as DARPin® therapeutics, in connection with its Initial Public Offering of 3,000,000 American Depositary Shares in the United States at a public offering price of USD 21.25 per ADS, for total gross proceeds of approximately USD 63.8 m. Each ADS represents one new ordinary share issued by Molecular Partners out of its authorized share capital. Trading of the ADSs commenced on the Nasdaq Global Select Market on Wednesday, June 16, 2021 under the ticker symbol “MOLN.” Molecular Partner&#8217;s ordinary shares continue to be listed and traded on SIX Swiss Exchange making the stock dual listed.
J.P. Morgan, SVB Leerink and Cowen acted as joint book-running managers for the offering. RBC Capital Markets acted as the bookrunner, Kempen &amp; Co as the lead manager for the offering.
Molecular Partners was advised by Homburger in this transaction. The Homburger team was led by partner Dieter Gericke (Corporate / M&amp;A, Capital Markets) and included partner Stefan Oesterhelt (Tax) as well as associates Lorenzo Togni, Karin Mattle and Francesco Bernasconi (all Corporate / M&amp;A, Capital Markets) and junior associate Tanja Niederer (Corporate / M&amp;A, Capital Markets).

Homburger advised Molecular Partners AG in connection with its Initial Public Offering in the United States and listing on NASDAQ

On April 29, 2021, PolyPeptide Group AG, a global leader in peptide development and manufacturing, announced the successful pricing of its initial public offering (IPO) at CHF 64 per share, implying a market capitalization of CHF 2.12 bn. The base offering of the IPO comprised 3,125,000 new shares issued in a capital increase and 8,396,740 existing shares sold by the selling shareholder, Draupnir Holding B.V. In addition, the selling shareholder has granted an over-allotment option to the underwriters of up to 1,728,261 existing shares, exercisable in whole or in part within 30 days following the first day of trading. The shares were listed and started trading on SIX Swiss Exchange on April 29, 2021 under the ticker symbol «PPGN».
Credit Suisse AG, Morgan Stanley Europe SE and Merrill Lynch International acted as Joint Global Coordinators and Joint Bookrunners, and Danske Bank A/S, Joh. Berenberg, Gossler &amp; Co. KG and Zürcher Kantonalbank as Joint Bookrunners on the IPO.
PolyPeptide is a leading global independent contract development and manufacturing organization (CDMO) specializing in innovative peptides employed as the active ingredient in therapeutic products. Dating back to 1952, PolyPeptide is the world’s first dedicated peptide manufacturer and at present manufactures approximately half of all currently approved peptide drug substances. For the year ended December 31, 2020, PolyPeptide generated revenues of EUR 223.0 m and an adjusted EBITDA of EUR 62.0 m. With a global workforce of more than 900 employees, PolyPeptide has manufacturing sites across three continents.
Homburger acted as counsel to the underwriters. The Homburger team was led by partner Frank Gerhard and included lead associate Lorenzo Togni and associate Daniel Junginger (all Corporate / M&amp;A and Capital Markets). Partner Stefan Oesterhelt provided tax advice.

Lorenzo
Togni

SIX Swiss Exchange to Launch SPARKS, a New Equity Segment for SMEs

Homburger advised Molecular Partners AG in connection with its Initial Public Offering in the United States and listing on NASDAQ

Homburger advised the Underwriters on the IPO of PolyPeptide Group AG on SIX Swiss Exchange

New Equity Prospectus Regime to be Phased In Starting January 1, 2020

Moving the Goalposts between Launch and Pricing oder Der Prospektnachtrag beim IPO unter bisherigem und zukünftigem Recht

The future of equity capital markets transactions in Switzerland: what issuers of equity instruments should know about the new Swiss prospectus regime

The New Swiss Equity Prospectus Regime - What Issuers and Underwriters of Equity Instruments Should Know (Updated Version of January 2020)

Join the Team

Lorenzo Togni

Karriere

Sprachen

Zulassung

Teams

LorenzoTogni

SIX Swiss Exchange to Launch SPARKS, a New Equity Segment for SMEs

Homburger advised Molecular Partners AG in connection with its Initial Public Offering in the United States and listing on NASDAQ

Homburger advised the Underwriters on the IPO of PolyPeptide Group AG on SIX Swiss Exchange

New Equity Prospectus Regime to be Phased In Starting January 1, 2020

Moving the Goalposts between Launch and Pricing oder Der Prospektnachtrag beim IPO unter bisherigem und zukünftigem Recht

The future of equity capital markets transactions in Switzerland: what issuers of equity instruments should know about the new Swiss prospectus regime

The New Swiss Equity Prospectus Regime - What Issuers and Underwriters of Equity Instruments Should Know (Updated Version of January 2020)

Join the Team

Lorenzo Togni

Karriere

Sprachen

Zulassung

Teams

Lorenzo
Togni