At its meeting on 27 September 2019, the Federal Council decided to implement the Federal Act on the Implementation of Recommendations of the Global Forum on Transparency and Exchange of Information for Tax Purposes (“Global Forum”) by the November 1st, 2019.

From this date, bearer shares will no longer be authorized, unless the company has shares listed on stock exchange or if they are issued as uncertified securities (section 622 para. 1bis of the Swiss Code of Obligations (“CO”)). Such grounds must be registered in the Commercial Register, which the Board of Directors must request until April 30th, 2021 (section 622 para. 2bis CO and section 2 of the transitional provisions of the amendment of June 21st, 2019 (“trans. prov.”)). In the absence of any grounds for exception, the Commercial Registry Office must reject any request for registration relating to the issue of new bearer shares or request to retain such existing shares. As from May 1st, 2021, bearer shares that have not been registered in the Commercial Register will automatically be converted into registered shares (section 4 para. 1 trans. prov.).

In this respect, it will be up to the Board of Directors to update the share register and register the holders of converted shares who have complied with the duty of notification. Indeed, according to section 697i CO of the former law, shareholders were required to notify the company when acquiring unlisted bearer shares (first name, address…). For shareholders who have not complied with this obligation by April 30th, 2021, the Board of Directors must add a note to the register stating that these persons have not complied with the duty of notification and cannot therefore exercise the rights associated with their shares (section 6 al. 1 and 2 trans. prov.).

Shareholders whose bearer shares have been converted but who have not notified the company have a grace period of 5 years from the entry into force of this new law, i.e. until October 31st, 2024, to apply to the Court and ask to be listed in the share register, in order to have their status as shareholders recognized and to obtain the reactivation of their rights (section 7 al. 1 trans. prov.). After this grace period, they will be definitively deprived of their rights as shareholders (section 8 para. 1 trans. prov.).

Indeed, according to section 8 para. 1 trans. prov., the shares of shareholders who have not notified and who have been converted will be automatically cancelled. These shares will then be replaced by own shares that the company may freely dispose of.

Nevertheless, a shareholder whose shares have been cancelled and who can demonstrate that he has not been at fault has a right for compensation from the company (section 8 para. 2 trans. prov.) until October 31st, 2034.

In the event of a breach of company law rules on transparency, the new section 731b of the CO provides for a new procedure for deficiencies in the organization of the company, when the share register or the list of beneficial owners is not kept in accordance with legal requirements. The Court will thus be able to take all necessary measures to restore a situation in accordance with the law.

In addition, two new criminal provisions entered into force on November 1st, 2019. First, section 327 of the Criminal Code (“CP”) imposes a fine on anyone who intentionally violates the obligations set out in section 697j para. 1 to 4 or 790a para. 1 to 4 of the CO to announce the beneficial owner of the shares or the capital contributions. In addition, section 327a CP punishes anyone who intentionally violates the obligations of company law on the maintenance of lists and registers, in particular within the meaning of section 686 (1) to (3) and (5) CO and 697l CO.

We remain at your entire disposal for any further information.


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