Switzerland Says Goodbye to Bearer Shares
Following recommendations of the Global Forum on Transparency and Exchange of Information for Tax Purposes, bearer shares will be abolished, unless they are listed on a stock exchange or structured as intermediated securities (Swiss Federal Act on Implementing Recommendations of the Global Forum on Transparency and Exchange of Information for Tax Purposes).
Conversion to registered shares
Bearer shares which cease to exist under the revised law will be automatically converted into registered shares as of 1 May 2021, should a company fail to convert them before this date.
Entries in the commercial register will be updated accordingly and the Commercial Register Office will reject any application for registration of articles of association’s amendments which do not include the conversion of bearer shares.
The company’s board of directors is required to maintain a share register, which lists shareholders’ names and addresses and shows that shareholders have fulfilled their reporting duties and provided proof of ownership of the shares. Furthermore, any person who alone or by agreement with third parties acquires shares in a company, and thereby reaches the threshold of 25% of the share capital or voting rights, must also report the beneficial owner.
Violating the reporting duties or failing to keep a share register may be punished by fine. Failing to comply with registration duties also constitutes a so called “lack of organization”, which may lead to the dissolution of the company by court.
Impact on shareholders’ rights
Shareholders who have failed to comply with their reporting duty by the deadline, are only left the legal avenue to register their shares via the courts. They must obtain prior approval by the company and prove their shareholder status. The board cannot add anyone to the register unless the courts have confirmed a shareholder’s status.
Unreported shareholders cannot exercise their voting rights or receive dividends until they are entered in the share register.
Shareholders who fail to be registered by 31 October 2024 will lose their rights associated with the shares concerned and respective shares become void.