Complete Revision of the Listing Regulations of the Swiss Stock Exchange

In view of the enactment of the new Swiss Stock Exchange and Securities Trading Act (which is scheduled to take effect on January 1, 1997) the current listing regulations of the Swiss Stock Exchange have been completely revised under the supervision of the Swiss Admission Board. The new regulations are expected to be enacted in October 1996 and shall govern the listing of equity, debt and derivative instruments on the Swiss Stock Exchange. Although the new regulations are not yet available in final form, the general principles of these proposed regulations (the "Regulations") are as follows.

According to Section 1 of the Regulations their purpose is to provide issuers - to the furthest possible extent - with free and equal access to the Swiss Stock Exchange and to secure transparency for all investors with regard to issuers and securities. The primary aim of the Regulations is to enhance investors' protection by means of more stringent disclosure requirements for issuers in compliance with international standards.

From a formal point of view the Regulations shall also provide issuers of securities as well as issuing houses with a clear overview of the listing requirements. For this purpose the Regulations will be accompanied by detailed check lists.

The Regulations place specific emphasis on the contents of the listing prospectus. This document will be required to contain much more detailed information than is the case under the current regulations. A more complete prospectus shall enable sophisticated investors to obtain a reasonable basis from which to judge the issuer's financial situation, earning capacity and future prospects as well as the rights attached to the securities. The currently required listing advertisement, however, will be permissible in an abbreviated form under the new Regulations. The contents of said advertisement may be limited to the principal terms and special features (if any) of the securities and to a reference as to where the prospectus may be obtained. The listing advertisement will have to be prepared in both the German and French language and published in at least two Swiss newspapers.

Under the Regulations the person or entity filing the listing application will be required to provide a so-called "no material adverse change declaration" on behalf of the issuer. Any material adverse change of the issuer's financial position and earning capacity occurring after the publication of the prospectus will have to be made public.

The Regulations will further require the issuer to prepare its accounts according to certain specified accounting standards as long as the issuer's securities are listed. Furthermore, the issuer will have the ongoing obligation to inform the market in a timely manner of any "price-sensitive" fact which arises in connection with its activities and which is not public knowledge. The publication of said fact may, however, be temporarily postponed, if (i) said fact is an element of the issuer's strategy and (ii) the disclosure of said fact might prejudice legitimate interests of the issuer. In the latter case the issuer will be required to ensure strict confidentiality.

In the event of a material breach of the Regulations, severe sanctions may be imposed on the violator (be this an issuer, a guarantor, if any, the person or entity which files the listing application on behalf of an issuer or any member of the Swiss Stock Exchange) by the Swiss Admission Board or the Disciplinary Commission of the Swiss Stock Exchange.

The Regulations have been drafted along the lines of established international standards and, in particular, with the Directives of the European Union in mind. Although the Regulations definitely retain an independent Swiss character, they may be deemed equivalent to the regulations of the European Union.

The content of this article is intended to provide general information on the subject matter and is not a legal advice. An individual matter requires legal advice according to the specific circumstances.