The public offering of securities to investors in Switzerland is, as a general matter, subject to a requirement to publish a prospectus pursuant to the Swiss Financial Services Act (FinSA). The same goes where securities are to be admitted to trading on a Swiss trading venue. Prior to publication, in most cases, the prospectus has to be signed off by a prospectus review body (currently there are two, operated by the stock exchanges SIX and BX Swiss, respectively).
Companies will typically aim to structure VC investments and the associated funding rounds as private placements not subject to the FinSA prospectus rules. In this context, it should be noted that an offering can relatively quickly be considered public if it is not clearly limited to a very small and clearly determined group of potential investors. However, even public offerings do not trigger the prospectus requirement if one of several exemptions can be invoked, e.g. (i) limiting the offering to investors qualifying as professional clients in the sense of the FinSA (non-retail offering), (ii) directing the offering at fewer than 500 prospective investors, or (iii) offering securities of a denomination larger than CHF 100,000 only or where investors are required to purchase at least CHF 100,000 in securities (wholesale offering). An exemption further applies if the total value of the offering does not exceed CHF 8 million during a rolling 12-month period.
Where debt securities are offered, Swiss companies are required to make available certain basic information to the creditors, even in the absence of prospectus requirement in the strict sense, to avoid the proceeds raised qualifying as deposits from the public under the Swiss Banking Act.
The FinSA also governs the activities of financial intermediaries that are considered “financial services providers”. The definition of a “financial service” is quite broad, covering, inter alia, any activity addressed directly at certain clients that is specifically aimed at the acquisition or disposal of securities or other financial instruments. As such, certain brokerage, intermediation or similar activities in the VC space might in principle be caught by financial services regulation under the FinSA. However, as a matter of law and practice, activities broadly in the area of corporate finance are excluded from the financial services definition. This concerns, in particular (a) the consultation on structuring or raising capital as well as on business combinations and the acquisition or disposal of participations and the services associated with such consultation (corporate M&A and corporate finance services), (b) the placement of financial instruments with or without a firm commitment as well as associated services (underwriting activities), and (c) financing within the scope of aforementioned services.
Separately, where VC investments are structured as commingled funds or other forms of collective investment, Swiss investment fund regulation may come into play.