Company Quick10K Filing
UBS
20-F 2019-12-31 Filed 2020-03-03
20-F 2018-12-31 Filed 2019-03-15
20-F 2017-12-31 Filed 2018-03-09
20-F 2016-12-31 Filed 2017-03-10
20-F 2015-12-31 Filed 2016-03-18
20-F 2014-12-31 Filed 2015-03-13

UBS 20F Annual Report

Item 17 ¨ Item 18 ¨
Item 4. Information on The Company
Item 10. Additional Information.
Item 19. Exhibits.
Note 1 Summary of Significant Accounting Policies
Note 2A Segment Reporting
Note 2B Segment Reporting By Geographic Location
Note 3 Net Interest and Trading Income
Note 4 Net Fee and Commission Income
Note 5 Other Income
Note 6 Personnel Expenses
Note 7 General and Administrative Expenses
Note 8 Income Taxes
Note 9 Earnings per Share (Eps) and Shares Outstanding
Note 10 Due From Banks and Loans (Held At Amortized Cost)
Note 13 Trading Portfolio
Note 14 Derivative Instruments and Hedge Accounting
Note 15 Financial Investments Available-For-Sale
Note 16 Property and Equipment
Note 17 Goodwill and Intangible Assets
Note 18 Other Assets
Note 19 Due To Banks and Customers
Note 21 Debt Issued Held At Amortized Cost
Note 22 Provisions and Contingent Liabilities
Note 23 Other Liabilities
Note 24 Fair Value Measurement
Note 25 Restricted and Transferred Financial Assets
Note 26 Offsetting Financial Assets and Financial Liabilities
Note 27 Financial Assets and Liabilities - Additional Information
Note 28 Pension and Other Post-Employment Benefit Plans
Note 29 Equity Participation and Other Compensation Plans
Note 30 Interests in Subsidiaries and Other Entities
Note 31 Business Combinations
Note 32 Changes in Organization
Note 33 Operating Leases and Finance Leases
Note 34 Related Parties
Note 35 Invested Assets and Net New Money
Note 36 Currency Translation Rates
Note 38 Swiss Gaap Requirements
Note 1 Summary of Significant Accounting Policies
Note 2A Segment Reporting
Note 2B Segment Reporting By Geographic Location
Note 3 Net Interest and Trading Income
Note 4 Net Fee and Commission Income
Note 5 Other Income
Note 6 Personnel Expenses
Note 7 General and Administrative Expenses
Note 8 Income Taxes
Note 9 Earnings per Share (Eps) and Shares Outstanding
Note 10 Due From Banks and Loans (Held At Amortized Cost)
Note 11 Cash Collateral on Securities Borrowed and Lent, Reverse Repurchase and Repurchase Agreements, and Derivative Instruments
Note 12 Allowances and Provisions for Credit Losses
Note 13 Trading Portfolio
Note 14 Derivative Instruments and Hedge Accounting
Note 15 Financial Investments Available-For-Sale
Note 16 Property and Equipment
Note 17 Goodwill and Intangible Assets
Note 18 Other Assets
Note 19 Due To Banks and Customers
Note 20 Financial Liabilities Designated At Fair Value
Note 21 Debt Issued Held At Amortized Cost
Note 22 Provisions and Contingent Liabilities
Note 23 Other Liabilities
Note 24 Fair Value Measurement
Note 25 Restricted and Transferred Financial Assets
Note 26 Offsetting Financial Assets and Financial Liabilities
Note 27 Financial Assets and Liabilities - Additional Information
Note 28 Pension and Other Post-Employment Benefit Plans
Note 29 Equity Participation and Other Compensation Plans
Note 30 Interests in Subsidiaries and Other Entities
Note 31 Business Combinations
Note 32 Changes in Organization
Note 33 Operating Leases and Finance Leases
Note 34 Related Parties
Note 35 Invested Assets and Net New Money
Note 36 Currency Translation Rates
Note 37 Events After The Reporting Period
Note 38 Swiss Gaap Requirements
Note 39 Supplemental Guarantor Information Required Under Sec Regulations
Note 1 Corporate Information
Note 2 Accounting Policies
Note 3 Other Operating Income
Note 4 Personnel Expenses
Note 5 Other Operating Expenses
Note 6 Financial Expenses
Note 7 Liquid Assets
Note 8 Marketable Securities
Note 9 Other Short-Term Receivables
Note 10 Accrued Income and Prepaid Expenses
Note 11 Investments in Subsidiaries
Note 12 Financial Assets
Note 13 Prepaid Assets
Note 14 Current Interest-Bearing Liabilities
Note 15 Accrued Expenses and Deferred Income
Note 17 Share Capital
Note 18 Treasury Shares
Note 19 Personnel
Note 20 Assets Pledged To Secure Own Liabilities
Note 21 Contingent Liabilities
Note 22 Significant Shareholders
Note 23 Share and Option Ownership of The Members of The Board of Directors and The Group Executive Board
Note 24 Related Parties
Note 25 Events After The Reporting Period
Note 1 Business Activities, Risk Assessment, Outsourcing and Personnel
Note 2 Accounting Policies
Note 3 Net Trading Income
Note 4 Sundry Ordinary Income and Expenses
Note 5 Extraordinary Income and Expenses
Note 6 Other Assets and Liabilities
Note 7 Pledged Assets
Note 8 Swiss Pension Plan and Non-Swiss Defined Benefit Plans
Note 9 Allowances and Provisions1
Note 10 Statement of Shareholders' Equity
Note 11 Share Capital and Significant Shareholders
Note 12 Transactions with Related Parties
Note 13 Commitments and Contingent Liabilities
Note 14 Derivative Instruments1
Note 15 Fiduciary Transactions
Note 16 Events After The Reporting Period
EX-1.1 d886962dex11.htm
EX-1.3 d886962dex13.htm
EX-4.3 d886962dex43.htm
EX-4.4 d886962dex44.htm
EX-4.5 d886962dex45.htm
EX-4.6 d886962dex46.htm
EX-4.7 d886962dex47.htm
EX-4.9 d886962dex49.htm
EX-7 d886962dex7.htm
EX-12 d886962dex12.htm
EX-13 d886962dex131.htm
EX-15.1 d886962dex151.htm
EX-15.2 d886962dex152.htm

UBS Earnings 2014-12-31

Balance SheetIncome StatementCash Flow

20-F 1 d886962d20f.htm 20-F 20-F
Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

(Mark One)

¨ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

 

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2014

OR

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     .

OR

 

¨ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 1-15060

UBS Group AG

UBS AG

(Exact Name of Registrants as Specified in Their Respective Charters)

Switzerland

(Jurisdiction of Incorporation or Organization)

 

UBS Group AG   UBS AG

Bahnhofstrasse 45, CH-8001 Zurich,

Switzerland

 

Bahnhofstrasse 45, CH-8001 Zurich,

Switzerland and

(Address of Principal Executive Office)  

Aeschenvorstadt 1, CH-4051 Basel,

Switzerland

  (Address of Principal Executive Offices)

David Kelly

677 Washington Boulevard

Stamford, CT 06901

Telephone: (203) 719-3000

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Please see page 3.

Securities registered or to be registered pursuant to Section 12(g) of the Act:

Please see page 5.

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

Please see page 5.


