Automatic conversion of bearer shares into registered shares from 1 May 2021 - Tax and Legal blog

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From 1 May 2021, bearer shares (with just some exceptions) will be automatically converted into registered shares by the Federal Office of Commercial Register unless the companies have already converted on a voluntary basis their bearer shares and thus modified their articles of association by this date. In addition, holders of bearer shares must inform the company about their bearer shares by the end of April 2021 if they have not already done so. After this date, shareholders will have to apply to the court to have their shares registered.

From 1 November 2019, it became unlawful for unlisted companies to issue bearer shares, unless they are structured as intermediated securities and deposited with a Swiss custodian or registered in a Swiss custodian’s main register. However companies with equity securities listed on a stock exchange can still hold and issue bearer shares.

Automatic conversion

After 1 May 2021 (end of a transitional period) and if none of the above-mentioned exceptions applies, bearer shares not already converted by the concerned companies will be automatically converted into registered shares by the Federal Office of Commercial Register. The same will apply to bearer participation certificates.

Adverse consequences for the concerned companies

When bearer shares are converted into registered shares by operation of law, the company concerned will need to amend its articles of association (a notarial deed will be required). Until this happens, any other amendment to a company’s articles will be rejected by the Commercial Register. Registrations of new directors and removals of directors will however continue to be accepted, as these changes do not require a modification to the articles of association.

Adverse consequences for shareholders

Any holder of bearer shares who has not declared ownership to the respective company by the end of April 2021 will not be registered as shareholder of the converted shares. Their membership rights will be suspended and their economic rights forfeited. Between 1 May 2021 and not later than 31 October 2024, these shareholders will have to apply to the court to prove their shareholder status and have their shares registered.

After 31 October 2024, if these shareholders have not applied to the court for recognition as shareholders, their relevant shares will automatically become null and void and they will lose their shareholder rights. Such a shares will be replaced by treasury shares (held by the company), to be disposed of or cancelled as provided by law.

What would be the consequences of this? As an example, shareholders with bearer shares in real estate companies would lose their investment in the company.

Deloitte view

If you have not yet done so, it is not too late to initiate the process of converting your company’s bearer shares on a voluntary basis by notifying the company of your ownership of the shares. We recommend that you should do this as soon as possible and before end of April 2021, in order to avoid any adverse consequences of an automatic conversion.

Deloitte Legal is ready to provide assistance and support to achieve these mandatory formalities.

Key contacts

Urs Sturzenegger - Partner, Deloitte Legal

Urs is an attorney-at-law leading our Legal practice. He has more than 22 years of experience advising listed companies as well as privately held organisations, trusts, family owned businesses and public administration on Swiss legal matters. His areas of expertise include corporate, commercial, contract and labor laws. He is also specialised in pre and post merger reorganisations, cross border migrations and has a profound knowledge of all legal aspects of supply chain implementation.

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Paul de Blasi - Director, Deloitte Legal

Paul is a Swiss qualified Attorney-at-Law with over 15 years of professional experience. Since 2017 he has been leading the legal practice of Deloitte in the French-speaking part of Switzerland. His practice focuses on domestic and international merger and acquisition transactions and all aspects of general corporate and commercial law, including assistance to management and boards of directors, assistance to shareholders, family members and private clients. Paul is a member of the board of directors of his own family business and a member of the Family Business Network Switzerland and International (FBN).

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Emanuelle Brulhart – Senior Manager, Deloitte Legal

Emanuelle is a Swiss qualified attorney-at-law with over 16 years’ professional experience. Her areas of practice include corporate law (M&A and restructurings), employment law, immigration and social security. She provides legal advice on complex restructuring projects, secondments, hiring of services, transfers and collective redundancies. Emanuelle is active in the field of M&A, commercial transactions and corporate restructuring, including legal and employment due diligence, drafting agreements or ancillary legal documentation, the preparation and execution of closing, and post-closing assistance.

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Seynabou Soumare – Manager, Deloitte Legal

Seynabou is a qualified attorney-at-law with over 8 years’ professional experience as business legal adviser in Switzerland. She advises on corporate and commercial Law. Her focus is on all corporate law issues as well as M&A transactions, and she has extensive experience in multinational reorganisation projects. She supports clients in various business sectors in developing and/or reorganising their activities in Switzerland. She also assists on other specific legal matters such as Immigration and Social Security on an ad hoc basis.

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