FINSA and FINIA enter home stretch

Economic Affairs and Taxation Committee of the National Council (WAK-N) concludes consultations

The Economic Affairs and Taxation Committee of the National Council (WAK-N) has concluded its consultation on the Financial Services Act (FINSA) and the Financial Institutions Act (FINIA). This was communicated today in a media release. Accordingly, the bill will now be subject to consultation in the National Council in the fall session. As FINSA and FINIA have already been passed in the Council of States by the end of last year the bill now has to pass its last obstacle.

By and large the WAK-N conformed to the resolution of the Council of States in terms of content. Nevertheless, the WAK-N differed with the Council of States in certain points. With respect to the FINSA there were differences with respect to the conditions for the preparation of a prospectus, the liability for false details contained in the prospectus or the Key Information Document as well as the criminal provisions. With respect to the FINIA the WAK-N differed in particular as far as the provisions contained in the Annex are concerned. According to the resolution of the WAK-N the provision in the Banking Act (BA) contained in the Annex to FINIA should not be changed at all.

In certain points the members of the WAK-N could not reach an agreement. This concerned in particular the criminal provisions, the scope with respect to the insurance companies and the external asset managers.

The draft of the bill as resolved by the WAK-N will be available in due course.

Please do not hesitate to contact us.

Günther Dobrauz
Partner
Leader Legal FS Regulatory &
Compliance Services
+41 58 792 14 97
guenther.dobrauz@ch.pwc.com

Tina Balzli
Director
Head Banking, Legal FS Regulatory and
Compliance Services
+41 58 792 15 54
tina.balzli@ch.pwc.com

Simon Schären
Manager
PwC Legal FS Regulatory and
Compliance Services
+41 58 792 14 63
simon.schaeren@ch.pwc.com

How banks are gearing up for PSD2

With around five months to go, banks don’t have much time left
to make sure they’re compliant with the EU’s revised Payment
Services Directive (PSD2). However, for many financial institutions,
PSD2 is more than just a compliance exercise. It will impact
banks’ strategic positioning and significantly change their risk
profile as they interact with third parties.

Since Switzerland is not a member of the EEA, PSD2 isn’t directly
applicable in this country. But given that Switzerland is a member
of SEPA (the Single Euro Payments Area), in the future it will be
required to demonstrate that national rules similar to PSD2 are in
place. There will also be heavy pressure on Swiss banks from the
client side to open up their architecture vis-à-vis third parties.

PwC’s PSD2 team recently conducted a study across the Swiss and
European markets on banks’ readiness to tackle the new rules.
The survey ran from February to June this year, and 38 large
banks responded. The objective was to understand how much
progress regulators in each state had made in terms of transposing
PSD2 into national regulation, the state of play for banks in
relation to implementing PSD2, what opportunities banks felt
PSD2 offered them, and the impact that open data might have on
banks’ systems and infrastructures.

Results of Survey

Read more about PSD2

Get in contact with us:

Günther Dobrauz
Partner, Leader Legal FS
Regulatory & Compliance Services
+41 58 792 14 97
guenther.dobrauz@ch.pwc.com

Michael Taschner
Senior Manager, Legal FS
Regulatory & Compliance Services
+41 58 792 10 87
michael.taschner@ch.pwc.com

Philipp Rosenauer
Manager, Legal FS
Regulatory & Compliance Services
+41 58 792 18 56
philipp.rosenauer@ch.pwc.com

Partial revision of the Swiss VAT law: at least 30’000 foreign established businesses will have, in principle, to register for VAT in Switzerland

Swiss VAT Law imposes new obligation on foreign companies

As of January 1st, 2018 / January 1st, 2019, the partial revision of Swiss VAT Law will directly impact the foreign established companies operating in Switzerland

Please check out our technical flyer on the subject to find out more about these changes:

 

Do you want to know more about the new Swiss VAT obligations impacting foreign business or e-commerce business?