Table of Contents

Indicate the number of outstanding shares of each issuer’s classes of capital or common stock as of

31 December 2014:

 

UBS Group AG   UBS AG

Ordinary shares, par value CHF 0.10 per share:

3,629,256,587 ordinary shares

 

Ordinary shares, par value CHF 0.10 per share:

3,842,445,658 ordinary shares

(including 87,871,737 treasury shares)   (including 2,115,255 treasury shares)

Indicate by check mark if the registrants are well-known seasoned issuers, as defined in Rule 405 of the Securities Act.

 

UBS Group AG   UBS AG
Yes  ¨            No  þ   Yes  þ            No  ¨

If this report is an annual or transition report, indicate by check mark if the registrants are not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes  ¨            No  þ

Note — Checking the box above will not relieve any registrant required to file reports pursuant to

Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the Registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrants were required to file such reports) and (2) have been subject to such filing requirements for the past 90 days.

Yes  þ             No  ¨

Indicate by check mark whether the registrants have submitted electronically and posted on their corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 205 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrants were required to submit and post such files).

Yes  þ            No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check One):

UBS Group AG

Large accelerated filer  ¨    Accelerated filer  ¨    Non-accelerated filer  þ

UBS AG

Large accelerated filer  þ    Accelerated filer  ¨    Non-accelerated filer  ¨

Indicate by check mark which basis of accounting the registrants have used to prepare the financial statements included in this filing.

 

U.S. GAAP  ¨  

International Financial Reporting

Standards as issued by the International

Accounting Standards Board  þ

  Other  ¨

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrants have elected to follow.

 

2


Table of Contents

Item 17  ¨             Item 18  ¨

If this is an annual report, indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act)

Yes  ¨            No  þ

Securities registered or to be registered pursuant to Section 12(b) of the Act:

UBS Group AG

 

Title of each class

  

Name of each exchange on

which registered

Ordinary Shares (par value of CHF 0.10 each)    New York Stock Exchange

UBS AG

 

Title of each class

  

Name of each exchange on

which registered

$300,000,000 Floating Rate Noncumulative Trust Preferred Securities    New York Stock Exchange
$300,000,000 Floating Rate Noncumulative Company Preferred Securities    New York Stock Exchange*
$1,000,000,000 6.243% Noncumulative Trust Preferred Securities    New York Stock Exchange
$1,000,000,000 6.243% Noncumulative Company Preferred Securities    New York Stock Exchange*

Subordinated Guarantee of UBS AG with respect to each of the

Noncumulative Company Preferred Securities above

   New York Stock Exchange*
E-TRACS Linked to the UBS Bloomberg CMCI Food Total Return due April 5, 2038    NYSE Arca
E-TRACS Linked to the UBS Bloomberg CMCI Agriculture Total Return due April 5, 2038    NYSE Arca
E-TRACS Linked to the UBS Bloomberg CMCI Energy Total Return due April 5, 2038    NYSE Arca
E-TRACS Linked to the UBS Bloomberg CMCI Total Return due April 5, 2038    NYSE Arca
E-TRACS Linked to the UBS Bloomberg CMCI Gold Total Return due April 5, 2038    NYSE Arca
E-TRACS Linked to the UBS Bloomberg CMCI Industrial Metals Total Return due April 5, 2038    NYSE Arca
E-TRACS Linked to the UBS Bloomberg CMCI Livestock Total Return due April 5, 2038    NYSE Arca
E-TRACS Linked to the UBS Bloomberg CMCI Silver Total Return due April 5, 2038    NYSE Arca
E-TRACS Long Platinum Linked to the UBS Bloomberg CMCI Platinum Total Return due May 14, 2018    NYSE Arca

 

3


Table of Contents
E-TRACS Linked to the S&P 500 Gold Hedged Index due January 30, 2040    NYSE Arca
E-TRACS Linked to the Bloomberg Commodity Index Total ReturnSM due October 31, 2039    NYSE Arca
E-TRACS Linked to the Alerian MLP Infrastructure Index due April 2, 2040    NYSE Arca
1xMonthly Short E-TRACS Linked to the Alerian MLP Infrastructure Total Return Index due October 1, 2040    NYSE Arca
2xMonthly Leveraged Long E-TRACS Linked to the Alerian MLP Infrastructure Index due July 9, 2040    NYSE Arca
E-TRACS Linked to the Alerian Natural Gas MLP Index due July 9, 2040    NYSE Arca
E-TRACS Linked to the Wells Fargo® MLP Index due October 29, 2040    NYSE Arca
E-TRACS Daily Long-Short VIX ETN due November 30, 2040    NYSE Arca
E-TRACS Linked to the Wells Fargo® Business Development Company Index due April 26, 2041    NYSE Arca
2×Leveraged Long E-TRACS Linked to the Wells Fargo® Business Development Company Index due May 24, 2041    NYSE Arca
ETRACS Monthly Pay 2xLeveraged Dow Jones International Real Estate ETN due March 19, 2042    NYSE Arca
ETRACS Monthly Pay 2xLeveraged Dow Jones Select Dividend Index ETN due May 22, 2042    NYSE Arca
ETRACS Monthly Pay 2xLeveraged S&P Dividend ETN due May 22, 2042    NYSE Arca
ETRACS Alerian MLP Index ETN due July 18, 2042    NYSE Arca
ETRACS Monthly Pay 2xLeveraged Mortgage REIT ETN due October 16, 2042    NYSE Arca
ETRACS Diversified High Income ETN due September 18, 2043    NYSE Arca
ETRACS Monthly Pay 2xLeveraged Diversified High Income ETN due November 12, 2043    NYSE Arca
ETRACS Monthly Pay 2xLeveraged Closed-End Fund ETN due December 10, 2043    NYSE Arca
ETRACS Monthly Reset 2xLeveraged S&P 500® Total Return ETN due March 25, 2044    NYSE Arca
ETRACS Wells Fargo MLP Ex-Energy ETN due June 10, 2044    NYSE Arca
ETRACS Monthly Pay 2xLeveraged Wells Fargo MLP Ex-Energy ETN due June 24, 2044    NYSE Arca
ETRACS Monthly Pay 2xLeveraged US High Dividend Low Volatility ETN due September 30, 2044    NYSE Arca
ETRACS S&P 500 VEQTOR Switch ETN due December 2, 2044    NYSE Arca

 

4


Table of Contents
ETRACS Monthly Pay 2xLeveraged US Small Cap High Dividend ETN due February 6, 2045    NYSE Arca

 

*

Not for trading, but solely in connection with the registration of the corresponding Trust Preferred Securities.

