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Great interest in SASV's lawsuit against UBS, registration period extended until 14 August 2023

The lawsuit of the "Swiss Association for the Protection of Investors" (Schweizerischer Anlegerschutzverin, SASV) against UBS has met with great interest. Within a week, more than 500 people have already joined to have the exchange ratio in the Credit Suisse takeover judicially reviewed.


The most important facts in brief:

  • Already over 500 registrations within one week

  • In particular private shareholders from Switzerland, including numerous pensioners and employees of Credit Suisse

  • Registration period extended until August 14, 2023

  • Participation also possible via litigation financiers and thus cost- and risk-free

  • Instead of not joining any lawsuit at all, the SASV recommends joining via the litigation financier (option 2) in order to be able to benefit from the outcome in the event of an out-of-court settlement.

  • However, there is no guarantee that shareholders will receive more in the end, despite UBS's objectionable approach.

In record time, the Swiss Association for the Protection of Investors (Schweizerischer Anlegerschutzverein, SASV) has succeeded in creating a platform for former Credit Suisse shareholders to register in German, French, Italian and English, through which they can join the action to review the exchange ratio in accordance with Art. 105 of the Swiss Merger Act. Within a week, more than 500 shareholders have already joined the lawsuit via the SASV. Among them are primarily private small investors from Switzerland and former employees of Credit Suisse who had received part of their remuneration in now "almost worthless shares".


The SASV's action under Art. 105 of the Merger Act deals with the question of whether the share and membership rights of CS shareholders were adequately safeguarded in the context of the takeover of CS by UBS. CS shareholders received only one UBS share for every 22.48 CS shares. In view of the closing price of UBS on Friday, 17 March 2023, of CHF 17.11, the price stipulated in the merger agreement of 19 March 2023 was thus only 76 centimes per CS share, whereas the stock market price of the CS share had been CHF 1.86 two days earlier. The book value as of 31 March 2023 was CHF 13.70 per share. Thus, the exchange ratio of 22.48 CS shares per UBS share was not only determined without any well-founded basis for decision-making within the framework of a hasty action, but this exchange ratio also turned out to be far too advantageous for UBS. This is also reflected in the course of the negotiations: UBS first offered a lump sum of one billion francs, then a lump sum of three. This compares with Credit Suisse's equity capital of 54 billion francs at the end of March 2023. After deducting the purchase price, there is a so-called "badwill" of 51 billion francs. Normally, companies pay goodwill, i.e. a premium on the net asset value, when they take over a company. The takeover of the second largest Swiss bank by the largest bank had the character of horse trading, in which the purchase price was arbitrarily determined.


Moreover, the exchange ratio has not been independently verified to date. A judicial review and correction of this exchange ratio by an appropriate expert is therefore necessary in order to determine the fair value of Credit Suisse and to examine the appropriateness of the exchange ratio. Especially against the background that Credit Suisse has been one of the best capitalised banks in Europe.


In addition, the shareholders had no rights of inspection and were not allowed to vote on the merger. Thus, numerous control mechanisms provided for in the Swiss Merger Act were abolished. The review is not only in the interest of CS shareholders, but of the entire Swiss financial centre, so as not to open the door to uncontrolled expropriations.


Therefore, for the first time in Switzerland, the SASV offers shareholders the opportunity to participate in a lawsuit at minimal cost to themselves, in order to provide a counterweight to the large companies on the capital market, so that small investors can also enforce their rights in a cost- and effort-efficient manner. The aim is to increase the pressure on large capital market participants to behave in a legally compliant manner. The SASV does not aim to make a profit.


Interested parties have the choice of bearing their share of the costs of the lawsuit themselves on a pro rata basis (option 1) or joining a lawsuit financed by a litigation financier through the SASV (option 2):


Option 1: Proportionate bearing of costs by CS shareholder

The costs for the lawsuit are borne proportionately by the participants, whereby these costs should be relatively low due to the synergy effect. If more shareholders participate than previously calculated and the costs per share can therefore be reduced, the excess amount paid will be refunded to the participating shareholders.


Option 2: Costs borne by litigation financiers

Alternatively, those who do not wish to bear further costs can join a lawsuit financed by a litigation financier through the SASV. Participation in this lawsuit is free of charge and therefore risk-free. The litigation financier finances the entire costs of the proceedings. In return, in the event of success, it receives remuneration in the form of a percentage of the compensation determined by the court or comparatively. The SASV does not make a profit through the litigation financing.


Interested parties should find out more about participation on the SASV website by 14 August 2023 and register directly: click here!


Participating shareholders are represented by Niedermann Rechtsanwälte from Zurich.

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