Private Equity Minority Investments - Universität St.Gallen

Chapter VI: Exitentitled parties 2330 and, if the shareholders’ agreement so provides, theymust pay a contractual penalty. 2331 Yet, the transfer of shares remains valid.2 Exit Routes and Related RightsGiven PEMIs’ need for investment liquidity and in light of their mostcommon exit avenues (see Section II.A.1.1), the primary exit rightscommonly agreed upon relate to a sale to fellow shareholders, the company,a third party, or to the general public.2.1 Sale to Fellow Shareholders or the CompanyA PEMI’s exit may be carried out via a transfer of shares to fellowshareholders or, subject to certain limitations, to the portfolio company.Generally, Swiss corporate law does not confer shareholders wishing to selltheir shares any right to compel other shareholders or the company topurchase their shares. 2332 However, such a sale of shares can be based on acontractual agreement, for example, by the PEMI exercising a put optionagainst other shareholders or the company, or by fellow shareholders or thecompany exercising a call option on the PEMI’s shares. Put options entitlea shareholder to sell shares to the obliged party, in part or in whole, at a predefinedstrike price. Conversely, call options allow the obligee to purchasethe shares held by the obliged shareholder, in part or in whole, at a predefinedstrike price. The company’s purchase of its own stock (buy-back) issubject to statutory limitations because shareholders generally do not have aright to claim the return of their contribution. 2333 The company may acquireits own shares only if (i) freely disposable equity in the amount necessaryfor this purpose is available, (ii) the total nominal value of own shares doesnot exceed 10% of the share capital, 2334 and (iii) the principle of equaltreatment of shareholders 2335 is observed. 2336 Differential treatment demon-233023312332233323342335CO 97 I.See FRICK, § 11, 1087 (lock-up provisions), N 1115 (regarding the right of first offer), N1134 (regarding the right of first refusal).See FRICK, § 11, N 1143.CO 690 II.By exception 20%, see CO 659 II. In addition, there is the option to buy-back shares as partof a capital reduction pursuant to CO 732 et seqq.See Section IV.E.4.1.3. Specifically, in the context of put options, three conditions apply: (i)conferring of put options to certain classes of shares is only admissible if objectivelyjustified, (ii) all willing shareholders in the same circumstances must be able to sell at thesame terms, (iii) the purchase must be at arm’s length, (i.e., the strike price must be orientedto the real value of the shares), but objectively justified deviations in individual cases areallowed. See BÖCKLI, Aktienrecht, § 4, N 248 et seqq.; LENTZ/VON PLANTA, BaslerKommentar, CO 659, N 7a; FRICK § 11, N1292.375