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

 

5


Table of Contents

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report contains statements that constitute “forward-looking statements,” including but not limited to management’s outlook for UBS’s financial performance and statements relating to the anticipated effect of transactions and strategic initiatives on UBS’s business and future development. While these forward-looking statements represent UBS’s judgments and expectations concerning the matters described, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from UBS’s expectations. These factors include, but are not limited to: (i) the degree to which UBS is successful in executing its announced strategic plans, including its cost reduction and efficiency initiatives and its planned further reduction in its Basel III risk-weighted assets (RWA) and leverage ratio denominator (LRD); (ii) developments in the markets in which UBS operates or to which it is exposed, including movements in securities prices or liquidity, credit spreads, currency exchange rates and interest rates and the effect of economic conditions and market developments on the financial position or creditworthiness of UBS’s clients and counterparties; (iii) changes in the availability of capital and funding, including any changes in UBS’s credit spreads and ratings, or arising from requirements for bail-in debt or loss-absorbing capital; (iv) changes in or the implementation of financial legislation and regulation in Switzerland, the US, the UK and other financial centers that may impose more stringent capital (including leverage ratio), liquidity and funding requirements, incremental tax requirements, additional levies, limitations on permitted activities, constraints on remuneration or other measures; (v) uncertainty as to when and to what degree the Swiss Financial Market Supervisory Authority (FINMA) will approve reductions to the incremental RWA resulting from the supplemental operational risk capital analysis mutually agreed to by UBS and FINMA, or will approve a limited reduction of capital requirements due to measures to reduce resolvability risk; (vi) the degree to which UBS is successful in executing the announced creation of a new Swiss banking subsidiary and a US intermediate holding company, the squeeze-out to complete the establishment of a holding company for the UBS Group, changes in the operating model of UBS Limited and other changes which UBS may make in its legal entity structure and operating model, including the possible consequences of such changes, and the potential need to make other changes to the legal structure or booking model of UBS Group in response to legal and regulatory requirements, including capital requirements, resolvability requirements and proposals in Switzerland and other countries for mandatory structural reform of banks; (vii) changes in UBS’s competitive position, including whether differences in regulatory capital and other requirements among the major financial centers will adversely affect UBS’s ability to compete in certain lines of business; (viii) the liability to which UBS may be exposed, or possible constraints or sanctions that regulatory authorities might impose on UBS, due to litigation, contractual claims and regulatory investigations; (ix) the effects on UBS’s cross-border banking business of tax or regulatory developments and of possible changes in UBS’s policies and practices relating to this business; (x) UBS’s ability to retain and attract the employees necessary to generate revenues and to manage, support and control its businesses, which may be affected by competitive factors including differences in compensation practices; (xi) changes in accounting or tax standards or policies, and determinations or interpretations affecting the recognition of gain or loss, the valuation of goodwill, the recognition of deferred tax assets and other matters; (xii) limitations on the effectiveness of UBS’s internal processes for risk management, risk control, measurement and modeling, and of financial models generally; (xiii) whether UBS will be successful in keeping pace with competitors in updating its technology, particularly in trading businesses; (xiv) the occurrence of operational failures, such as fraud, unauthorized trading and systems failures; and (xv) the effect that these or other factors or unanticipated events may have on our reputation and the additional consequences that this may have on our business and performance. The sequence in which the factors above are presented is not indicative of their likelihood of occurrence or the potential magnitude of their consequences. Our business and financial performance could be affected by other factors identified in our past and future filings and reports, including those filed with the SEC. More detailed information about those factors is set forth in documents furnished by UBS and filings made by UBS with the SEC. UBS is not under any obligation to (and expressly disclaims any obligation to) update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise.

 

6


Table of Contents

Cross-reference table

Set forth below are the respective items of SEC Form 20-F, and the locations in this document where the corresponding information can be found.

 

   

Annual Report refers to the Annual Report 2014 of UBS Group AG and UBS AG annexed hereto, which forms an integral part hereof.

 

   

Supplement refers to certain supplemental information contained in this forepart of the Form 20-F, starting on page 11 following the cross-reference table.

 

   

Financial Statements refers to the consolidated financial statements of either UBS Group or UBS AG, or both, depending upon the context, contained in the Annual Report

In the cross-reference table below, page numbers refer to either the Annual Report or the Supplement, as noted.

Please see page 19 of the Annual Report for definitions of terms used in this Form 20-F relating to UBS.

 

Form 20-F item

  

Response or location in this filing

Item 1. Identity of Directors, Senior Management and Advisors.    Not applicable
Item 2. Offer Statistics and Expected Timetable.    Not applicable
Item 3. Key Information   
A – Selected Financial Data   

Annual Report, Selected Financial Data (766-770 and 788-792) and Statement of changes in equity (398-401 and 558-561)

 

The exchange rate for the Swiss franc as reported by the Federal Reserve System (H.10 Weekly) on 6 March 2015 was CHF 0.9846 per USD 1. See page 766 of the Annual Report for additional exchange rate information.

B – Capitalization and Indebtedness.    Not applicable
C – Reasons for the Offer and Use of Proceeds.    Not applicable
D – Risk Factors.    Annual Report, Risk Factors (63-78)
Item 4. Information on the Company.
A – History and Development of the Company   

1-3: Annual Report, Corporate information (6)

 

4: Annual Report, The making of UBS (14-16) and Our strategy (39-42)

 

5-7: Not applicable

B – Business Overview.   

1, 2, 5 and 7: Annual Report, pages 8-9 and 46-62, Note 2a to each set of Financial Statements (Segment reporting) (426-429 and 587-590), and Note 2b to each set of Financial Statements (Segment reporting by geographic location) (430 and 591)

 

3: Seasonal characteristics (44)

 

4: Not applicable

 

6: None

 

8: Regulation and supervision and Regulatory and legal developments (30-38)

 

Supplement (11)

C – Organizational Structure.    Annual Report, UBS and its businesses (8-9), Note 30 to each set of Financial Statements (Interests in subsidiaries and other entities) (527-536 and 691-699)
D – Property, Plant and Equipment.    Annual Report, Property, plant and equipment (771 and 793), Note 16 to each set of Financial Statements (Property and equipment) (452 and 613), Note 33(a) to each set of Financial Statements, Operating lease commitments (539 and 703), Information

 

7


Table of Contents
   required by industry guide 3 (772-785 and 794-807) and Selected financial data (766-770 and 788-792).
Item 4A. Unresolved Staff Comments.    None.
Item 5. Operating and Financial Review and Prospects.
A – Operating Results.    Annual Report, UBS Group AG key figures (5), Measurement of performance (43-45), Group performance (88-112), operating results by business division (113-153), Currency management (244), Our global presence subjects us to risk from currency fluctuations (73), Current market climate and industry drivers (26-29) and Regulatory and legal developments (33-38)
B – Liquidity and Capital Resources.   

Annual Report, Liquidity and funding management (235-243), Capital management (245-280), Note 25a to each set of Financial Statements (Restricted financial assets) (492 and 654), Currency management (244), Note 20 to each set of Financial Statements (Financial liabilities designated at fair value) (456-457 and 618-619) and Note 21 to each set of Financial Statements (Debt issued held at amortized cost) (457-458 and 619-620)

 

We believe that our working capital is sufficient for the company’s present requirements. Liquidity and capital management is undertaken at UBS as an integrated asset and liability management function.

C—Research and Development, Patents and Licenses, etc.    Not applicable
D—Trend Information.    Annual Report, Current market climate and industry drivers (26-29)
E—Off-Balance Sheet Arrangements.    Annual Report, Off-balance sheet (109-111), Note 25 to each set of Financial Statements (Restricted and transferred financial assets) (492-495 and 656-659) and Note 33(a) to each set of Financial Statements (Operating lease commitments) (539 and 703)
F—Tabular Disclosure of Contractual Obligations.    Annual Report, Contractual obligations (110-111)
Item 6. Directors, Senior Management and Employees.
A – Directors and Senior Management.   

1, 2 and 3: Annual Report, 292-298 and 303-308

 

4. 5: None

B – Compensation.   

