The abolition of registered shares and its consequences for shareholders and companies

In addition to the coronavirus pandemic and its economic impact, it was almost forgotten that another drastic event was approaching for Swiss stock corporations: the abolition of bearer shares by law and the forced conversion of existing bearer shares into registered shares.

The corresponding legal basis came into force on November 1, 2019. From this date, bearer shares are only permitted if they are listed on a stock exchange.

On May 1, 2021, inadmissible bearer shares will be converted into registered shares by law.

The Act also provides for a procedure to identify shareholders who have not fulfilled their obligation to notify the company under the previous law and whose shares have been converted; the procedure ends with the shares of non-notified shareholders becoming null and void five years after the Act comes into force. Subject to the restrictions on holding treasury shares, the company may freely dispose of them. However, if the threshold of 10% of treasury shares is exceeded, the company will have to sell a corresponding proportion of these shares or cancel them through a capital reduction.

The law also provides for new penal provisions if the shareholder fails to report the beneficial owners of their shares. The law also stipulates that proceedings may be initiated against companies that do not keep the share register or the list of beneficial owners in accordance with the regulations.

Voting rights and dividend entitlements for shares whose holders have not registered are suspended for the duration of the non-registration. The Board of Directors must ensure that no shareholders exercise their rights in violation of these provisions.

In summary, it can be said that failing to abolish bearer shares will cost both the AG and the shareholder dearly.

The State Secretariat for International Financial Matters SIF has published a published free instructions on the steps required for the correct conversion of bearer shares into registered shares. are.

Public limited companies wishing to simplify their processing can use the services of Konsento's digital platform. With our partners from Bratschi Attorneys at Law we have developed a joint service. This includes the handling of the redemption and destruction of bearer shares, the issue of registered shares, the updating of the share register, the identification of shareholders and the determination of beneficial owners with managed, digital processes as well as legal advice from Bratschi Attorneys at Law, if further measures are required. 

For more information, write to us at hello@konsento.ch.