Relationship agreements (RA) are a highly effective management tool in M&A practice – especially for listed companies with major shareholders. Properly structured, they stabilize the shareholder base, channel the influence of anchor shareholders and regulate sensitive information flows, for example in the case of IPOs, capital increases, PIPEs or strategic minority shareholdings. The art lies in the precise design in accordance with Swiss law: purpose, limits, disclosure, insider and antitrust law, among other things, must be interlinked.
1. Purpose & differentiation: What is the purpose of a RA – and what is not a RA?
In contrast to a shareholders’ agreement (SHA) between shareholders, a RA is an agreement between the (often listed) company and one or more major shareholders. It serves to visibly channel influence and safeguard the independence of the company. In the case of minority anchors, nomination rights and clearly defined participation rights can professionalize cooperation without creating de facto control; in the case of controlled companies, the RA signals independence and good governance to the outside world.
It differs from the SHA, which coordinates rights/obligations among shareholders (voting rights, restrictions on sale, co-sale rights). The SHA, which for the most part only binds shareholders, is also frequently used in practice by unlisted companies, start-ups, joint ventures and family businesses.
2. Where is the red line in Swiss law?
The limits under Swiss law run along the lines of freedom of contract with the reservation of excessive restriction (Art. 27 para. 2 of the Swiss Civil Code) and the duties of care and loyalty of the Board of Directors under Art. 717 of the Swiss Code of Obligations: The Board of Directors may only conclude a RA if it is in the interests of the company and was negotiated in good faith; its assessment is subject to the business judgment rule and relative equal treatment (Art. 717 para. 2 SCO). In addition, basic structures under stock corporation law (Art. 714 in conjunction with Art. 706b SCO) and capital market disciplines apply: Ad hoc publicity, disclosure or acting in concert pursuant to Art. 120 FinMIA – including case-by-case assessment of standstill agreements – and the duty to make an offer pursuant to Art. 135 FinMIA if a RA qualifies as a domination agreement and the 33 ⅓ % threshold would be exceeded. Under antitrust law, the exchange of information and any acquisition of control (merger control) must also be considered.
3. Board & voting rights: How much influence is (still) permissible?
In practice, a workable corridor has been established for board and voting rights issues: Nomination rights according to participation scale, clear requirement profiles (competence, reputation, independence) and a right of refusal by the company in the event of non-fulfilment are permissible; the election remains reserved for the general meeting. Voting commitments in favor of the company are controversial and are considered by the majority of scholars to be permissible to a limited extent if they are limited in terms of time and purpose (e.g. election of an independent director, support of a defined strategy) and no de facto control of the General Meeting by the BoD arises; blanket commitments to issue instructions or models that shift the division of responsibilities are considered problematic. Veto rights in the company-shareholder relationship are regularly critical and require a very narrow, objective justification (see judgment of October 28, 2015, of the Commercial Court of the Canton of Zurich, case no.: HG140114-O).
4. Information rights & confidentiality: How does the flow remain legally secure?
A privileged supply of information – typically via board members (contract for the benefit of third parties) or narrowly defined consolidation windows – is permissible provided it is earmarked, proportionate and in the interests of the company; relative equal treatment remains the guiding principle. Under insider trading law, Art. 142/154 FinMIA prohibits abusive disclosure and exploitation of Insider Information; the safe harbor of Art. 128 lit. a FinMIO permits it on a “need-to-know” basis to fulfill legal or contractual obligations. This should be flanked by strict confidentiality obligations, blocking periods, insider lists, clean teams/Chinese walls and – very practically – audit trails and contractual penalties. At the same time, antitrust risks in the exchange of competition-sensitive data must be controlled.
5. Participation dynamics: clean calibration of lock-up, standstill & takeover protection
Finally, shareholding dynamics and takeover safeguards must be finely calibrated: Lock-ups stabilize the shareholder base over a clear period of time; standstills limit the build-up of shareholdings or expansion of control. In the takeover context, non-tender agreements, tender obligations and “don’t ask, don’t waive” clauses can be considered – ideally only with the consent of independent board members. Waiver clauses on participation, control or legal action rights are justifiable for specific occasions and for a limited period of time (e.g. no special audit request as part of a dispute resolution), whereas general blanket waivers are tricky. The right dosage avoids disclosure obligations or even mandatory offers – and creates calm in the cap table without triggering a change of control.
RAs are powerful – and tricky. They have established themselves in practice, but continue to test the limits of Swiss law. Those who use them successfully define the purpose with razor-sharp precision, limit the time and subject matter, document the BoD assessment cleanly and keep insider, disclosure and antitrust processes watertight – with clear sunset and trigger mechanisms. This allows you to gain influence and stability without provoking mandatory offers, unequal treatment or antitrust risks.
If you are now setting the course for your next IPO window, a PIPE or a strategic minority investment, we can support you even at short notice with a deal-specific RA design including a disclosure roadmap, a red-flag review of your drafts and practical sample clauses/playbooks for the board, legal and investor relations. Contact us for a compact initial consultation: we will structure your initial situation and deliver a viable legal architecture – tailored to your transaction.
Disclaimer: This publication contains general information only and does not constitute legal advice. For advice on your specific situation, please contact us directly.