Please do not hesitate to contact us to discuss about your situation, your projects and more particularly the related VAT consequences in Switzerland or abroad.

We would be more than happy to discuss with you about the potential impacts, benefits, risks, costs, optimizations and obligations resulting from such changes.

Patricia More, Associée TVA, PwC Genève
+41 58 792 95 07 / patricia.more@ch.pwc.com

Olivier Comment, Directeur TVA, PwC Lausanne
+41 58 792 81 74 / olivier.comment@ch.pwc.com

PwC Deal Talk – Doing Deals in India from a Swiss Investor’s Perspective

Edition 4/2017

India has seen significant economic growth in the past two decades and has credibly positioned itself as the largest democratically driven economy in the world.

With more than 250 Swiss companies having a presence in India and with a total Swiss foreign direct investment of over USD 3.2 bn in India since the year 2000, the subcontinent is also an increasingly important trade partner for Switzerland.

In 2015, Swiss imports from India amounted to USD 1.0 bn whilst Swiss exports to India (excluding bullion) amounted to USD 0.8 bn.

M&A activity in India has gradually increased over the last 5 years. 2016 saw the highest M&A activity of this period with 1,002 deals with a total deal value of USD 61 bn, whereby USD 29.3 bn (48%) of deal value was linked to cross-border transactions.

India offers attractive opportunities for Swiss Investors, but the environment is vastly different to the Swiss market and there are unique features investors need to be aware of. With first-hand experience and local teams on the ground, PwC can help you to avoid common pitfalls when doing deals in India.

Read Attachment

Contact Us

Sascha Beer
Partner
Corporate Finance / M&A
Tel. +41 58 792 1539
sascha.beer@ch.pwc.com

Nico Psarras
Partner
Head of Transaction Services
Tel. +41 58 792 1572
nico.psarras@ch.pwc.com

Devinder Singh
Director, Transaction Services
Tel. +41 58 792 1432
devinder.singh@ch.pwc.com

The New EU Prospectus Regulation and its impact on Swiss-based issuers and their KIDs under PRIIPs

The new EU Prospectus Regulation (“PR”) was adopted by the European Council on 16 May 2017 and will enter into force on 20 July 2017. The PR is the latest regulation issued by the European Capital Markets Union (“CMU”) and should become reality by 2019. The PR is based on and further clarifies the existing EU Prospectus Directive. It contains provisions that are directly applicable in all EU member states without discretion, but that also apply in particular to Swiss-based issuers and their agents offering securities in the EU or admitting transferable securities to trading on regulated markets located in the EU such as EUREX. One of the main goals of the PR is to reduce the length of prospectuses by providing clear and detailed guidelines of how to create a prospectus. This newsletter gives a short overview of the key content of the PR and explains in particular how it will be applicable to Swiss-based issuers and their agents.

1. Executive Summary

The PR particularly affects Swiss-based issuers and their agents publicly offering transferable securities in the EU and admitting transferable securities to EU regulated markets such as EUREX.

Most financial instruments, such as shares, bonds, warrants and structured products come under its scope, except for units in collective investment schemes which are not close-ended. There are detailed new requirements related to the content, scope, length, formalities and other requirements of a prospectus.

The summary of a prospectus can be used instead of a KID created under PRIIPs. Issuers should therefore investigate operational and legal synergies between the PR and the KID. Consequently, the PR should be addressed now despite the fact that most provisions will not enter into force until 21 July 2019.

2. When a prospectus is required

A prospectus must be published when transferable securities are offered to the public in the EU or admitted to trading on regulated markets located in the EU by means of a communication to persons in any form and by any means, presenting sufficient information on the terms of the offer and the securities to be offered so as to enable an investor to decide to purchase or subscribe to the securities in question.