1: Annual Report, 338-381, Note 29 to each set of Financial Statements (Equity participation and other compensation plans) (517-526 and 681-690) and Note 34 to each set of Financial Statements (Related parties) (540-542 and 704-706)

 

2: Annual Report, Note 28 to each set of Financial Statements (Pension and other post-employment benefit plans) (502-516 and 666-680)

C – Board practices.   

1: Annual Report, 292-312

 

2: Annual Report, 345-381, and Note 34 to each set of Financial Statements (Related parties) (540-542 and 704-706)

 

3: Annual Report, Audit committee (299-300) and Human Resources and Compensation Committee (300)

D—Employees.    Annual Report, Our employees (331-337)
E—Share Ownership.    Annual Report, 377-380, Note 29 to each set of Financial Statements (Equity participation and other compensation plan) (517-526 and 681-690) and “Equity holdings of key management personnel” in Note 34 to each set of Financial Statements (Related parties) (540-542 and 704-706)
Item 7. Major Shareholders and Related Party Transactions.
A—Major Shareholders.   

Annual Report, Group structure and shareholders (284-285) Capital structure (286-289) and Voting rights, restrictions and representation (290)

 

The number of shares of UBS Group AG held by the respective shareholders listed on page 285 of the Annual Report as holding 3% or more of total share capital is as follows:

 

8


Table of Contents

Shareholder

  

Number of shares
held

 

Chase Nominees Ltd., London

     336,292,171   

GIC Private Limited, Singapore

     245,517,417   

DTC (Cede & Co.), New York

     214,152,040   

Nortrust Nominees Ltd., London

     130,915,291   

 

   The number of shares of UBS AG held by UBS Group AG as of 31 December 2014 was 3,716,910,207 shares.
B—Related Party Transactions.   

Annual Report, Loans (356), Loans granted to GEB members on 31 December 2014/2013 (381), Loans granted to BoD members on 31 December 2014/2013 (381), and Note 34 to each set of Financial Statements (Related parties) (540-542 and 704-706)

 

The loans disclosed in such sections (a) were made in the ordinary course of business, (b) were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons, and (c) did not involve more than the normal risk of collectability or present other unfavorable features.

C—Interests of Experts and Counsel.    Not applicable
Item 8. Financial Information.   
A—Consolidated Statements and Other Financial Information.   

1, 2, 3, 4, 5, 6: Please see Item 18 of this Form 20-F.

 

7: Information on material legal and regulatory proceedings is in Note 22 to each set of Financial Statements (Provisions and contingent liabilities) (458-468 and 621-631).

 

For developments during the year, please see also Note 14 (Provisions and contingent liabilities), in the Financial Information section in our respective quarterly reports for the First, Second and Third Quarters 2014, filed on Forms 6-K dated May 6, 2014, July 29, 2014 and October 28, 2014, respectively; as well as Note 12 (Provisions and contingent liabilities), in the Financial Information section in our quarterly report for the Fourth Quarter 2014, filed on Form 6-K dated February 10, 2015. The Notes in each such Quarterly Report speak only as of their respective dates.

 

8: Annual Report, Distributions to shareholders (289)

B—Significant Changes.    Annual Report, Note 1 to each set of Financial Statements (Summary of significant accounting policies) (405-425 and 565-586), Note 2a to each set of Financial Statements (Segment reporting) (426-429 and 587-590) and Note 37 to each set of Financial Statements (Events after the reporting period) (545 and 709)
Item 9. The Offer and Listing.   
A – Offer and Listing Details.   

1,2,3,5,6,7: Not applicable

 

4: Annual Report, Stock exchange prices (280)

B—Plan of Distribution.    Not applicable
C—Markets.    Annual Report, Listing of UBS shares (279)
D—Selling Shareholders.    Not applicable
E—Dilution.    Not applicable
F—Expenses of the Issue.    Not applicable
Item 10. Additional Information.   
A—Share Capital.    Not applicable
B—Memorandum and Articles of Association.   

Annual Report, Elections and terms of office (299), Capital structure (286-289), Organizational principles and structure (299-301) and Shareholders’ participation rights (290-291)

 

Supplement, 12

C—Material Contracts.    The Terms & Conditions of the series of loss-absorbing tier 2 notes issued on 22 May 2013, 13 February 2014 and 15 May 2014 are exhibits 4.1, 4.2 and 4.3 to this

 

9


Table of Contents
  

Form 20-F, respectively. The Terms and Conditions of three series of additional Tier 1 notes issued 19 February 2015 are exhibits 4.4, 4.5 and 4.6 to this Form 20-F, and the Terms and Conditions of additional Tier 1 instruments to be issued pursuant to the Deferred Capital Contingent Plan 2014/15 is exhibit 4.7 to this Form 20-F. These notes are described under Tier 1 capital and Tier 2 capital on pages 252-253 of the Annual Report, under Deferred Contingent Capital Plan on page 370 of the Annual Report and in Note 37 to the UBS Group AG Financial Statements (Events after the reporting period) (545).

 

The Non-Prosecution Agreement that UBS entered into with the US Department of Justice on December 18, 2012, is exhibit 4.8 to the Form 20-F, and the agreement extending the term thereof is exhibit 4.9 to this Form 20-F. These agreements are described in paragraph 7 of Note 22b to each set of Financial Statements (Litigation, regulatory and similar matters) (465-467 and 627-629).

D—Exchange Controls.    There are no restrictions under the Articles of Association of UBS Group AG or Swiss law, as presently in force, that limit the right of non-resident or foreign owners to hold UBS’s securities freely. There are currently no Swiss foreign exchange controls or other Swiss laws restricting the import or export of capital by UBS or its subsidiaries. In addition, there are currently no restrictions under Swiss law affecting the remittance of dividends, interest or other payments to non-resident holders of UBS securities.
E—Taxation.    Supplement, 17-20
F—Dividends and Paying Agents.    Not applicable
G—Statement by Experts.    Not applicable
H—Documents on Display.    UBS files periodic reports and other information with the Securities and Exchange Commission. You may read and copy any document that we file with the SEC on the SEC’s website, www.sec.gov, or at the SEC’s public reference room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 (in the United States) or at +1 202 942 8088 (outside the United States) for further information on the operation of its public reference room. Much of this additional information may also be found on the UBS website at www.ubs.com/investors.
I—Subsidiary Information.    Not applicable
Item 11. Quantitative and Qualitative Disclosures About Market Risk.
(a) Quantitative Information About Market Risk.    Annual Report, Market risk (206-222)
(b) Qualitative Information About Market Risk.    Annual Report, Market risk (206-222)
(c) Interim Periods.    Not applicable.
Item 12. Description of Securities Other than Equity Securities.
A – Debt Securities    Not applicable.
B – Warrants and Rights    Not applicable.
C – Other Securities    Not applicable.
D – American Depositary Shares    Not applicable.
Item 13. Defaults, Dividend Arrearages and Delinquencies.    There has been no material default in respect of any indebtedness of UBS or any of its significant subsidiaries or any arrearages of dividends or any other material delinquency not cured within 30 days relating to any preferred stock of UBS AG or any of its significant subsidiaries.
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds.    None
Item 15. Controls and Procedures.

(a)    Disclosure Controls and Procedures

   Annual Report, US disclosure requirements (314), and Exhibit 12 to this Form 20-F.

