CFCL Investment regulation – Switzerland
Reference
Regulatory structure
Please refer to the CBL Market infrastructure - Switzerland for the complete information about the regulatory structure.
Holding restrictions
Disclaimer
The information contained in the Holding Restrictions is based on the legal opinion obtained by CBL that was issued on 21 May 2021. CFCL believes the information to be correct as of that date but disclaims any responsibility as to the accuracy and completeness of the information after that date. In the case of discrepancy between the information provided by CFCL and the local laws and regulations, the latter shall prevail. The Holding Restrictions do not constitute legal advice and Clients should seek advice from independent professional counsel.
Clients are responsible for ensuring compliance with the holding restrictions and agree to indemnify and hold harmless, CFCL, for any loss, expense, liability, damage, or claims, whether direct or indirect, against or incurred by CFCL arising out of or resulting from such non-compliance.
Holding restrictions – Register Market - Switzerland
Restrictions on clients
No general restrictions on client residency for holdings held through CFCL.
However, certain funds may impose specific restrictions on investor domicile. Clients must refer to and abide by the restrictions (if any) contained in the fund prospectus before entering into transactions.
Restrictions on settlement
There is no general restriction on settlement for Switzerland investment funds through CFCL. However, certain funds may impose specific settlement/transfer restrictions. Clients must refer to and abide by the restrictions (if any) contained in the fund prospectus before entering transactions.
Holding restrictions – CSD Market - Switzerland
Holding restrictions
Registered shares in Swiss companies are subject to holding restrictions.
Company bylaws can prohibit the re-registration of registered shares (re-registration being normally subject to the approval of the Board of Directors) if the purchaser's holding exceeds the limits fixed in the bylaw or if the purchaser refuses, upon the company's request, to declare that shares were acquired in the purchaser's own name and for the purchaser's own account.
Customers must not hold any Canadian securities via CFCL’s link to Switzerland.
It is the customer’s responsibility to put in place all necessary arrangements with respect to investment restrictions and the customer shall be liable for non-compliance.
The customer shall indemnify and hold harmless CFCL, its directors, officers, agents, employees or affiliates (the “ Indemnified Persons”) for any loss, expense, liability, damage or claims incurred by any of the Indemnified Persons as a result of the non-compliance with such holding restrictions.
Transfer and repatriation of capital
The transfer abroad of capital gains, dividends and interest as well as the repatriation of capital by residents or non-residents is not restricted.
Disclosure requirements
With regard to shares in companies listed on the official market and on the regulated OTC market, acquisitions exceeding the 3%, 5%, 10%, 15%, 20%, 25%, 33.3%, 50% or 66.6% threshold must be reported to the stock exchange (if the shares are listed) and to the company.
Disclosure requirements
Introductory information and categories
This section provides general information about the disclosure requirements for fund securities holdings with which Clearstream Fund Centre must, according to the information available at the time of the present publication, comply with each of the domestic markets and fund markets covered by the Disclosure Requirements.
Fund securities that are held remotely are usually not disclosed by CFCL. A disclosure request received by CFCL regarding such a holding will be forwarded to the relevant client without assessing its validity and the CFCL Client shall handle the request on a voluntary basis.
Disclosure Requirements are only available for those countries where CFCL has a link to the respective domestic market or direct access to local domiciled funds that are held in Clearstream’s name on the register.
For fund securities holdings where CFCL has no such link or direct access to the register, clients must be aware that local laws might provide for mandatory disclosure. A disclosure request in this regard will be forwarded to clients without assessing its validity. Clients commit not to unreasonably withhold their consent to such a request and agree to indemnify CFCL for damages resulting directly from non-compliance with mandatory local disclosure requirements.
In most cases, the obligation to disclose is based on the domestic equivalent of a Companies Act, relevant investment funds act or anti-money laundering act and covers all security types.
In some instances, the obligation to disclose is based on stock exchange laws or regulations and only applies to listed domestic and foreign securities.
The Disclosure Requirements do not constitute legal advice and the Clients should seek independent professional advice in relation to fund securities deposited with CFCL, especially as, for those jurisdictions in which no disclosure obligation falls on CFCL, there may be separate disclosure requirements that apply directly to clients of CFCL, shareholders and beneficial owners.
Please note that CFCL is not always given comprehensive information or advised of changes affecting local disclosure requirements.
It remains the sole responsibility of the Client to ensure compliance with local disclosure requirements. If a requirement is not met, it is the Client who will be liable to any related penalty. Clients are therefore advised to seek independent legal advice on the existence and interpretation of local disclosure requirements.
In the case of a discrepancy between the general information contained in this document and the information provided by CFCL for a specific market, as applicable (irrespective of whether this information has been obtained from an agent of Clearstream Fund Centre, or, as the case may be, a foreign regulator of a branch of CFCL), the information provided by CFCL for the specific market as applicable, shall prevail.
N.B.: In all countries, if it is suspected that a disclosure obligation has been breached (for example, that a threshold of holdings under custody has been crossed without being reported), the regulators and the authorities may have the power to investigate. Moreover, in all countries, disclosure obligations might be triggered by enforceable judgements of the competent jurisdiction of the country in question.
Disclosure categories
Clearstream Fund Centre classifies disclosure scenarios according to the following market categories:
Category 1
Markets where disclosure by Clearstream Fund Centre to issuers, investment fund managers and/or to regulators or market authorities is mandatory under applicable law;
Category 2
Markets where disclosure by Clearstream Fund Centre of account holders to issuers, investment fund managers and/or foreign regulators or market authorities is a legal obligation in respect of securities in specific circumstances;
Category 3
Markets where there is no obligation for Clearstream Banking as custodian of Cleatstream Fund Centre to disclose account holders to issuers, investment fund managers and/or regulators, notwithstanding any disclosure requirement falling directly on clients of Clearstream Banking, shareholders and/or beneficial owners or notwithstanding disclosure necessary to obey an enforceable judgement of the country in question.
