Switzerland, one of the widely preferred business destination by global investors, has been seeking the abolition of bearer shares since July 2016, and the concept came into implementation on 21st November 2019.
The Federal Assembly has adopted a new rule to abolish the concept of bearer shares in the state, backed by the Global Forum of Transparency and Exchange of Information for Tax Purpose.
What are Bearer Shares?
Bearer shares can be understood as a type of company share that need not be registered under any specific business or person.
In short, the shares will not be registered in any register; however, the shareholder will possess complete ownership of the same.
Why Implement the New Rule?
One of the key recommendations was provoked the authorities to take the call is to trace the tax and anti-money laundering activities.
The Final Call & It’s Upshots
The move got initiated in January 2018, the Federal Council of Switzerland had introduced a Bill to implement the OCED demands, including specific provisions of compulsory conversion of shares.
- With the exception of the Public Limited Companies and bearer shares issued in the form of intermediated securities, bearer shares will no longer be in effect. However, the shareholder(s) would remain anonymous on the online commercial registry entry, meaning the Swiss AG retains its advantage of the anonymity of ownership.
- Existing bearer shares which do not fall under this category would have to be converted into registered and name shares according to this new law
- Bearer shares that still haven’t been converted 18 months after entry into force of the Global Forum Act would have to be converted automatically into registered shares.
- Criminal sanctions could arise for those violating the obligation to disclose beneficial ownership in the future
- After 1st January 2020, members of the board of directors or managing directors who deliberately fail to comply with this law or neglect to keep the share register or the register of beneficial owners up to date could be fined up to CHF 10’000.
This means that any non-listed public limited companies (AG) in Switzerland must convert existing bearer shares into registered shares by no later than April 30, 2021.
To complete the conversion in time, the company must act now. The change needs to be registered at the commercial registry, and it will require adjusting the company’s statutes and corporate documents using a notary meeting.
If the company's shareholders and signatories are unable or not comfortable travelling to Switzerland to represent the shares, the change can be carried out by Power of Attorney.
If you would need any assistance in handling this obligatory change of shares from bearer to registered or have any general questions about Swiss company administration, experts at BSW can help you to clear the legal aspects. Feel free to contact us today-we’d be glad to assist!