 

10


Table of Contents
(b) Management’s Annual Report on Internal Control over Financial Reporting    Annual Report, Management’s reports on internal control over financial reporting (389 and 549)
(c) Attestation Report of the Registered Public Accounting Form    Annual Report, Reports of independent registered public accounting firm on internal control over financial reporting (390-391 and 550-551)
(d) Changes in Internal Control over Financial Reporting    None
Item 15T. Controls and Procedures.    Not applicable
Item 16A. Audit Committee Financial Expert.    Annual Report, Audit Committee (299-300) and Corporate governance (282-283)
Item 16B. Code of Ethics.    There was no substantive amendment to the Code of Business Conduct and Ethics (the “Code”) in 2014. No waiver from any provision of the Code was granted to any employee in 2014. The Code is published on our website under http://www.ubs.com/1/e/investors/corporategovernance/business_conduct.html.
Item 16C. Principal Accountant Fees and Services.   

Annual Report, Auditors (311)

 

None of the non-audit services so disclosed were approved by the Audit Committee pursuant to paragraph (c) (7)(i)(C) of Rule 2-01 of Regulation S-X.

Item 16D. Exemptions from the Listing Standards for Audit Committees.    Not applicable
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers.    Annual Report, Treasury share activities (278)
Item 16F. Changes in Registrant’s Certifying Accountant.    Not applicable
Item 16G. Corporate Governance.    Annual Report, Corporate governance (282-283)
Item 17. Financial Statements.    Not applicable
Item 18. Financial Statements.    Annual Report, Financial Statements and the Notes to the Financial Statements (384-547 and 549-723)
Item 19. Exhibits    Supplement, 20-21

Supplemental information

 

Item 4. Information on the Company

B – Business Overview

Disclosure Pursuant To Section 219 of the Iran Threat Reduction And Syrian Human Rights Act

Section 219 of the U.S. Iran Threat Reduction and Syria Human Rights Act of 2012 (“ITRA”) added new Section 13(r) to the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”) requiring each SEC reporting issuer to disclose in its annual and, if applicable, quarterly reports whether it or any of its affiliates have knowingly engaged in certain activities, transactions or dealings relating to Iran or with the Government of Iran or certain designated natural persons or entities involved in terrorism or the proliferation of weapons of mass destruction during the period covered by the report. The required disclosure includes disclosure of activities not prohibited by U.S. or other law

 

11


Table of Contents

even if conducted outside the U.S. by non-U.S. affiliates in compliance with local law. Pursuant to Section 13(r) of the Exchange Act, we note the following for the period covered by this annual report:

UBS has a Group Sanctions Policy that prohibits transactions involving sanctioned countries, including Iran, and sanctioned individuals and entities. However, UBS maintains one account involving the Iranian government under the auspices of the United Nations in Geneva after agreeing with the Swiss government that it would do so only under certain conditions. These conditions include that payments involving the account must: (1) be made within Switzerland; (2) be consistent with paying rent, salaries, telephone and other expenses necessary for its operations in Geneva; and (3) not involve any Specially Designated Nationals blocked or otherwise restricted under U.S. or Swiss law. In 2014, the gross revenues for this UN related account were approximately USD 9,697 which were generated by fees charged to the account; the net profit was approximately USD 6,704 after deductions were taken for UBS internal costs for maintaining the account. UBS AG intends to continue maintaining this account pursuant to the conditions it has established and consistent with its Group Sanctions Policy.

As previously reported, there were also certain outstanding trade finance arrangements that had been issued on behalf of Swiss client exporters in favor of their Iranian counterparties, which involve four Iranian designated banks (WMD). At the time these trade finance arrangements were initiated in or about 2000, none of the Iran banks involved were WMD-designated. In February 2012 UBS ceased accepting payments on these outstanding export trade finance arrangements and worked with the Swiss government who insured these contracts (Swiss Export Risk Insurance “SERV”). On December 21, 2012, UBS and the SERV entered into certain Transfer and Assignment Agreements under which SERV purchased all of UBS’s remaining receivables under or in connection with Iran-related export finance transactions. Hence, the SERV is the sole beneficiary of said receivables. Contractually UBS remains creditor and thus accordingly it is not yet in the position to write off these receivables. There was no financial activity involving Iran in connection with these trade finance arrangements in 2014.

In connection with these trade finance arrangements, UBS has maintained one existing account relationship with an Iranian bank that is currently WMD designated. This account was established prior to the U.S. designation and maintained due to the existing trade finance arrangements. In 2007, following the designation of the bank pursuant to sanctions issued by the U.S., UN and Switzerland, the account was blocked under Swiss law and has remained blocked since then. Client assets as of December 2014 were USD 3,189. We intend to terminate these legacy arrangements and relationships in accordance with the nature of these instruments and applicable law. As there have been no transactions involving this account in 2014 other than general account fees, there are no gross profits/net revenues to report for 2014.

In 1993, a non-Iranian individual opened a private banking relationship at a predecessor institution of UBS AG in Switzerland. In 2001, this individual was designated under Executive Order 13224. In 2001, the individual’s accounts at UBS AG were blocked by order of the Swiss authorities. The Swiss authorities lifted the blocking of the individual’s UBS accounts in October 2012, and the US authorities lifted the blocking in 2014. UBS AG froze the client’s remaining account in 2012 and has taken steps to exit this client relationship in a matter consistent with applicable law. In 2014, the gross revenues for this client relationship were approximately USD -2,775 and the net loss was approximately USD -3,904.

 

Item 10. Additional Information.

B—Memorandum and Articles of Association.

Please see the Articles of Association of UBS Group AG and of UBS AG (Exhibits 1.1 and 1.2, respectively, to this Form 20-F) and the Organization Regulations of UBS Group AG and UBS AG (Exhibit 1.3 to this Form 20-F).

 

12


Table of Contents

Set forth below is a summary of the material provisions of the Articles of Association of UBS Group AG, which we call the “Articles” throughout this document, Organization Regulations and the Swiss Code of Obligations relating to our shares. This description does not purport to be complete and is qualified in its entirety by references to Swiss law, including Swiss company law, and to the Articles and Organization Regulations.

The Articles of Association of UBS AG are substantially similar to the Articles of UBS Group AG, so the following description applies equally to UBS AG.

The shares are registered shares with a par value of CHF 0.10 per share. The shares are fully paid up.

Each share carries one vote at our shareholders’ meetings. Voting rights may be exercised only after a shareholder has been recorded in our share register as a shareholder with voting rights. Registration with voting rights is subject to certain restrictions. See “— Transfer of Shares” and “—Shareholders’ Meeting”.

The Articles provide that we may elect not to print and deliver certificates in respect of registered shares. Shareholders may, however, following registration in the share register, request at any time that we issue a written statement in respect of their shares.

Transfer of Shares

The transfer of shares is effected by corresponding entry in the books of a bank or depository institution following an assignment in writing by the selling shareholder and notification of such assignment to us by the bank or depository institution. The transfer of shares further requires that the purchaser file a share registration form in order to be registered in our share register as a shareholder. Failing such registration, the purchaser may not vote at or participate in shareholders’ meetings.

A purchaser of shares will be recorded in our share register with voting rights upon disclosure of its name, citizenship and address. However, we may decline a registration with voting rights if the shareholder does not declare that it has acquired the shares in its own name and for its own account. If the shareholder refuses to make such declaration, it will be registered as a shareholder without voting rights.

There is no limitation under Swiss law or our Articles on the right of non-Swiss residents or nationals to own or vote our shares.

