The end of bearer shares: what you need to know

For decades, bearer shares were a hallmark of the Swiss AG: whoever held the certificate was, in effect, the shareholder. That model is over. International pressure for greater transparency has led to a reform that has almost entirely eliminated these shares. If you own an AG with outdated articles of association, this article concerns you.

What has changed

With the entry into force of the new transparency rules, bearer shares are permitted only in exceptional cases: listed companies, or shares structured as book-entry securities. For the vast majority of unlisted AGs, bearer shares are no longer allowed.

The legislator left no room for inertia. Companies that failed to bring their situation into line faced an automatic conversion and, in the worst cases, the cancellation of any certificates that were not regularised.

The forced conversion

Any bearer shares still in existence were converted ex officio into registered shares. In practice:

• The commercial register carried out the conversion even without an active amendment to the company’s articles of association.
• Articles that still mention bearer shares must nonetheless be brought into line at the first available opportunity, because they conflict with the law.
• The company must keep an up-to-date share register listing the holders of the registered shares.

The duty to report the beneficial owner

The reform is not only about the type of share. At the heart of transparency lies the obligation, for anyone acquiring shares, to report to the company their own identity and that of the beneficial owner when certain participation thresholds are exceeded.

For the company, this entails two record-keeping obligations:

1. The register of holders of registered shares.
2. The list of reported beneficial owners.

These registers must be kept in Switzerland, accessible at all times and kept up to date. They are not a formal document to be filed away: they are records that the authorities may ask to inspect.

Penalties: the point not to underestimate

Here is the part that many shareholders overlook. A shareholder who fails to comply with the reporting duty faces severe and automatic consequences:

• Suspension of membership rights: voting rights are suspended until the report is made.
• Loss of financial rights: dividends and other financial rights accrued during the period of non-compliance may be forfeited, not merely frozen.

In other words, a shareholder who stays silent risks becoming a member with no voice and no dividend. For the company, ignoring the duty to keep the registers exposes its directors to liability.

What to do in practice today

If you manage or own an unlisted AG, check these points:

• The articles of association must no longer provide for bearer shares. If they do, they must be amended.
• An up-to-date register of registered shares must exist.
• The list of beneficial owners must exist.
• Every transfer of shares must trigger the reporting procedure.

If you have acquired or sold holdings in recent years without formalising the reports, now is the time to regularise. The penalty of losing dividends does not distinguish between oversight and bad faith.

Why rely on structured support

Managing corporate registers seems like an administrative detail until you need to prove, in a due diligence process or before an authority, that everything is in order. At that point a poorly kept share register costs time, credibility and, sometimes, the deal itself.

At SIH ONE we keep corporate registers digitally and always aligned with transparency obligations, so that every transfer and every report is properly tracked.

Do you want to check that your AG is fully compliant with the new rules on shares? Find out more with our tax and legal advisory services and secure your company’s governance.