Route to Switzerland

Route Sector to Switzerland Panel
Route to Switzerland
Marco Estermann
Head Issuer Relations
SIX Swiss Exchange
+41 58 399 2406
marco.estermann@six-group.com
www.six-swiss-exchange.com
After entering into recession in 2009, Switzerland has started on a slow
paced but promising road to recovery. The country is an attractive
place to do business for foreign investors due to its central location, its
business-friendly government and an educated workforce practicing a
plethora of languages from neighbouring nations.
The Federal Department of Economic Affairs
Swiss GDP jumped by 0.9% in the fourth quarter of 2010. According
to the Federal Department of Economic Affairs (FDEA) private
consumption and investment boosted GDP growth to 2.6% for
the year. The trade balance for services was a growth contributor
throughout 2010, while the trade balance for goods was limited.
On the production side industry, financial intermediaries as well as
business services all recorded significant growth.
In terms of Switzerland’s public finances, the expected deficits have
so far not materialised, claimed Matthias Kägi, spokesperson for FDEA.
“Despite a deterioration of public budgets, positive accounting results
were achieved in 2009 and in 2010 deficits did not surface. While a deficit
at the federal level is forecast for the coming years, the cantons and
communes will be able to keep their accounts stable through 2012. The
debt ratio for the entire state sector is likely to decline to 35.9% by 2012.”
The FDEA groups together the Swiss government’s expertise in
all matters regarding economic affairs and trade policy. It develops
Peter Ruggle - Partner
Aschwanden Peter & Partners
+ 41 (0) 43 244 82 22
peter.ruggle@app-law.ch
www.app-law.ch
On January 1, 2011, Switzerland enacted its new Swiss Code of Civil Procedure. It replaces the previously existing 26 cantonal
laws on civil procedure and the cantonal convention on domestic arbitration. Switzerland has a longstanding tradition in the
international dispute resolution arena and is known and appreciated for its politically unbiased administration of justice and its
stability of the law. The new federal civil procedure act supports these qualities.
The new Code of Civil Procedure increases the formal procedural
requirements with respect to the parties’ assertions in court. The first
submission must indicate all supporting evidence. The new rules
require a precise case analysis before submitting the first petition.
Mediation has become an official means to resolve disputes under
the new federal code of civil procedure. Peter Ruggle, partner at
Aschwanden Peter & Partners expects the importance of mediation to
increase over the next several years, as its use is encouraged.
“The Code of Civil Procedure grants the judge the right to recommend
mediation to the parties and to suspend court proceedings. It is often
advisable to include mediation as a preliminary step before going into
arbitration or filing the first petition in court.”
Depending on the canton in which litigation takes place (Zurich,
Berne, St. Gall, Aargau), Switzerland provides for commercial
courts with judges having specific knowledge on business matters.
Companies confronted with complex disputes with other companies
are advised to retain experienced litigators who have the required
knowledge and understand the economic and fiscal implications.
“Aschwanden Peter & Partners foster an integral approach to
resolve disputes,” explained firm partner James T. Peter. “We
James T. Peter - Partner
Aschwanden Peter & Partners
+ 41 (0) 43 244 82 22
james.peter@app-law.ch
www.app-law.ch
Matthias Kägi
Spokesperson
Federal Department of Economic Affairs
+41 31 322 20 34
matthias.kaegi@gs-evd.admin.ch
www.evd.admin.ch
strategies for employment, growth, prosperity and sustainability in Switzerland. The
FDEA guarantees the country has the best possible access to foreign markets through
the World Trade Organisation (WTO) and a network of more than 20 free trade
agreements and bilateral agreements with the EU.
The Six Swiss Exchange
SIX Swiss Exchange is one of the leading regulated stock exchanges in Europe.
As a pillar of the Swiss financial centre, it creates optimal trading conditions for
investors, issuers and participants from across the world.
“Thanks to its high-performance trading platform, its trading partners benefit
from latency periods of just microseconds,” explained Marco Estermann from
the issuer relations department. “SIX Swiss Exchange ensures round-the-clock
trading that is independent, fair and supervised. This increases trust and
stability in the Swiss financial centre.”