Shareholders’ Meeting

Under Swiss law, annual ordinary shareholders’ meetings must be held within six months after the end of our financial year, which is 31 December. Shareholders’ meetings may be convened by the Board of Directors (BoD) or, if necessary, by the statutory auditors, with twenty-days’ advance notice. The BoD is further required to convene an extraordinary shareholders’ meeting if so resolved by a shareholders’ meeting or if so requested by shareholders holding in aggregate at least 10% of our nominal share capital. Shareholders holding shares with an aggregate par value of at least CHF 62,500 have the right to request that a specific proposal be put on the agenda and voted upon at the next shareholders’ meeting. A shareholders’ meeting is convened by publishing a notice in the Swiss Official Commercial Gazette (Schweizerisches Handelsamtsblatt) at least twenty days prior to such meeting.

 

13


Table of Contents

The Articles do not require a minimum number of shareholders to be present in order to hold a shareholders’ meeting.

Resolutions generally require the approval of an “absolute majority” of the votes cast at a shareholders’ meeting. Shareholders’ resolutions requiring a vote by absolute majority include:

 

   

Amendments to the Articles;

 

   

Elections of directors and statutory auditors;

 

   

Approval of the annual report and the consolidated statements of accounts;

 

   

Approval of the annual financial statements and the resolution on the use of the balance sheet profit (declaration of dividend);

 

   

Decisions to discharge directors and management from liability for matters disclosed to the shareholders’ meeting; and

 

   

Passing resolutions on matters which are by law or by the Articles reserved to the shareholders’ meeting (e.g., the ordering of an independent investigation into the specific matters proposed to the shareholders’ meeting).

Under the Articles, a resolution passed at a shareholders’ meeting with a supermajority of at least two thirds of the Shares represented at such meeting is required to:

 

   

Change the limits on BoD size in the Articles;

 

   

Remove one fourth or more of the members of the BoD; or

 

   

Delete or modify the above supermajority requirements.

Under Swiss corporate law, a resolution passed by at least two thirds of votes represented and an absolute majority of the par value of the shares represented must approve:

 

   

A change in our stated purpose in the Articles;

 

   

The creation of shares with privileged voting rights;

 

   

A restriction on transferability of shares;

 

   

An increase in authorized or contingent capital or the creation of reserve capital in accordance with Swiss banking law;

 

   

An increase in capital out of equity against contribution in kind, for the purpose of acquisition and granting of special rights;

 

   

Changes to pre-emptive rights;

 

   

A change of domicile of the corporation; or

 

   

Dissolution of the corporation.

At shareholders’ meetings, a shareholder can be represented by his or her legal representative or under a written power of attorney by another shareholder eligible to vote, by a corporate proxy, by the independent proxy or by a custodial proxy. Votes are taken electronically, by written ballot or by a show of hands. If a written ballot is requested by at least 3% of the votes present at the shareholders’ meeting or such ballot is ordered by the Chairman of the meeting, a written ballot will be conducted.

Net Profits and Dividends

Swiss law requires that at least 5% of the annual net profits of a corporation must be retained as general reserves for so long as these reserves amount to less than 20% of the corporation’s nominal share capital. Any net profits remaining are at the disposal of the shareholders’ meeting, except that, if an annual dividend exceeds 5% of the nominal share capital, then 10% of such excess must be retained as general reserves.

 

14


Table of Contents

Under Swiss law, dividends may be paid out only if the corporation has sufficient distributable profits from previous business years or if the reserves of the corporation are sufficient to allow distribution of a dividend. In either event, dividends may be paid out only after approval by the shareholders’ meeting. The BoD may propose to the shareholders that a dividend be paid out. The auditors must confirm that the dividend proposal of the Board conforms with statutory law. In practice, the shareholders’ meeting usually approves the dividend proposal of the BoD.

Dividends are usually due and payable after the shareholders’ resolution relating to the allocation of profits has been passed. Under Swiss law, the statute of limitations in respect of dividend payments is five years.

U.S. holders of shares will receive dividend payments in U.S. dollars, unless they provide notice to our U.S. transfer agent, Computershare, that they wish to receive dividend payments in Swiss francs. The U.S. transfer agent will be responsible for paying the U.S. dollars or Swiss francs to registered holders, and for withholding any required amounts for taxes or other governmental charges. If the U.S. transfer agent determines, after consultation with us, that in its judgment any foreign currency received by it cannot be converted into U.S. dollars or transferred to U.S. holders, it may distribute the foreign currency received by it, or an appropriate document evidencing the right to receive such currency, or in its discretion hold such foreign currency for the accounts of U.S. holders.

Preemptive Rights

Under Swiss law, any share issue, whether for cash or non-cash consideration or for no consideration, is subject to the prior approval of the shareholders’ meeting. Shareholders of a Swiss corporation have certain preemptive rights to subscribe for new issues of shares in proportion to the nominal amount of shares held. The Articles or a resolution adopted at a shareholders’ meeting with a supermajority may, however, limit or suspend preemptive rights in certain limited circumstances.

Borrowing Power

Neither Swiss law nor the Articles restrict in any way our power to borrow and raise funds. No shareholders’ resolution is required.

Conflicts of Interests

Swiss law does not have a general provision on conflicts of interests. However, the Swiss Code of Obligations requires directors and members of senior management to safeguard the interests of the corporation and, as such, imposes a duty of care and a duty of loyalty on directors and officers. This rule is generally understood as disqualifying directors and senior officers from participating in decisions that directly affect them. Directors and officers are personally liable to the corporation for any breach of these provisions. In addition, Swiss law contains a provision under which payments made to a shareholder or a director or any person associated therewith, other than at arm’s length, must be repaid to us if the shareholder or director was acting in bad faith.

In addition, our Organization Regulations prohibit any member of the BoD from participating in discussions and decision-making regarding a matter as to which he or she has a conflict of interest.

Repurchase of Shares

Swiss law limits a corporation’s ability to hold or repurchase its own shares. We and our subsidiaries may only repurchase shares if we have sufficient free reserves to pay the purchase price and if the aggregate nominal value of the shares does not exceed 10% of our nominal share capital. Furthermore, we must create a special reserve on our balance sheet in the amount of the purchase

 

15


Table of Contents

price of the acquired shares. Such shares held by us or our subsidiaries do not carry any rights to vote at shareholders’ meetings.

Notices

Notices to shareholders are made by publication in the Swiss Official Gazette of Commerce. The BoD may designate further means of communication for publishing notices to shareholders.

Notices required under the listing rules of the SIX Swiss Exchange will be published in two Swiss newspapers in German and French. We or the SIX Swiss Exchange may also disseminate the relevant information on the online exchange information systems.

Registration and Business Purpose

UBS Group AG is registered as a corporation in the commercial register of Canton Zurich under the registration number CHE-395.345.924 and has its registered office in Zurich, Switzerland. The business purpose of UBS Group AG, as set forth in its Articles, is the acquisition, holding, administration and sale of direct and indirect participations in enterprises of any kind, in particular in the areas of banking, financial, advisory, trading and service activities in Switzerland and abroad. UBS Group may establish enterprises of any kind in Switzerland and abroad, hold equity interests in these companies, and conduct their management. UBS Group is authorized to acquire, mortgage and sell real estate and building rights in Switzerland and abroad. UBS Group may provide loans, guarantees and other types of financing and securities for group companies and borrow and invest capital on the money and capital markets.