The prospectus obligation applies to both equity and non-equity securities entitling the holder either to acquire transferable securities or to receive a cash amount through a cash settlement determined by reference to other instruments, notably transferable securities, currencies, interest rates or yields, commodities or other indices or measures. It covers in particular warrants, covered warrants, certificates, structured products, and securities convertible at the option of the investor, but not units in collective investment schemes other than the closed-end types.

No public offer of transferable securities is deemed an offer to qualified investors in the sense of MiFID II (safe harbour). Any resale to the public of transferable securities first placed with qualified investors or admitted to trading on a regulated market will however require the publication of a prospectus. Offers to fewer than 150 natural or legal persons per EU Member State are not deemed to be public, nor are offers of securities with denominations per unit amounting to at least EUR 100,000 or offers of securities addressed to investors who acquire securities for a total consideration of at least EUR 100,000 per investor. There are also multiple exemptions applicable to securities traded on a regulated market.

Resales of transferable securities in the scope of the PR are generally treated as separate offers and are subject to a prospectus, unless an exemption applies. No additional prospectus is required as long as a valid prospectus is available. A prospectus is valid for 12 months from the date of approval of the offer or the admission to trading and the date on which the issuer or the person responsible for drawing up the prospectus consents to its use in written form.

It is possible to voluntarily draw up a prospectus in accordance with the provisions of the PR even if the offer would be outside the scope of application of the PR. Such prospectuses are subject to all the rights and obligations of a prospectus created according to the PR.

3. The issuer of a prospectus

The issuer who issues or proposes to issue securities, the offeror who offers securities to the public, or a mandated third party such as a bank, is responsible for ensuring that the prospectus provides sufficient information to enable investors to make informed investment decisions.

The liability for the information given in the prospectus, and any supplement thereto, lies at the very least with the issuer, or its administrative, management or supervisory bodies, the offeror, the person asking for the admission to trading on a regulated market, or the guarantor. The persons responsible for the prospectus must be clearly identified in the prospectus. Civil liability remains with the individual EU member states.

4. When do Swiss-based issuers have to issue a prospectus?

Any non-EU domiciled issuer, such as a Swiss issuer, bank or intermediary, can offer transferable securities in the EU or seek admission to trading of securities on a regulated market established in the EU, such as EUREX, if a prospectus is drawn up and approved by the competent authorities according to the PR. It is to be expected that the corresponding Swiss prospectus requirements will be equivalent to the prospectus requirements under the PR. The Swiss requirements are currently undergoing a revision in the context of the debate on the Swiss Financial Services Act (FinSA) in the Swiss parliament. As a result, competent authorities may in future even approve prospectuses issued under Swiss law if certain additional requirements are met.

5. The Key Types of Prospectuses

6. The prospectus approval process

Any prospectus and all its constituent parts must be approved by the competent authority prior to publication. Any of the constituent parts can be approved separately. The competent authority is generally the EU member state where the issuer has its registered office or, in the case of a third-country issuer such as a Swiss bank, the member state where the securities are intended to be offered to the public for the first time or where the first application for admission to trading on a regulated market is made.

The prospectus has to be made available to the public by the issuer, offeror or person asking for admission to trading on a regulated market in advance of, and at the latest at the beginning of the offer to the public or the admission to trading of the securities concerned. The prospectus is regarded as public if it is published in electronic format or on certain web pages.

The approving authority will then notify the competent authorities of the EU member states in which the securities will be distributed.

7. The rules for advertisements

Any advertisement regarding either an offer of securities to the public or an admission to trading on a regulated market must be clearly recognisable as such. All information disclosed in the context of an advertisement must be consistent with the information contained in the prospectus.

8. When are updates required?

Every significant new factor, material mistake or material inaccuracy relating to information included in the prospectus which may affect the assessment of securities and which arises between the time of the approval of the prospectus and the closing of the offer period or when trading on the regulated market begins, must be mentioned in a supplement to the prospectus and must be approved by the competent authority. In such cases, investors who have already agreed to purchase or subscribe to the securities have two days in which to withdraw their acceptance.

