Obligation to notify – As a shareholder, do you still have your voting rights?

I. Introduction

Registered shareholders who hold or acquire equity rights and thereby reach or exceed the limit of 25 percent of voting rights or capital shares must report the first name, surname and address of the beneficial owner of the shares to the company within one month. Failure to comply with this reporting obligation may result in criminal penalties for the defaulting shareholder. In any case, it will lead to a restriction of his/her shareholder rights towards the company.

II. Criminal law consequences

A fine is imposed (art. 327 Swiss criminal code) on anyone who deliberately fails to comply with these reporting obligations. As a result, shareholders are now sanctioned if they intentionally or recklessly omit or incorrectly fulfil their reporting obligations. The maximum amount of the impending fine can be up to CHF 10’000. If the shareholder subject to the reporting obligation is fined more than CHF 5’000, this will lead to an entry in the criminal register, which will remain accessible for ten years.

III. Corporate law consequences

Due to the obligation of the board of directors to keep a register, all registered shareholders (and if necessary, the beneficial owners), notified to the company must be listed in the shareholder’s register. A quick search of the register can confirm whether or not the shareholder has complied with his/her reporting obligation. If there is no corresponding report of the beneficial owner, this could lead to drastic consequences. If shareholders with at least 25 percent of the share capital are not entered into the shareholder’s register, the general meeting resolutions on which they nevertheless voted are contestable. These shareholders are also not entitled to a dividend payment. In particular, it should be noted that even in the event of subsequent notification, the claim is already forfeited. If dividends are paid out despite the absence of a notification, they can be reclaimed.

IV. Conclusion

Shareholders who reach or exceed the threshold of 25 percent of voting rights or capital shares are urgently required to check whether they have complied with their reporting obligations. Otherwise, they may lose their entitlement to a dividend for a certain period of time and may not be able to exercise voting rights. Likewise, the consequences under criminal law should not to be neglected. Shareholders concerned can find a template for a so-called FATF-notification under the following link: 

MME-Shareholder-Register-Template

June 2020 | Authors: Andreas Rudolf, Michèle Landtwing Leupi, Sabrina Weiss

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