Mr Estermann said the strong Swiss currency could translate to a slowdown
in economic growth in the coming months: “The ‘weakness’ of the USD as well
as the Euro has put a lot of upward pressure on the CHF, which could have a
negative effect on the exporting industries and the economy as a whole.” The
country’s attractive tax environment is also under stress.
Nevertheless, Mr Estermann expects to see increased activity on the listing side over
2011 and beyond, should market volatilities normalise again. “We believe that more and
more investment companies are looking to exit their portfolio companies and the capital
needs of growth companies will require them to find new funds by way of an IPO.”
Aschwanden Peter & Partners
consider ourselves as highly motivated and experienced negotiators and
litigators. Our clients are advised with respect to all methods on dispute
resolution. Thus, our law firm values ‘traditional’ and alternative dispute
resolution methods of all kinds. We provide our clients with well-established
project management experience in complex litigation, arbitration and mediation
procedures, and we have profound knowledge of the various rules of arbitration
and mediation of both national and international institutions (International
Chamber of Commerce, Swiss Chambers’ Court of Arbitration and Mediation,
Swiss Chamber of Commercial Mediation).”
The firm’s main areas of expertise are far reaching. They include consulting during
the preliminary stages of litigious conflicts. Aschwanden Peter & Partners will advise
customers prior to a possible conflict. For the drafting of contracts, in particular, the
firm places value on developing conflict-preventing provisions and on selecting
suitable dispute resolution mechanisms. Based on the firm’s experience, they can assist
with setting up and implementing a risk management system for companies.
Aschwanden Peter & Partners are able to carry out complex mediation
using their experienced team of mediators. The firm also has extensive
experience working with international clients and serving as arbitrators or
representatives in arbitration cases. Attorneys routinely represent domestic
and international companies before national courts.
April 2011 Corporate INTL 101

Sector Route to Panel Switzerland
Route Sector to Switzerland Panel
Deloitte - Transaction Services
Konstantin von Radowitz
Corporate Finance Partner
+41 (44) 421 6457
kvonradowitz@deloitte.ch
www.deloitte.ch
Switzerland is an attractive place to do business for foreign investors
due to its central location, its business-friendly environment
and educated workforce who practice a range of languages from
neighbouring nations. Swiss GDP was forecast to rise by 0.4% in 2010
but unexpectedly jumped by 0.9% in the fourth quarter. The boost
was partially due to an increase in exports of chemical products. The
Swiss National bank predicts growth in 2011 to shrink to a moderate
1.5 % after 2.6% in 2010. The positive emerging trends in the financial
sector of the Swiss economy as well as the country’s low tax rate have
led to a rise in foreign investments. The nation’s corporate tax rate is
between 13% and 22% and, in accordance with the nation’s taxation
laws, can be availed by any company that has its registered office or
place of effective management in Switzerland.
The M&A market is certainly reaping the benefits of Switzerland’s modest
economic growth. Deal activity in the Swiss market seems to have picked
up in the past two to four months, said Konstantin von Radowitz, corporate
finance partner at Deloitte Switzerland. He said that current public
offers suggest that the courage to do transactions is coming back.
With the new increases in transactions comes a need for a multitude
of financial and professional services to support these deals. The M&A
Transaction Services Team at Deloitte Switzerland enable a deal’s maxi-
Gloor & Sieger
Oliver Rappold
Attorney-at-law, LL.M.
Partner
+41 44 254 61 61
orappold@gloor-sieger.ch
www.gloor-sieger.ch
mum value to be achieved by ensuring value drivers, risks and other price sensitive
aspects are identified and properly assessed.
The team’s transactional expertise is complemented by industry and functional
experts from across Deloitte in areas such as tax, pension, accounting and
IT. The team consists of specialists with a variety of backgrounds and industry
expertise. They provide due diligence and M&A services to both corporate and
private equity clients. The team also works closely with M&A tax, M&A strategy,
operational and post-merger integration teams.
Corporate finance partner Konstantin von Radowitz outlined how his team
helps to maximise the value of an acquisition. “With our Vendor Assistance
Services we support sellers in preparing their asset for sale in different relevant
fields such as finance, financial and operational carve-out analyses, tax,
pensions, IT, etc. by looking at the asset in a way a potential investor would
look at them thereby helping to avoid value erosion throughout the deal.