9. When will the PR enter into force?

The PR will enter into force on 20 July 2017. There will be a transitional period until 21 July 2019 for most requirements under the PR. Certain provisions will already apply as of 21 July 2018 and 20 July 2017 respectively, such as the exemption from publishing a prospectus for shares which represent less than 20% of the number of shares of the same class admitted to trading on the same regulated market over a period of 12 months.

Please contact us for your free consultation:

Martin Liebi
Director
Tel: +41 58 792 2886
martin.liebi@ch.pwc.com

Michael Taschner
Senior Manager
Legal FS Regulatory & Compliance Services
+41 58 792 23 25
michael.taschner@ch.pwc.com

Anne Batliner
Manager
Legal FS Regulatory & Compliance Service
+41 58 792 2955
anne.batliner@ch.pwc.com

Newsflash: The Swiss Federal Council has published some key amendments to the current version of the Swiss Financial Market Ordinance (FinfraV/FMIO)

The new regulations on initial and variation margins for OTC-derivatives, the platform trading obligation, the delayed recording and reporting obligation for securities dealers and foreign market participants, and the prolonged exemption for pension funds and investment funds for retirement.

The Swiss Federal Council has published some key amendments to the current version of the Swiss Financial Market Ordinance (FinfraV/FMIO) affecting a wide variety of market participants such as counterparties of OTC-derivatives, securities dealers, pension funds, and investment funds for retirement.

The new regulations on initial and variation margins for OTC-derivatives under the Swiss Financial Market Infrastructure Act FinfraV/FMIO will enter into force on the 1st of August 2017. The variation margin requirements under FinfraV/FMIO will enter into force on the 1st of September 2017 and will affect all counterparties to OTC-derivatives not being small non-financial counterparties (NFC-). The key new requirements under the new initial and variation margins regulations will be as follows:

  • The new regulations are much stronger aligned to the final initial and variation margin regulations under EMIR, the corresponding European regulation. The new Swiss regulations do however not impose an obligation to review the legal opinions applicable to OTC-contracts on an annual basis. This is a welcomed alleviation for the Swiss market participants.
  • It is now generally possible to re-use initial margins granted in the form of cash if they are held in custody with a third party custodian bank or a central bank.
  • It is now possible to change the method for the calculation of the initial margin in each derivative category also after a mutual agreement on such calculation has been achieved.
  • There will no mandatory haircut of 8% anymore if the variation margin paid in cash is not provided in the mutually agreed currency.
  • The obligation to exchange initial and variation margins for options on equity, indexes or similar equity derivatives will apply only beginning as of the 4th of January 2020.
  • Units in UCITS funds can now also be used for initial and variation margin purposes.
  • No initial margin must be provided anymore for the foreign exchange component of Cross Currency Swaps.
  • OTC-derivatives related to covered bonds are under certain conditions totally or at least partially exempted from the initial and variation margin obligation.

The platform trading obligation, that requires that certain specifically designated derivatives must be traded on a trading venue, has formally set in force. There is however currently no derivatives category that has been designated as subject to the trading obligation on a platform.

Another important alleviation for securities traders and foreign market participants at Swiss trading venues is the delayed entry into force of the recording and reporting obligations. These obligations will now only enter into force on the 1st of October 2018 for Swiss securities dealer. The transactions and orders that have occurred in between the 1st of January 2018 and the 30th of September 2018 will however have to be recorded and reported no later than until the 31st of December 2018 (“backloading”). The recording and reporting obligations will enter into force for foreign branches of Swiss securities dealers and foreign participants of Swiss trading venues as of the 1st of January 2019.

The exemption for pension funds and investment foundations for retirement from the clearing obligation has been extended until the 16th of August 2018.

Please do not hesitate to contact us for a free consultation on any of these new provisions.