UBS AG is registered as a corporation in the commercial registers of Canton Zurich and Canton Basle-City under the registration number CHE-101.329.561 and has registered offices in Zurich and Basel, Switzerland. The business purpose of UBS AG, as set forth in its Articles of Association, is the operation of a bank, with a scope of operations extending to all types of banking, financial, advisory, trading and service activities in Switzerland and abroad.

Duration, Liquidation and Merger

Our duration is unlimited.

Under Swiss law, we may be dissolved at any time by a shareholders’ resolution which must be passed by (1) an absolute majority of the shares represented at the meeting in the event we are to be dissolved by way of liquidation, or (2) a supermajority of at least two thirds of the votes represented and an absolute majority of the par value of the shares represented at the meeting in other events (for example, in a merger where we are not the surviving entity). Dissolution by court order is possible if we become bankrupt.

Under Swiss law, any surplus arising out of a liquidation (after the settlement of all claims of all creditors) is distributed to shareholders in proportion to the paid-up nominal value of shares held.

Mandatory Tender Offer

Under the Swiss Stock Exchange Act, shareholders and shareholders acting in concert with third parties who acquire more than 33 1/3% of the voting rights of a Swiss listed company will have to submit a takeover bid to all remaining shareholders. A waiver from the mandatory bid rule may be granted by our supervisory authority. If no waiver is granted, the mandatory takeover bid must be made pursuant to the procedural rules set forth in the Swiss Stock Exchange Act and implementing ordinances.

 

16


Table of Contents

Other

Ernst & Young Ltd, Aeschengraben 9, CH-4051 Basel, Switzerland, have been appointed as statutory auditors and as auditors of the consolidated accounts of both UBS Group AG and UBS AG. The auditors are subject to election by the shareholders at the ordinary general meeting on an annual basis.

E—Taxation.

This section outlines the material Swiss tax and U.S. federal income tax consequences of the ownership of UBS ordinary shares by a U.S. holder (as defined below) who holds UBS ordinary shares as capital assets. It is designed to explain the major interactions between Swiss and U.S. taxation for U.S. persons who hold UBS shares.

The discussion does not address the tax consequences to persons who hold UBS ordinary shares in particular circumstances, such as tax-exempt entities, banks, financial institutions, life insurance companies, broker-dealers, traders in securities that elect to use a mark-to-market method of accounting for securities holdings, holders liable for alternative minimum tax, holders that actually or constructively own 10% or more of the voting stock of UBS, holders that hold UBS ordinary shares as part of a straddle or a hedging or conversion transaction, holders that purchase or sell UBS ordinary shares as part of a wash sale for tax purposes or holders whose functional currency for U.S. tax purposes is not the U.S. dollar. This discussion also does not apply to holders who acquired their UBS ordinary shares through a tax-qualified retirement plan, nor generally to unvested UBS ordinary shares held under deferred compensation arrangements.

If a partnership holds UBS ordinary shares, the U.S. federal income tax treatment of a partner will generally depend on the status of the partner and the tax treatment of the partnership. A partner in a partnership holding the UBS ordinary shares should consult its tax advisor with regard to the U.S. federal income tax treatment of an investment in the ordinary shares.

The discussion is based on the tax laws of Switzerland and the United States, including the U.S. Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed regulations under the Internal Revenue Code, published rulings and court decisions, as in effect on the date of this document, as well as the Convention between the United States of America and the Swiss Confederation for the Avoidance of Double Taxation with Respect to Taxes on Income, which we call the “Treaty,” all of which may be subject to change or change in interpretation, possibly with retroactive effect.

For purposes of this discussion, a “U.S. holder” is any beneficial owner of UBS ordinary shares that is for U.S. federal income tax purposes:

 

   

A citizen or resident of the United States;

 

   

A domestic corporation or other entity taxable as a corporation;

 

   

An estate, the income of which is subject to U.S. federal income tax without regard to its source; or

 

   

A trust, if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust.

The discussion does not generally address any aspects of Swiss taxation other than income and capital taxation or of U.S. taxation other than federal income taxation. Holders of UBS shares are

 

17


Table of Contents

urged to consult their tax advisors regarding the U.S. federal, state and local and the Swiss and other tax consequences of owning and disposing of these shares in their particular circumstances.

(a) Ownership of UBS Ordinary Shares - Swiss Taxation

Dividends and Distributions

Dividends paid by UBS to a holder of UBS ordinary shares (including dividends on liquidation proceeds and stock dividends) are in principle subject to a Swiss federal withholding tax at a rate of 35%.

Until the end of 2010, the Par Value Principle was applicable. Under the Par Value Principle any distribution, which was not a repayment of the par value of the shares, was subject to Swiss withholding tax.

On 1 January 2011, the Par Value Principle was replaced by the Capital Contribution Principle. Under the Capital Contribution Principle, the repayment of capital contributions, including share premiums made by the shareholders after December 31, 1996 is in principle no longer subject to Swiss withholding tax if certain requirements regarding the booking of these capital contributions are met. The Swiss Federal Tax Administration issued guidelines on how the Capital Contribution Principle has to be applied.

A U.S. holder that qualifies for Treaty benefits may apply for a refund of the withholding tax withheld in excess of the 15% Treaty rate (or for a full refund in case of qualifying retirement arrangements). The claim for refund must be filed with the Swiss Federal Tax Administration, Eigerstrasse 65, CH-3003 Berne, Switzerland no later than December 31 of the third year following the end of the calendar year in which the income subject to withholding was due. The form used for obtaining a refund is Swiss Tax Form 82 (82 C for companies; 82 E for other entities; 82 I for individuals; 82 R for regulated investment companies), which may be obtained from any Swiss Consulate General in the United States or from the Swiss Federal Tax Administration at the address above. The form must be filled out in triplicate with each copy duly completed and signed before a notary public in the United States. The form must be accompanied by evidence of the deduction of withholding tax withheld at the source.

Transfers of UBS Ordinary Shares

The purchase or sale of UBS ordinary shares, whether by Swiss resident or non-resident holders (including U.S. holders), may be subject to a Swiss securities transfer stamp duty of up to 0.15% calculated on the purchase price or sale proceeds if it occurs through or with a bank or other securities dealer as defined in the Swiss Federal Stamp Tax Act in Switzerland or the Principality of Liechtenstein. In addition to the stamp duty, the sale of UBS ordinary shares by or through a member of a recognized stock exchange may be subject to a stock exchange levy.

Capital gains realized by a U.S. holder upon the sale of UBS ordinary shares are not subject to Swiss income or gains taxes, unless such U.S. holder holds such shares as business assets of a Swiss business operation qualifying as a permanent establishment for the purposes of the Treaty. In the latter case, gains are taxed at ordinary Swiss individual or corporate income tax rates, as the case may be, and losses are deductible for purposes of Swiss income taxes.

(b) Ownership of UBS Ordinary Shares - U.S. Federal Income Taxation

Dividends and Distributions

Subject to the passive foreign investment company rules discussed below, U.S. holders will include in gross income the gross amount of any dividend paid, before reduction for Swiss withholding taxes, by UBS out of its current or accumulated earnings and profits, as determined for U.S. federal income

 

18


Table of Contents

tax purposes, as ordinary income when the dividend is actually or constructively received by the U.S. holder. Distributions in excess of current and accumulated earnings and profits, as determined for U.S. federal income tax purposes, will be treated as a return of capital to the extent of the U.S. holder’s basis in its UBS ordinary shares and thereafter as capital gain.

