Bern, 22.11.2018 – During its meeting on 21 November 2018, the Federal Council adopted the dispatch on the implementation of the Global Forum’s recommendations on Switzerland’s phase 2 review. The bill provides for the conversion of bearer shares into registered shares or structuring them as intermediated securities. Moreover, a sanction system for breaches of duty is to be introduced.
On 26 July 2016, the Global Forum on Transparency and Exchange of Information for Tax Purposes published the phase 2 report on Switzerland. It contains various recommendations. They concern the transparency of legal entities and the exchange of information. The bill contains the measures to be taken to implement the Global Forum’s recommendations.
Essentially, the bill stipulates that bearer shares are still permitted only if the company has equity securities listed on a stock exchange or if the bearer shares are structured as intermediated securities. Furthermore, a breach of the duty to report the beneficial owners or to maintain the share register and the list of beneficial owners of shares will be punishable. Regarding the exchange of information, the bill also contains provisions on the confidentiality of administrative assistance requests, as well as the capacity to be a party and to take legal action pertaining to parties about whom information is requested in administrative assistance proceedings. In addition, the provision on administrative assistance requests based on stolen data has been clarified.
The proposal was criticised during the consultation. While the cantons are generally in favour of it, a considerable number of the remaining consultation participants expressed negative views. The Federal Council is sticking to the main points – the conversion of bearer shares into registered shares and the sanction system for breaches of duty – as they are indispensable for implementing the Global Forum’s recommendations. If they are not taken, Switzerland will receive an insufficient overall rating in the next Global Forum peer review, which will begin at the end of 2018. This would not only damage Switzerland’s reputation considerably; Switzerland would also run the risk of other states placing it on a list of non-cooperative jurisdictions.
The Federal Department of Finance (FDF) will publish instructions on the conversion of bearer shares into registered shares and structuring them as intermediated securities.
Parliament will start to discuss the proposal in spring 2019.