Disclosure Requirements – Switzerland
Disclosure Category: 2
In the case of bearer shares, there is no legal obligation on Clearstream Banking S.A. (Clearstream Banking) to disclose the identity of its clients or their holdings to issuers or to the regulator.
In the case of registered securities, there can be a legal (contractual) obligation for Clearstream Banking to disclose the identity of the shareholder to the issuing company.
Consent
Clients holding Swiss shares registered in the name of Clearstream Nominees, London (see the Market Link Guide – Switzerland) consent and are hereby deemed to consent to disclosure and to the appointment of the requestor (that is, the respective company) as their attorney-in-fact, under power of attorney to collect from Clearstream Banking such information as is required to be disclosed. Clients who do not want to grant such authority to Clearstream Banking should refrain from holding such shares in their account with Clearstream Banking.
Disclosure requirements
The Swiss company issuing the shares may require Clearstream Banking, upon request, to disclose to that company information relating to the identity of Clearstream Banking clients holding any of the company’s registered shares at Clearstream Banking and to the quantity of shares held. Clearstream Banking will only systematically disclose in the case of the shares are one of the companies with whom it has entered into a specific agreement (see 3.a in the table below).
Background and legal basis
In Switzerland, companies may issue shares in bearer or registered form. The provisions are to be found in the Swiss Code of Obligations (CO), in the chapter Governing Corporations (Articles 620 and following).
1. | Bearer shares There is no obligation on custodians to disclose clients information, although shareholders themselves may have the obligation to disclose, for example, when crossing reporting thresholds. | |
2. | Non-listed registered shares Companies may require full registration at beneficial owner level. There is no nominee concept. This is a service that Clearstream Banking does not offer. Most relevant are Article 685b paragraph 3 of CO, with regard to registered shares not listed on a stock exchange, and Article 685d paragraph 2 of CO, with regard to registered shares listed on a stock exchange. | |
3. | Listed registered shares | |
a. | Where Clearstream Banking has entered into an agreement with an issuing company, Clearstream Banking registers holdings of those shares in its own nominee name. The articles of association of a Swiss company issuing such shares may require Clearstream Banking, upon request and/or on a regular basis, to disclose to that company information relating to the identity of its clients. Clearstream Banking typically registers such holdings in its own name and Clearstream Banking is consequently bound by the rules of the issuing company. | |
b. | Where Clearstream Banking has not entered into a specific agreement with an issuing company, shares are held by Clearstream Banking in disposal form with its custodian. Neither registration nor disclosure is mandatory. If an investor wishes to exercise its voting rights, the investor must instruct Clearstream Banking to register those shares in the investor’s name, by a specific deadline, which varies from company to company. | |
Corporations that have issued registered shares may insist, in the Articles of Association, that company approval (from the board of managing directors or from the supervisory board) or shareholder approval (at the AGM or at an EGM) is required before shares can be transferred.
Disclosure of registered shares to the company is based on the clause of the company's articles of association. It creates a contractual obligation between the issuing company and the investor.
Sanctions
Non-disclosure of holdings of registered shares may mean that it is not possible to exercise voting rights or rights attached to the voting right. (Article 685F of the CO)
Obligation to report threshold crossings
Extract of Article 20 of the Stock Exchange Act: Obligation to notify:
“Whosoever directly, indirectly or in concert with third parties acquires or sells for their own account shares or purchase or sale rights relating to shares in a company incorporated in Switzerland whose equity securities are listed in whole or in part in Switzerland and thereby attains, falls below or exceeds the threshold percentages of 3, 5, 10, 15, 20, 25, 33 1/3, 50 or 66 2/3 of voting rights, whether or not such rights may be exercised, must notify the company and the stock exchanges on which the equity securities in question are listed.”
The threshold values in Art. 20 of the Stock Exchange Act are defined on the basis of the total number of voting rights as per entry in the Commercial Register (Art. 12 para. 2 SESTO-FINMA).
The obligation to disclose applies to all investors who directly, indirectly or in concert with third parties reach, exceed or fall below the shareholding percentage specified by law through the acquisition or sale of equity and/or derivative instruments, including cash settlement options, of a company incorporated in Switzerland. Substantial shareholder reporting is required each time the shareholder reaches, exceeds or falls below the 3%, 5%, 10%, 15%, 20%, 25%, 33.3%, 50% or 66⅔% thresholds. Parties, in addition to private investors, who are obligated to report, include:
- A group of companies (the total amount of shares held by the group must be reported; that is, holdings of the parent company plus its subsidiaries);
- Investors who, together with third parties, according to an agreement/contract or other organised proceedings, acquire or sell equity securities or exercise voting rights;
- Mutual fund companies (aggregate holdings of all funds held with the same management must be reported but not the total of the fund group); and
- Borrowers, in the case of securities lending and borrowing, if they are entitled to exercise the voting rights.
See the SIX Exchange Regulation website for further information.
The company and the stock exchange must be notified within four trading days of acquisition or sale. The disclosure forms can be found at:
https://www.ser-ag.com/en/topics/disclosure-of-shareholdings.html
Sanctions
There is no standard penalty. Possible breaches of the act are sanctioned in accordance with Chapter 9 of the Stock Exchange Act: Penal Provisions and can be subject to a fine up to CHF 1 million.
Listings of significant shareholders can be found at:
https://www.ser-ag.com/en/topics/disclosure-of-shareholdings.html