18 April 2023

A central register is planned to increase the transparency of legal entities

  • Articles
  • Compliance
  • Legal
  • Regulatory Compliance

After new rules were introduced in 2015 due to the efforts of the Financial Action Task Force (FATF) for more transparency with regard to ownership, the next innovation is already in planning.

  • Michèle Landtwing Leupi

    Legal Partner

Current situation
As it stands today, anyone who, alone or in concert with third parties, acquires shares in a company that is not listed on the stock exchange and thereby exceeds the threshold of 25% must notify the company within one month pursuant to Art. 697j para. 1 CO. This person is deemed to be the beneficial owner.

What is planned
In order to increase the transparency of legal entities and to ensure the facilitated identification of beneficial owners, the Federal Council announced in a message dated 12 October 2022 that a bill is to be drafted. In particular, it is intended to introduce a central register for the identification of beneficial owners and new obligations for the risk-based updating of information on beneficial owners. Access to this register is to be granted only to relevant authorities. The exact scope of the planned revision and the resulting obligations for companies are still unclear.

Background
he background to this planned innovation is a revision of Recommendation 24 and the associated Interpretative Note of the FATF Recommendations, which was published in March 2022. It states that countries should decide which form of register or alternative mechanisms they will use to enable the competent authorities to access information efficiently. This decision is to be additionally documented. This makes it clear that for the FATF, the establishment of a register is the preferred approach to collecting information on beneficial owners. The Guidance on Recommendation 24 published in March 2023 further confirms this by dedicating five pages to the "registry approach", while other approaches are described as alternative mechanisms and are only mentioned in passing and briefly. An obligation to introduce a registry therefore seems likely. Against this background, the Federal Council has decided to start work on the introduction of such a registry at an early stage, so that one is prepared for the aforementioned case.

Situation in the European Union (EU)
As written at the beginning, the exact design of the future register is still unclear. The implementation in the EU could give an indication.

The EU introduced a transparency register in 2015 and decided to expand it in 2018, making the register publicly accessible, among other things. As this is a directive, the concrete implementation is left to the member states. The EU directive, which was adopted in May 2015, stipulates that companies must register their owners in the transparency register if they hold a stake of more than 25 percent in the company and the names of the beneficial owners have not already been published elsewhere, such as in the commercial register.

However, due to the fact that the legislation is designed as a directive, there are great differences in the design in the individual member states. While in some countries only certain legal entities are required to provide additional transparency, in others all companies are simply required to register, including those listed on the stock exchange. The limit of 25 percent of the shares to define beneficial owners is also defined differently. In Germany and Austria, for example, pool contracts are also taken into account.

Next steps
In Switzerland, the next step will be to substantiate the bill for a Swiss central register in a consultation process planned for the second quarter of 2023. The new provisions are expected to enter into force around the beginning of 2026. As soon as more information is available, especially on the exact design of the central register, this report will be updated.

Another development to watch is the extension of the scope of the Anti-Money Laundering Act to advisors. Since the provision was not introduced as planned with the revision of the Anti-Money Laundering Act, this topic will probably be taken up again in the near future. This is largely due to the Pandora Papers leaked at the end of 2021, which are said to show that sev-eral Swiss consulting firms were involved in the corruption and money laundering scandal. However, there are no concrete initiatives yet.

Until then, we therefore refer to a report written in 2019, which gives a good overview of possible obligations: The extension of the scope of application of AMLA to advisors

 
Back