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
Paul de Blasi
Director, Deloitte Legal
Emanuelle Brulhart
Senior Manager, Deloitte Legal
Seynabou Soumare
Manager, Deloitte Legal
