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Documentation

Preliminary agreements
What preliminary agreements are commonly drafted?

For sales of private companies, in most cases letters of intent, memoranda of understanding and/or term sheets are used as preliminary documents. These documents set out the transaction process and in most cases include provisions on exclusivity, confidentiality and break-up fees.

Principal documentation
What documents are required?

These depend on the circumstances surrounding the transaction.

In the sale of a private company, the key document is the sale and purchase or transaction agreement. This is:

  • the share purchase agreement in case of a share deal;
  • the asset purchase agreement in case of an asset deal; and
  • the merger agreement in case of a statutory merger.

Which side normally prepares the first drafts?

In auction sales, the seller prepares the first draft, whereas in other types of transaction the buyer prepares the first draft.

What are the substantive clauses that comprise an acquisition agreement?

An acquisition agreement contains the following substantive clauses:

  • object of sale;
  • purchase price, including earn-out provisions;
  • escrow provisions (optional);
  • actions before closing;
  • conduct of business between signing and closing;
  • conditions precedent to closing;
  • closing actions;
  • representations and warranties;
  • remedies;
  • covenants and undertakings;
  • indemnities; and
  • miscellaneous provisions.

What provisions are made for deal protection?

These depend on the party seeking deal protection.

The buyer will usually request material adverse change (MAC) clauses providing termination rights, undertakings and covenants regarding the conduct of business between signing and closing (eg, restricted actions, ordinary course of business) and, in rare cases, break-up fees.

The seller will resist MAC clauses, favour a short period between signing and closing and ask for proof of the availability of sufficient funds to pay the purchase price.

Closing documentation
What documents are normally executed at signing and closing?

At signing, the sale and purchase or transaction agreement and its schedules are executed.

At closing, the following documents are normally executed in share and asset deals:

  • Share deal:
    • resolution by the target’s board of directors approving transfer of the shares in case of registered shares with restricted transferability;
    • updated share registers in case of targets with registered shares;
    • share certificates (endorsed in case of registered shares) in case of targets with share certificates; and
    • assignment declarations in case of targets without share certificates.
  • Asset deal:
    • resolution by the target’s board of directors approving the transaction; and
    • application for registration of the asset transfer with the Commercial Registry (in case of asset transfer under the Merger Act).

Are there formalities for the execution of documents by foreign companies?

No.

However, the registration of foreign quota holders in limited liability companies with the Commercial Registry requires the filing of a legalised and apostilled document proving the existence of the quota-holder (eg, an excerpt from the Commercial Register or a certificate of good standing).

Where a public deed is required in the context of an M&A transaction (eg, in asset transfers involving real estate), the notary public will also require a legalised and apostilled power of attorney if no representative of the foreign company attends the notarisation.

Are digital signatures binding and enforceable?

Yes. However, at present, digital signatures are rarely used in Switzerland because the law recognises as equivalent to a handwritten signature only an authenticated electronic signature based on an authenticated certificate issued by a provider of certification services, as provided for in the Federal Act on Electronic Signatures. 

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