Changes to company law as part of the implementation of the FATF recommendations
On July 1, 2015, amendments to company law came into force which contain transparency and disclosure obligations with the aim of implementing the recommendations of the "Groupe d'action financière" (GAFI) revised in 2012. These are aimed at Swiss corporations (AG, GmbH and cooperative) and their shareholders.
The FATF is an international body of experts based in Paris with the aim of combating money laundering, terrorist financing and the financing of weapons of mass destruction and standardizing the fight against these crimes internationally. It has 36 members, including Switzerland as a founding member. The FATF has drawn up 40 recommendations, which are intended to form the international minimum standard on which the Swiss legislative revision of December 2014 is based. As part of the implementation of these FATF recommendations from 2012, tax offenses were also included in the catalog of predicate offenses for money laundering and terrorist financing.
Company law regulations
Notification of the acquisition of bearer shares
Notification of the beneficial owner (shareholding ≥25%)
Sanctions
Obligation to keep a list of shareholders
10-year retention obligation for the directories
Duties of the Board of Directors
The new legal provisions do not apply in this form to listed companies, when using a financial intermediary or if the equity securities are structured as intermediated securities in accordance with the Intermediated Securities Act, as the FATF recommendations are otherwise covered by law. The appointment of a financial intermediary represents a delegation of the reporting obligations (of the company), but has no influence on the various reporting obligations of the shareholders/acquirers.
Registered shares
The provisions of Art. 686 CO regarding the acquisition of registered shares have not been amended. As before, the company must enter the name and address of the owner and usufructuary of the participation rights in a share register. It must also obtain proof of the acquisition of ownership of the shares (share certificate with endorsement or declaration of assignment) or the establishment of usufruct (written contract).
Bearer shares
When acquiring bearer shares after July 1, 2015, new reporting obligations for shareholders come into force (Art. 697i CO). Shareholders must report their acquisition of shares to the company within one month, together with proof of acquisition (presentation of the certificate) and disclosure of their identity with surname, first name and address (official ID with photograph) or extract from the commercial register in the case of a legal entity. This regulation begins with the acquisition of a single share. The reporting obligation applies to the shareholder (also in the case of representation). The acquisition of bearer shares naturally includes not only the purchase of such securities, but also gifts, the transfer of bearer shares by way of security or other fiduciary legal transactions and universal succession, for example as a result of inheritance or a merger, demerger or transfer of assets in accordance with the Merger Act.
Registered shares
There are no new legal obligations for existing registered shareholders.
Bearer shares
In accordance with the transitional provisions of the Federal Act on the Implementation of the FATF Recommendations of 12\. December 2014 (Art. 3), the reporting obligations also apply to persons who were already bearer shareholders when the law came into force. They have six months after the Act comes into force to comply with their reporting obligations, i.e. until December 31, 2015.
Furthermore, bearer shareholders are obliged to notify the company of any future changes to their first name, surname, company name and address in accordance with Art. 697i para. 3 of the Swiss Code of Obligations.
Registered / bearer shares
According to Art. 697j para. 1, anyone who acquires shares in a company alone or in joint agreement with third parties (e.g. by means of a shareholders' agreement) and thereby reaches or exceeds the threshold of 25 percent of the share capital or votes must notify the company within one month of the first name, surname and address of the natural person for whom they are ultimately acting (ultimate beneficial owner). It is the acquirer and not the beneficial owner (if it is not the same person) who is obliged to notify the company . If the acquirer is a legal entity (e.g. in multi-level group structures), the exact ownership structure must be disclosed down to the natural persons who ultimately hold the interests. All natural persons concerned must be named. It is not important how many shares each individual natural person holds - a single share is sufficient.
The reporting obligation in turn includes a provision that future changes to the first or last name and address of the beneficial owner must be reported.
While the obligation to notify the beneficial owner of registered shares only applies in the event of acquisition, in the case of bearer shares this provision also applies to holdings of more than 25 percent that already existed when the law came into force (in accordance with transitional provisions). The reporting obligation must be complied with for six months, i.e. by December 31, 2015.
Limited liability company (GmbH)
The obligation to notify the beneficial owner also applies to limited liability companies and, as in the case of registered shares, expressly only in the event of a future acquisition of ordinary shares.
Registered / bearer shares; GmbH
When participation rights are acquired, the membership and property rights are suspended until the various aforementioned notification obligations have been fulfilled and entered in the register (Art. 697m CO). If the notification has not been made within one month, the property rights are forfeited. While the membership rights (e.g. voting rights) begin to run from this point in time in the event of a subsequent notification, the forfeited property rights (e.g. dividends) may not be made up retrospectively. Only the property rights from the date of registration can be asserted.
All entries must be documented by means of evidence!
Registered shares
As before, Art. 686 CO stipulates that the name and address of the owner and usufructuary of registered shares must be entered in the share register. The beneficial owner must now also be named if 25 percent or more of the company's share capital or votes are acquired (Art. 697j CO).
Bearer shares
The keeping of a list of bearer shareholders and of the beneficial owners reported to the company is new and is regulated in Art. 697l CO. The list must contain the first name, surname or company name, address, nationality and date of birth.
GmbH / cooperatives
As before, the GmbH is obliged to keep a share register (Art. 790 CO) and the cooperative is obliged to keep a register of cooperative members (Art. 837 CO). The GmbH is now also obliged to keep a list of the beneficial owners reported to the company, applying the provisions for bearer shares (Art. 697l CO in conjunction with Art. 790a CO).
Registered / bearer shares; limited liability company; cooperative
All the above-mentioned legally required registers must be accessible in Switzerland at all times. The registers and the supporting documents that served as the basis for the various entries must be kept for 10 years. This retention obligation begins after the deletion of an entry.
Registered / bearer shares
The Board of Directors is responsible for maintaining the register of shareholders. It is also responsible for implementing the sanctions described above in accordance with Art. 697m CO. This may also give rise to liability claims against the Board of Directors in the event of a proven breach of its responsibility under company law (Art. 754 CO). Legal consequences may include the company's right to reimbursement from shareholders in the event of unjustly received dividends (Art. 678 CO) and the contestability of AGM resolutions if voting rights of suspended shares are exercised (Art. 691 para. 3 CO).
According to Art. 2 of the transitional provisions, companies are obliged to adapt their articles of association and regulations to the new provisions. The legislator has set a deadline of two years for this, i.e. until June 31, 2017.
We recommend that the articles of association be amended at an early stage and that the new legal provisions be applied immediately. Particular focus should be placed on the correct maintenance of the register of shareholders, including the prescribed documentation and retention obligations. The sanctions should be enforced by the Board of Directors.
We will be happy to assist you in drawing up a list of shareholders and/or drafting new articles of association.
The data must contain the first name, surname or company name, address, nationality and date of birth.
GmbH / cooperatives
As before, the GmbH is obliged to keep a share register (Art. 790 CO) and the cooperative is obliged to keep a register of cooperative members (Art. 837 CO). The GmbH is now also obliged to keep a list of the beneficial owners reported to the company, applying the provisions for bearer shares (Art. 697l CO in conjunction with Art. 790a CO).
