On June 21st, 2019, the Parliament approved the Federal Act on Implementation of Recommendations of the Global Forum on Transparency and Exchange of Information for Tax Purposes, which came into effect on November 1st, 2019. Its approval follows pressures by the Financial Action Task Force (FATF) and the Global Forum on Transparency and Exchange of Information for Tax Purposes (Global Forum) for Switzerland to modify its regulation related to bearer shares. As a consequence, these amendments will lead to the cancellation of bearer shares of many companies.

Overview of the modifications

Since November 1st, 2019, bearer shares are only authorized for companies listed on the stock exchange or for companies that issue their shares in the form of intermediated securities under the Federal Act on Intermediated Securities of 3 October 2008 (FISA) and deposit them with a central custodian. The registration of an annotation with the trade register is mandatory in both cases. Therefore, companies not listed on the stock exchange that have bearer shares (not issued in the form of intermediated securities) are required to convert them into registered shares. A deadline of 18 months which will expire on April 30th, 2021, applies to the registration of an annotation and to the conversion of shares.

Any shareholder purchasing shares of a company and reaching or exceeding the threshold of 25% of its share capital or voting rights is required to announce to the company within a one-month deadline the name, last name and address of the beneficial owner of the shares. The company is required to hold a register of its shareholders and beneficial owners. The legislation provides criminal sanctions for shareholders failing to announce a 25% share capital participation, as well as for board members failing to hold a shareholders and beneficial owners register.

Cancellation of bearer shares

The cancellation of bearer shares to convert them into registered shares requires an amendment of the articles of association of a company. If the conversion is not enacted within the eighteen-month deadline, the bearer shares will automatically be converted into registered shares. As a consequence, an amendment of the articles of association will be necessary, considering that any future registration would be rejected by the trade register without such amendment.

Measures to be taken by owners of bearer shares

Owners of bearer shares that did not regularly announce their holdings and whose bearer shares have been converted into registered shares can request a court, within a five-year deadline since the legal modifications, to be registered on a company’s shareholders list, with the prior approval of the company. Once the five-year deadline has expired, their shares will purely and simply be cancelled and replaced by the company’s own shares. The owners will hence lose their shareholders rights.

Owners of a company’s bearer shares are therefore advised to announce themselves to their company without delay, so as not to face criminal sanctions, to avoid being required to undertake judicial procedures or even to avoid risking to lose their shareholders’ rights.

The GVA law team assists you with regard to these legislative modifications. Our attorneys are available for any enquiry.

Christophe Zermatten, Attorney-at-law

+41 22 839 44 66