Contact

Martin Liebi
Head Capital Markets
martin.liebi@ch.pwc.com
0041 76 341 65 43

New Swiss FinTech rules

Switzerland adopts revised banking regulations in order to facilitate the business activities of “FinTech” companies

On February 1, 2017 the Federal Council initiated a public consultation suggesting modifications to Swiss banking regulations. The purpose of the proposed revision was to create appropriate regulations for FinTech companies operating outside the traditional financial sector, taking into account the specific risk potential of their respective business models. The proposed revision included amendments to both the Banking Act (“BA”) and the Banking Ordinance (“BO”). The public consultation lasted until May 2017.

On July 5, 2017 the Federal Council finally adopted the new Swiss regulatory framework with regard to the BO. The new regime will formally enter into force on August 1st, 2017 so that FinTech companies will be able to benefit from these new rules as quickly as possible.

The amended rules provide for the following:

  1. Settlement account exemption: An exemption for settlement accounts will be created. This will allow companies to hold funds in a settlement account for 60 days without the operation of such account being deemed an acceptance of public funds subject to licensing under the BA (Art. 5 para 3 let. c BO). The BO in its current version did not contain a 60-day period of this kind, thereby creating some uncertainty.
     
  2. Innovation space (“sandbox”): Companies are allowed to hold public deposits of up to CHF 1 million without having to obtain a banking license (“sandbox”). Consequently, holding public funds of less than CHF 1 million does not qualify as “operating on a commercial basis”, which is a requirement in order to fall within the scope of the BA and the BO (Art. 6 para 2 let. a BO). According to the BO in its current version, taking public funds from more than 20 persons is deemed as “operating on a commercial basis”. Under the revised version of the BO, the number of persons providing funds is irrelevant as long as the threshold of CHF 1 million is not exceeded. Furthermore, the funds raised may neither be invested nor be subject to interest payments (Art. 6 para 2 let. b BO). Finally, the persons providing the funds must be informed that the respective business model is not subject to supervision by the Swiss Financial Market Supervisory Authority (FINMA) and that the rules on deposit insurance do not apply (Art. 6 para 2 let. c BO). This new innovation space will enable FinTech companies to try out experimental new business models without immediately having to obtain a banking license.

All in all, these innovative amendments to the BA and the BO will substantially facilitate the operation of FinTech business models in Switzerland. Moreover, the revision of the BA and the BO is further evidence of the Swiss government’s commitment to constantly improving and redesigning the regulatory environment in order to boost Switzerland as a major FinTech hub.

Your contacts:

Guenther Dobrauz
Partner|Leader PwC Legal Services Switzerland
Tel. +41 58 792 1497
guenther.dobrauz@ch.pwc.com

Tina Balzli
Director|Legal FS Regulatory & Compliance Services
Tel. +41 58 792 1554
tina.balzli@ch.pwc.com

Simon Schären
Manager |Legal FS Regulatory & Compliance Services
Tel. +41 58 792 1463
simon.schaeren@ch.pwc.com

“2016 Chief Digital Officer” study – digital responsibility is growing

In its latest “2016 Chief Digital Officer” study, Strategy& investigates who is responsible for overseeing digitization within companies. The findings show that a third of Swiss management bodies delegate this task to a Chief Digital Officer (CDO), particularly in the financial industry. The profiles of CDOs vary – but not their role.

The aim of the “2016 Chief Digital Officer” study conducted by Strategy& is to establish who is in charge of the digital transformation in the 2,500 largest listed companies in the world (including 49 in Switzerland). The term CDO refers to senior executives entrusted with the digitization strategy of their company. The evaluation clearly shows that: The Chief Digital Officer is taking the C-suite by storm. Whereas in 2015, 6% of study participants employed a CDO; in 2016 the number had already risen to 19%. 60% of the CDOs questioned were appointed between 2015 and 2016. Europe, the Middle East and Africa (EMEA) have the highest CDO density in the world, and the strongest growth (+30%) in the role. Switzerland is ranked fifth in Europe with 33%.