This may well lead into a Vendor Due Diligence. On the buy side, we support
buyers in the due diligence analysis again in various fields, depending on the
respective transaction, such as finance, tax, pensions, IT, operational, post
merger integration etc.”
Mr von Radowitz said that he expects Swiss M&A market activity to continue to
pick up over the next 12 months. He also commented that the private equity and venture
capital markets are quite calm. “The general understanding is that notable venture
capital and buy-out transactions may well only come back in Q4 or 2012.”
The Swiss real estate market did not experience the same exaggerations as other countries in recent years. Hence it has
remained quite stable and fundamentally strong throughout the crisis. Consequently the construction sector has not seen an
actual downturn with many players still running at their capacity limits and in the top locations it is still a sellers’ market.
Given these parameters and the fact that bank lending in
Switzerland did not reach the leverage levels seen abroad, many of
the projects were able to survive and new projects have commenced.
Oliver Rappold, partner at Gloor & Sieger, said that the real estate fund
industry has experienced a sharp increase in interest and projects over
the last five years, in particular since the new law on collective investment
schemes (KAG) has come into force in 2007 which has introduced
new fund vehicles and tax optimizations. “The Swiss Financial Market
Supervisory Authority (FINMA) has, however, as a consequence of
the global financial crisis increased the regulatory hurdles since and is
currently reluctant in approving further real estate funds.”
Swiss construction regulation is based on statutory private and
public law. Private law (Swiss Code of Obligations) deals with
the relevant contracts such as work contracts, whereas public
law provides for the building and planning provisions including
environmental law and monument protection. Private law is mainly
federal law whereas public law is to a substantial part within the
authority of the cantons and communities.
In addition there is an extensive set of rules by the Swiss
engineers and architecture association (SIA) on technical matters,
safety etc. and standard agreements including general terms and conditions.
Despite a great tradition of detailed and extensive statutory law, case law plays
also an important part in the field of construction law.
Mr Rappold said that while there have been no major legal developments in
the industry recently which would materially affect building projects, there is
a federal popular initiative pending to vote within the next two years which in
case of its adoption would limit the possibility to declare new building zones.
This may have a long term impact on the construction dynamic in Switzerland.
“Furthermore, there are certain minor changes to statutory law in progress including
changes with regard to property liens. In addition, there are efforts to introduce
utilization restrictions and other measures in tourist areas in connection with the issue
of ‘cold beds’ and the long awaited abolition of the federal law on restrictions of foreign
ownership of real estate is still pending,” added Mr Rappold.
When questioned about future predictions for the Swiss construction industry, Mr
Rappold said opinions are divided. “Some claim over-heating in certain hot spots
and a considerable risk of a correction. Others are more optimistic on the prospects
of the industry. My personal opinion is somewhere in between: the fundamentals are
still quite strong, though a more cautious approach towards project developments, in
particular in the field of residential apartments (for sale), seems advisable. A risk lies
also in the historically low interest rates, should they rise unexpectedly steep.”
Kellerhals - M&A
Dr. Thomas Bähler - Partner
Kellerhals
+41 58 200 35 00
thomas.baehler@kellerhals.ch
Switzerland’s business environment is still unique in Europe in
many ways: its economic success traditionally rests on its stability,
its production technology and the quality of its products.
These factors are even more pertinent in the light of the Euro crisis,
claimed Thomas Bähler, M&A specialist and partner at Kellerhals.
“Furthermore, the inflation rate in recent years has constantly
remained below 1% and, as a result, is considerably lower than in the
EU and US. Interest rates in Switzerland have remained low. Against
this backdrop, the IMD has rated Switzerland as the most competitive
European country in its World Competitiveness Yearbook 2011.”
The M&A activity in the healthcare and life science sectors have been
particularly robust amid the economic downturn. The largest transaction
last year was the acquisition of global medical company, Alcon, by Novartis
International AG, a multinational pharmaceutical company based in Basel,
Switzerland. The deal was valued at US$ 41.2 billion.
“In contrast, it is the banking and finance industry that are
facing profound challenges,” explained Dr. Bähler. “In view of new
regulations requiring revisions of the traditional model of how
private banking operates, we might look at increased M&A activity in
this sector in 2011.”