Disclosure requirements – Register Market- Switzerland
Disclosure Category: 2
Clearstream Fund Centre S.A. (“CFCL”) may be required under Switzerland laws and regulations to disclose the identity, information and holdings of Clients and/or ultimate beneficial owners, upon request, in the case of holding investment funds in Switzerland .
Consent
In order to comply with the applicable legislation, Clients holding Switzerland investment funds or entering into transactions in the Switzerland market must consent, and are hereby deemed to consent, to the required legal disclosure. Such consent includes the appointment of the requestor (for example, the Fund Manager, Transfer Agent, Regulator) as their attorney-in-fact, under power of attorney, to collect from CFCL the required information to be disclosed. Clients who do not grant such authority cannot hold such investment funds / financial instruments in their accounts with CFCL.
Background and legal basis
Disclosure of information on CFCL clients and ultimate beneficial owners may arise from the following Switzerland laws and regulation:
- Anti-Money Laundering Act:
- Article 2 para. 2 let. b and bbis
- Articles 3-8 - Anti-Money Laundering Ordinance FINMA, article 40
Sanctions
proposed investment, and/or mandatory redemption of the existing holdings.
Disclosure requirements – CSD Market- Switzerland
Disclosure Category: 2
In the case of bearer shares, there is no legal obligation on Clearstream Fund Centre S.A. (“CFCL”) to disclose the identity of its clients or their holdings to issuers or to the regulator.
In the case of registered securities, there can be a legal (contractual) obligation for CFCL to disclose the identity of the shareholder to the issuing company.
Consent
Clients holding Swiss shares registered in the name of Clearstream Nominees, London (see the Market Link Guide – Switzerland) consent and are hereby deemed to consent to disclosure and to the appointment of the requestor (that is, the respective company) as their attorney-in-fact, under power of attorney to collect from CFCL such information as is required to be disclosed. Clients who do not want to grant such authority to CFCL should refrain from holding such shares in their account with Clearstream Fund Centre.
Disclosure requirements
The Swiss company issuing the shares may require CFCL, upon request, to disclose to that company information relating to the identity of CFCL clients holding any of the company’s registered shares at CFCL and to the quantity of shares held. Clearstream Banking will only systematically disclose in the case of the shares are one of the companies with whom it has entered into a specific agreement (see 3.a in the table below).
Background and legal basis
In Switzerland, companies may issue shares in bearer or registered form. The provisions are to be found in the Swiss Code of Obligations (CO), in the chapter Governing Corporations (Articles 620 and following).
Obligation to report threshold crossings
Extract of Article 20 of the Stock Exchange Act: Obligation to notify:
“Whosoever directly, indirectly or in concert with third parties acquires or sells for their own account shares or purchase or sale rights relating to shares in a company incorporated in Switzerland whose equity securities are listed in whole or in part in Switzerland and thereby attains, falls below or exceeds the threshold percentages of 3, 5, 10, 15, 20, 25, 33 1/3, 50 or 66 2/3 of voting rights, whether or not such rights may be exercised, must notify the company and the stock exchanges on which the equity securities in question are listed.”
The threshold values in Art. 20 of the Stock Exchange Act are defined on the basis of the total number of voting rights as per entry in the Commercial Register (Art. 12 para. 2 SESTO-FINMA).
The obligation to disclose applies to all investors who directly, indirectly or in concert with third parties reach, exceed or fall below the shareholding percentage specified by law through the acquisition or sale of equity and/or derivative instruments, including cash settlement options, of a company incorporated in Switzerland. Substantial shareholder reporting is required each time the shareholder reaches, exceeds or falls below the 3%, 5%, 10%, 15%, 20%, 25%, 33.3%, 50% or 66⅔% thresholds. Parties, in addition to private investors, who are obligated to report, include:
- A group of companies (the total amount of shares held by the group must be reported; that is, holdings of the parent company plus its subsidiaries);
- Investors who, together with third parties, according to an agreement/contract or other organised proceedings, acquire or sell equity securities or exercise voting rights;
- Mutual fund companies (aggregate holdings of all funds held with the same management must be reported but not the total of the fund group); and
- Borrowers, in the case of securities lending and borrowing, if they are entitled to exercise the voting rights.
See the SIX Exchange Regulation website for further information.
The company and the stock exchange must be notified within four trading days of acquisition or sale. The disclosure forms can be found at:
https://www.ser-ag.com/en/topics/disclosure-of-shareholdings.html
Please refer to Disclosure Requirements – Switzerland for complete information on disclosure requirements for Switzerland.
Disclaimer
The information contained in the Disclosure Requirements is based on the legal opinion obtained by CBL acting as a sub-custodian for CFCL that was issued on 21 May 2021. CFCL believes the information to be correct as of that date but disclaims any responsibility as to the accuracy and completeness of the information after that date. In the case of discrepancy between the information provided by CFCL and the local laws and regulations, the latter shall prevail. The Disclosure Requirements do not constitute legal advice and Clients should seek advice from independent professional counsel.
Clients are responsible for ensuring compliance with the disclosure requirements and agree to indemnify and hold harmless, CFCL, for any loss, expense, liability, damage or claims, whether direct or indirect, against or incurred by CFCL arising out of or resulting from such non-compliance.