Security tokens and tokenised shares: the differences

“Security token” and “tokenised shares” are often used as synonyms, but they are not. The first is a broad category — a token that represents a financial right; the second is a specific case — the share of a corporation represented in tokenised form. Understanding the difference is not a semantic exercise: it changes the legal framework, the rights embodied, the issuer’s obligations and the way value circulates. Here is how to frame them under Swiss law.

What a token represents

The decisive question is not “what technology does it use” but “which right does it embody”. A token can represent:

• a participation right (shares, quotas): voting right, dividend, liquidation share;
• a claim right (bonds, loans): repayment and interest;
• a right over an asset or a flow (tokens on revenues, on underlying assets).

When the token embodies a right of value that would typically be represented by a security, one speaks in a broad sense of a security token. The tokenised share is therefore a subcategory: a security token that specifically represents participation in the capital of an AG.

The Swiss legal basis: registered ledger securities

Since 2021 Swiss law recognises registered ledger securities, introduced into the Code of Obligations with the reform on distributed ledger technology. It is the instrument that allows rights — including shares — to be represented on an electronic register with effects equivalent to traditional securities.

For tokenisation to produce legal effects, the register must meet precise requirements: integrity, transparency about how it works, the possibility for the holder to dispose of their right and to verify its content. It is not enough to “put a share on a blockchain”: a registration agreement and articles of association consistent with the choice are needed.

Tokenised shares: what changes for the AG

Tokenising the shares of an AG means representing the participation as a registered ledger security instead of as a paper certificate or a simple uncertificated security. The practical effects:

• Transferability: circulation takes place via the register, according to the statutory rules and any restrictions (transfer restriction clauses).
• Share register: the issuer must in any case keep the record of shareholders and beneficial owners up to date under the Code of Obligations.
• Membership rights: voting, dividend and information rights remain those of the share; the tokenised form is the “container”, it does not change the corporate substance.
• Governance: articles of association, minutes and resolutions must reflect the choice of tokenisation.

The tokenised share does not turn the AG into a crypto project: it remains a corporation with its own rules, it simply represents the participation in digital form.

Non-share security tokens

Many security tokens do not represent shares but other rights: revenue shares, debt instruments, rights over a portfolio. Here the framework changes:

• there is not necessarily participation in the capital nor a voting right;
• the right embodied may be a claim, with different logic and risks from those of the shareholder;
• the regulatory qualification depends on the substance of the right, not on the label used in the white paper.

Confusing a revenue token with a tokenised share leads to wrong expectations about voting, information and priority in the event of liquidation.

Why the qualification matters

The distinction between the categories determines the applicable regime: obligations towards holders, any prospectus requirements, anti-money-laundering profile, accounting and tax treatment. A token that qualifies as a financial instrument follows different rules from a pure utility token. The qualification must be done before issuing, not afterwards: correcting a structure already placed on the market is expensive and sometimes impossible.

The correct sequence

First you define which right you want to represent; then you choose the legal form (share, claim, other ledger security); then you set up the register and the statutory and contractual documentation; finally you address the regulatory, accounting and tax aspects. Starting from the technology and looking for the legal framework afterwards is the path that generates the biggest problems.

How SIH ONE approaches the topic

SIH ONE deals with structuring and advice: qualification of the token and of the right embodied, setting up the tokenisation of shares as registered ledger securities, consistency between articles of association, register and documentation, coordination of the accounting and tax aspects. Where activities subject to authorisation are needed — public issuance, custody, regulated financial services — the regulated activities go through authorised partners. The goal is an issuance correctly qualified from the outset.

This content is informational and does not constitute legal, tax or regulatory advice. Every structure must be verified in the specific case.

Are you considering tokenising shares or issuing a security token? Let’s talk: we qualify the right and set up the structure, with authorised partners where needed.