Switzerland's Federal Act on the Implementation of the 2012 Revised Recommendations of the Financial Action Task Force (”the Law”) will partially come into effect on 1 July 2015.
The Law aims to intensify the fight against money laundering in Switzerland through a variety of changes to existing laws, and addresses the calls for greater transparency of privately-held Swiss companies and their shareholders. The changes as a consequence of the Law do not apply to listed companies.
From 1 July 2015, whoever acquires bearer shares in a privately-held Swiss company will be obliged to report the transaction to the company (or a financial intermediary entrusted with this task) within one month of the relevant transaction. This reporting requirement applies to all shareholders and does not contain minimum thresholds.
Where one alone, or in conjunction with another, acquires bearer or registered shares in a privately-held company and thereby exceeds the limit of 25% of the share capital or voting rights, he must report the identity of the beneficial owners of the shares to the company (or the trusted financial intermediary) within one month of the relevant transaction.
The beneficial owner may be the holder of the registered shares or bearer shares, or a third person. The reporting requirement always applies to the direct shareholder.
The company must create a directory of holders of bearer shares and ensure access at any time in Switzerland for a period of 10 years. The same obligation applies to keeping information on the identity of the beneficial owners.
If shareholders do not comply with their reporting obligations, they will not be able to exercise their voting rights and dividend rights until the reporting has actually taken place. Especially for dividend rights this may cause an issue, because the right to dividend will only apply as of the moment of reporting; there may be a loss of the right to declared dividends for the period between when the reporting should have taken place and when it actually takes place.
What can immediately be taken away from the update is that all records regarding shareholders and beneficial owners must be kept in a readily accessible place for a minimum period of 10 years. It is recommended that holders of bearer shares review existing ownership status and take note where more than 25% ownership falls to a single party. Companies should begin to take the roll call of shareholders and beneficial owners before the Law comes into force on 1 July.
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