Registered shares: the share register and obligations

Following the abolition of bearer shares, the vast majority of Swiss AGs now work with registered shares. It is a choice that brings transparency and traceability, but it imposes precise record-keeping obligations on the company. Anyone running an AG needs to know which registers to maintain, who has access to them and what happens when a share changes hands. Let’s look at these obligations in practical terms.

What sets a registered share apart

A registered share is issued to a specific person, entered in the company’s registers. Unlike the bearer share, whose holder was anyone physically in possession of the certificate, the registered share ties ownership to a name. Towards the company, the shareholder is whoever is entered in the share register: this is the key point of legitimation.

The share register

Every AG with registered shares must keep a share register (register of shareholders). It is not a bureaucratic formality: it is the instrument that determines who may exercise membership rights. The register must record:

• the name and address of the holders of the registered shares;
• the number and, where applicable, the class of the shares held;
• any usufructuaries and their details.

The register must be kept so that it is accessible in Switzerland at all times. Towards the company, only the person entered in it counts as a shareholder, with voting rights and the right to dividends. Anyone who buys shares but does not request entry remains the owner but cannot exercise membership rights.

The register of beneficial owners

In addition to the share register, there is a second obligation introduced to increase transparency. Anyone who acquires registered shares (or quotas) and reaches certain participation thresholds must report to the company the beneficial owner, that is, the natural person who actually stands behind the holding. The company keeps a register of beneficial owners with the name and address of these persons.

Failure to report has severe consequences: until the shareholder complies with the obligation, the membership rights attached to the shares (voting rights first and foremost) remain suspended, and the financial rights may lapse. It is a mechanism that pushes for transparency by effectively rendering undeclared shares unusable.

How registered shares are transferred

The transfer depends on the form of the certificates:

• if paper share certificates have been issued, the transfer takes place by delivery of the certificate and, as a rule, an endorsement or assignment;
• if the shares have not been incorporated into certificates, the transfer takes place through a written assignment of the right.

In either case, to be legitimated towards the company the buyer must request entry in the share register. If the articles of association provide for transfer restriction clauses, the company may make entry conditional on its own consent, within the limits set by law.

The company’s practical obligations

Those in charge must ensure, on an ongoing basis:

1. the up-to-date keeping of the share register with each transfer;
2. the handling of the reports on beneficial owners and of the related register;
3. the retention of the supporting documents underlying the entries;
4. compliance with any statutory clauses on transfers.

These registers must be kept together with the documents that prove their content, for the period prescribed after the entered person has been removed.

Mistakes to avoid

• Treating the share register as an optional document: without proper record-keeping, legitimation at the general meeting becomes contestable.
• Ignoring the duty to report the beneficial owner, with the resulting suspension of voting rights.
• Failing to update the registers after a transfer, creating uncertainty over who the shareholder really is.
• Keeping the registers abroad without immediate access from Switzerland.

In summary

Registered shares bring transparency but require documentary discipline. The share register and the register of beneficial owners are not formalities: they determine who votes, who collects dividends and who risks having their rights suspended. Keeping them in order is an integral part of good governance.

Do you want to set up your AG’s corporate registers correctly and handle transfers safely? SIH ONE’s corporate division looks after the articles of association, the share register and transparency obligations.