The Swiss financial services industry has clearly recognized the signs of the times, and is deploying the relevant management skills to ensure the consistent implementation of a digital strategy. The financial sector has the highest proportion of CDOs in Switzerland: insurance companies lead the way with 67%, followed by banks with 50%. They are digitizing not only their customer activities, but also their internal processes.

There is no typical CDO. Half of Swiss CDOs are members of the Board of Directors, 38% have individual titles such as “Head of Digital”, 6% hold the position of Vice President, and 6% are Directors. Almost two thirds were recruited from within the company. Only 13% of CDOs are currently female. 38% of CDOs held a previous function in marketing, sales or customer service. A third come with technical baggage, while a quarter have a background in consulting, strategy or business development. The importance of technical experience has increased. In 2016, 32% of CDOs originated from the technical sector. This represents more than twice as many as the previous year.

Find out more

Contact

Dr. Daniel Diemers
Partner Financial Services, Strategy&, Schweiz
+41 58 792 3190
daniel.diemers@strategyand.ch.pwc.com

Swiss Federal Council Adopts Dispatch on AEOI with 41 Jurisdictions

On 16 June 2017, the Swiss Federal Council agreed to adopt the dispatch on the introduction of the Automatic Exchange of Information (“AEOI”) with 41 states and territories. Switzerland will activate the AEOI with each individual state/territory via specific federal decrees within the framework of this dispatch.

This dispatch strengthens Switzerland’s international position, as its AEOI network has extended to most of the G20 and OECD states, in addition to the already existing agreements with 38 states and territories, including all EU member states.

As part of this dispatch, collection of information will begin in 2018 for a first data exchange in 2019. Brazil, China, Liechtenstein, and Russia are notable states included within the list of 41 states and territories.

Please refer to the following link for the Swiss Federal Council’s official media release:

Englishhttps://www.admin.ch/gov/en/start/documentation/media-releases.msg-id-67079.html
Germanhttps://www.admin.ch/gov/de/start/dokumentation/medienmitteilungen.msg-id-67079.html

Tax Package 17: Federal Council presents basic parameters of the planned reform

At its meeting on 9 June 2017 the Federal Council confirmed the basic parameters of the planned reform of Swiss corporate taxes, which the Steering Committee sent as a recommendation to the Federal Council and already introduced in a press release on 1 June 2017. The Tax Package 17 (SV 17) has three main objectives: first the aim is to secure Switzerland’s attractive status as a business location. In addition the reform intends, in view of the changed international environment, also to continue to preserve the acceptance of the Swiss tax system. Finally SV 17 is intended to secure sufficient tax revenues at all levels. These objectives are in principle identical with those of Corporate Tax Reform III (CTR III), which was rejected by the Swiss voters on 12 February 2017 with a share of the vote of almost 60%. SV 17 will therefore be more balanced. Compared with CTR III the special rules will be drawn up more restrictively and the interests of the cities and communes will carry more weight.

Continue to read in detail in our current newsletter.

If you have questions, please contact your usual PwC contact person or one of PwC Switzerland´s experts named below.

Contacts

Andreas Staubli
Partner
Leader TLS Schweiz
Tel. +41 58 792 44 72
Send E-mail
Armin Marti
Partner
Leader CT Schweiz
Tel. +41 58 792 43 43
Send E-mail
Benjamin Koch
Partner
Leader TP and VCT
+41 58 792 43 34
Send E-mail
Daniel Gremaud
Partner
Tax & Legal
+41 58 792 81 23
Send E-mail
Claude-Alain Barke
Partner
Tax & Legal
+41 58 792 83 17
Send E-mail
Remo Küttel
Partner
Tax & Legal
+41 58 792 68 69
Send E-mail
Laurenz Schneider
Director
Tax & Legal
+41 58 792 59 38
Send E-mail