Dividends paid to a noncorporate U.S. holder that constitute qualified dividend income will be taxable to the holder at a maximum rate of 20%, provided that the holder has a holding period in the shares of more than 60 days during the 121-day period beginning 60 days before the ex-dividend date and meets other holding period requirements. Dividends paid by UBS with respect to the shares will generally be qualified dividend income.

For U.S. federal income tax purposes, a dividend will include a distribution characterized under Swiss law as a repayment of capital contributions if the distribution is made out of current or accumulated earnings and profits, as described above.

Dividends will generally be income from sources outside the United States for foreign tax credit limitation purposes, and will, depending on the holder’s circumstances, be either “passive” or “general” income for purposes of computing the foreign tax credit allowable to the holder. Special rules apply in determining the foreign tax credit limitation with respect to dividends that are subject to the maximum 20% rate. The dividend will not be eligible for the dividends-received deduction generally allowed to U.S. corporations in respect of dividends received from other U.S. corporations.

The amount of the dividend distribution included in income of a U.S. holder will be the U.S. dollar value of the Swiss franc payments made, determined at the spot Swiss franc/U.S. dollar rate on the date such dividend distribution is includible in the income of the U.S. holder, regardless of whether the payment is in fact converted into U.S. dollars. Generally, any gain or loss resulting from currency exchange fluctuations during the period from the date the dividend distribution is included in income to the date such dividend distribution is converted into U.S. dollars will be treated as ordinary income or loss and will not be eligible for the special tax rate applicable to qualified dividend income. Such gain or loss will generally be income or loss from sources within the United States for foreign tax credit limitation purposes.

Subject to U.S. foreign tax credit limitations, the nonrefundable Swiss tax withheld and paid over to Switzerland will be creditable or deductible against the U.S. holder’s U.S. federal income tax liability. To the extent a refund of the tax withheld is available to a U.S. holder under the laws of Switzerland or under the Treaty, the amount of tax withheld that is refundable will not be eligible for credit against the U.S. holder’s U.S. federal income tax liability, whether or not the refund is actually obtained. See “(a) Ownership of UBS Ordinary Shares – Swiss Taxation” above, for the procedures for obtaining a tax refund.

Transfers of UBS Ordinary Shares

Subject to the passive foreign investment company rules discussed below, a U.S. holder that sells or otherwise disposes of UBS ordinary shares generally will recognize capital gain or loss for U.S. federal income tax purposes equal to the difference between the U.S. dollar value of the amount realized and the tax basis, determined in U.S. dollars, in the UBS ordinary shares. Capital gain of a non-corporate U.S. holder is generally taxed at preferential rates if the UBS ordinary shares were held for more than one year. The gain or loss will generally be income or loss from sources within the United States for foreign tax credit limitation purposes.

Passive Foreign Investment Company Rules

UBS believes that UBS ordinary shares should not be treated as stock of a passive foreign investment company for U.S. federal income tax purposes, but this conclusion is a factual determination made annually and thus may be subject to change. In general, UBS will be a passive

 

19


Table of Contents

foreign investment company with respect to a U.S. holder if, for any taxable year in which the U.S. holder held UBS ordinary shares, either (i) at least 75% of the gross income of UBS for the taxable year is passive income or (ii) at least 50% of the value, determined on the basis of a quarterly average, of UBS’s assets is attributable to assets that produce or are held for the production of passive income (including cash). If UBS were to be treated as a passive foreign investment company, then unless a U.S. holder were to make a mark-to-market election with respect to the UBS ordinary shares, gain realized on the sale or other disposition of UBS ordinary shares would in general not be treated as capital gain. Instead, a U.S. holder would be treated as if the holder had realized such gain and certain “excess distributions” ratably over the holder’s holding period for the shares and would be taxed at the highest tax rate in effect for each such year to which the gain was allocated, together with an interest charge in respect of the tax attributable to each such year. With certain exceptions, a holder’s UBS ordinary shares will be treated as stock in a passive foreign investment company if UBS was a passive foreign investment company at any time during the holder’s holding period in the UBS ordinary shares. In addition, dividends received from UBS would not be eligible for the preferential tax rate applicable to qualified dividend income if UBS were to be treated as a passive foreign investment company either in the taxable year of the distribution or the preceding taxable year, but would instead be taxable at rates applicable to ordinary income.

 

Item 19. Exhibits.

 

Exhibit
number

 

Description

1.1   Articles of Association of UBS Group AG dated 10 February 2015.
1.2   Articles of Association of UBS AG (Incorporated by reference to UBS AG’s Report of Foreign Private Issuer on Form 6-K filed May 19, 2014).
1.3   Organization Regulations of UBS Group AG and UBS AG dated 26 November 2014.
2(b)   Instruments defining the rights of the holders of long-term debt issued by UBS Group AG and its subsidiaries.
  We agree to furnish to the SEC upon request, copies of the instruments, including indentures, defining the rights of the holders of our long-term debt and of our subsidiaries’ long-term debt.
4.1   Terms and Conditions of Tier 2 Subordinated Notes of UBS AG due 2023, issued 22 May 2013. (Incorporated by reference to Exhibit 4.2 to UBS AG’s Annual Report on Form 20-F for the fiscal year ended December 31, 2013)
4.2   Terms and Conditions of Tier 2 Subordinated Notes of UBS AG due 12 February 2026, issued 13 February 2014. (Incorporated by reference to Exhibit 4.3 to UBS AG’s Annual Report on Form 20-F for the fiscal year ended December 31, 2013)
4.3   Terms and Conditions of Tier 2 Subordinated Notes of UBS AG due 2024, issued 15 May 2014.
4.4   Terms and Conditions of USD 1.25 billion 7% Tier 1 Subordinated Notes issued by UBS Group AG on 19 February 2015.
4.5   Terms and Conditions of USD 1.25 billion 7.125% Tier 1 Subordinated Notes issued by UBS Group AG on 19 February 2015.

 

20


Table of Contents

4.6

   Terms and Conditions of EUR 1 billion 5.75% Tier 1 Subordinated Notes issued by UBS Group AG on 19 February 2015.

4.7

   Terms and Conditions of additional Tier 1 capital instruments to be issued pursuant to the Deferred Contingent Capital Plan 2014/15.

4.8

   Non-Prosecution Agreement dated 18 December 2012 between UBS AG and the U.S. Department of Justice, Criminal Division, Fraud Section. (Incorporated by reference to Exhibit 4.3 to UBS AG’s Annual Report on Form 20-F for the fiscal year ended December 31, 2012)

4.9

   Agreement dated October 20, 2014, extending the term of the Non-Prosecution Agreement between UBS AG and the U.S. Department of Justice, Criminal Division, Fraud Section.

7

   Statement regarding ratio of earnings to fixed charges.

8

   Significant Subsidiaries of UBS Group AG.
   Please see Note 30 to each set of Financial Statements (Interests in subsidiaries and other entities), on pages 527-536 and 691-699 of the Annual Report.

10

   Notice pursuant to Regulation BTR.*

12

   The certifications required by Rule 13(a)-14(a) (17 CFR 240.13a-14(a))