Today, we delve into a topic of significance within Swiss corporate law – the Share Register (Article 686 CO). This article aims to elucidate the fundamentals of the Share Register and offers you an opportunity to access a downloadable template. Let us start.
1. What is a Share Register?
The Share Register is a compilation of individuals who, within the scope of a company, hold the status of shareholders or beneficiaries of registered shares. It serves the functions of legitimization and identification and is to be established immediately following the registration of a Swiss Corporation in the commercial register. Nowadays, Share Registers are primarily maintained electronically, as opposed to traditional paper-based registers.
2. What are the contents of a share register?
The Share Register must include all owners and beneficiaries of shares (Article 686 I Swiss Code of Obligations (CO). The corresponding entry should contain the first and last name, or the company name, of the owners or beneficiaries, along with their address.
In cases where various categories of shares are in circulation, clarification regarding the type of share (common, preferred, or voting share) and the degree of paid-in capital also required. Finally, in instances of joint ownership or co-ownership of registered shares, all co- or joint-owners must be listed in the share register.
3. What is the significance of the of the Share Register?
The Share Register holds a strictly private character is a more or less a membership directory. However, it is only declaratory in nature, meaning that even if an individual is not recorded in the Share Register, they can provide alternative means to substantiate their shareholder status.
4. How does one get registered in the share register?
The registration in the Share Register necessitates proof of the lawful acquisition of a share.
• To proof lawful acquisition of a share, the shareholder is required to present either a duly endorsed title (for certificated shares) or a written assignment declaration (for uncertificated shares) to the company. Based on this transfer evidence, the entry in the Share Register is then made. If there are statutory restrictions on transfers, the approval of the board of directors might be necessary as well.
• Shares issued as tokens (so-called ledger-based securities) are transferred via the blockchain based securities ledger. This entails an automatic new entry in the blockchain-based securities ledger with each transfer. If the securities ledger satisfies the legal requirements for a Share Register, it can be used as the securities ledger.
• In cases of an inheritance or a transfer of shares under matrimonial property law, corresponding evidence of inheritance status or marital entitlement must be presented to the company to amend the Share register.
5. Who needs to maintain the Share Register?
The Board of Directors holds the responsibility for maintaining the Share Register (Article 716,II CO). While no specific legal format for the Share Register exists, documentation in “written” form is essential. Nowadays, digital administration is commonplace, with printouts and signatures provided as necessary. Importantly, Swiss law mandates consistent access to the Share Register in Switzerland (Article 686 I CO), and all evidence for the entries must be retained for a period of ten years following the removal of the owner's details.
If no share register is kept or if the share register is not kept in accordance with the regulations, there is a defect in the organisation of the Company and shareholders or creditors may request the court to take the necessary measures (Art. 731b para. 1 item 3 CO).
6. Access to the Share Register
The Share Register is not publicly accessible, neither to shareholders nor third parties. However, shareholders possess the right to seek information pertaining to their personal records.
7. The Relevance of the Share Register in Business Sales
Especially in the context of business acquisitions, the Share Register is of central importance. Existing shareholders may only validly transfer their share if they are the legal owner of the shares. This is achieved through evidence of an unbroken chain of assignments from the original acquirer of the shares (founder or subscriber during capital increase) to the present owner. A prudent purchaser typically demands proof of this unbroken Chain of Title from the seller before finalizing the purchase agreement.
If the seller fails to do so, the buyer risks paying the purchase price without acquiring ownership rights. The (updated) Share Register plays a pivotal role in this context.
Do you have a proper share register for your company?
If not, fret not! We have just the solution for you. Access our downloadable Share Register template which also includes the necessary information regarding the concerning the directory of economically entitled individuals (Article 687l of CO).
[Template Share Register_EN]
[Vorlage AKtienbuch_DE]
Disclaimer: The information contained in this article is for general information purposes and does not constitute legal or tax advice. In specific individual cases, the present content cannot replace individual advice from expert persons.