In comparison to other European economies, Switzerland managed
to escape the most severe consequences of the crisis. UBS AG was
the only Swiss Bank that needed to be bailed out by both the federal
government and the Swiss National Bank. However, Dr. Bähler
warned that the strong Swiss Franc against the Euro is a downside
to the country’s robust economic outlook and the absence of deficit
spending. Principally, the export-led Industrial Markets are suffering
from the strong currency.
Although Switzerland has a long tradition of openness toward foreign
investors, some restrictions do exist regarding the acquisition of Swiss
residential real estate and the acquisition of businesses in regulated
industries such as banking, securities trading and insurance.
The issue of competition law has become the main challenge to large-
scale transactions in recent years. The Swiss Competition Commission
seems to take a much tougher and often unpredictable stand toward
merger activities, commented Dr. Bähler. “According to our experience it is
crucial to get in touch with the said anti-trust authority well before the deal
is being closed in order to outline not only the legal factors behind the deal,
but first and foremost its business reasons.”
The Swiss private equity market, which is only just picking up pace again,
is likely to play a much bigger role in terms of deal funding for the remainder
of 2011. According to Dr. Bähler this is due to the fact that after the severe
shock during the financial crisis, the industry has to show activities to gain
new funds given the many attractive targets in the current market.
Dr. Bähler also mentioned the increasingly important presence
of the emerging markets that are attractive to investors because of
the strong Swiss Franc. On the other hand companies from markets
such as China and India are demonstrating an increased readiness to
invest in Swiss companies.
Although Switzerland is not a member of the EU, nationals of most
of the EU member states are entitled to work in Switzerland.
Switzerland is a privileged place for launching a business, not only because
of its geographical situation in the middle of Europe, its attractive tax and
banking systems, its highly qualified workforce or of its matchless quality
of life, but also because its employment law is very liberal and flexible in
comparison with neighbouring jurisdictions. It guarantees an adequate
minimum employee protection through a number of compulsory provisions,
beyond which the parties are free to negotiate their employment relationship
as they wish. As an example, the payment of an indemnity by the employer is
not a condition of validity of a prohibition of competition.
Although workers’ unions play an important role in the negotiation of
collective agreements, only 20% of the workers are members of such unions.
Strikes are only allowed as ultima ratio and are therefore rare.
Fixed-term employment relationships end without notice, while
employment relationships for unlimited periods may be terminated by either
party, unless otherwise agreed, with seven days’ notice during the probation
period which can be extended up to three months, a one month’s notice
during the first year of service, a two months’ notice until the ninth year of
employment and a three months’ notice thereafter.
According to the liberal principle of the freedom of termination,
justification is not required. A termination may be considered as abusive
in specific circumstances, which have been interpreted rather broadly
in the recent case law. However, even if a termination is considered as
abusive, it is still valid. The employee has no right to be reintegrated
and can merely claim for compensation up to a maximum amount
corresponding to six months’ wages. A notice of termination is only void
if it is given by the employer at an inopportune juncture, such as during
compulsory service, illness or pregnancy.
Both employer and employee may at any time terminate the employment
relationship with immediate effect (without notice) for good cause, i.e.
if particular circumstances render the continuation of the employment
relationship in good faith unconscionable for the party giving notice. If
the termination with immediate effect is unjustified, it remains valid,
but the employee can claim for compensation up to a maximum amount
corresponding to six months’ wages.
In the case of restructurings (mergers, spin-offs, transfer of
undertakings) and mass redundancies, the employees or their
representatives and the cantonal employment offices have information
and consultation rights, but they do not have co-determination rights
and the employer has no obligation to set up a social plan.
Swiss corporate law has recently been amended with transparency
rules on compensation of board members and senior management of
listed companies.
Python & Peter - Employment Law
Jérôme Nicolas
+41 22 702 15 15
jnicolas@pplex.ch
www.pplex.ch
Python & Peter has offices in Geneva, Lausanne, Bern, Sion, Zug, Brussels
and Tokyo with more than 65 attorneys, all highly qualified and fluent
in several languages. We offer to both private and institutional clients in
Switzerland and abroad high quality services in all areas of the law, with
particular emphasis on business law, including employment law.
102 Corporate INTL April 2011 April 2011 Corporate INTL 103