Tradeable Securities


Shares represent the centrepiece of exchange-traded equity securities. According to the Swiss legal definition, a share represents a portion of a joint-stock company's established equity capital (consisting of its share and, under certain circumstances, participation certificate capital). Swiss corporate law dictates that a share must be issued in either registered or bearer form and have a par value of at least CHF 0.01. The par value determines the proportion of equity capital represented by the share and hence of the associated rights of the shareholder. The par value should not be confused with the "book value" of a share, for whose calculation the company's net assets as well as its earning power is relevant.

The term share, however, also refers to the security itself, which evidences the rights of the shareholder (in particular voting and dividend rights), and the fungibility of which is decisive for the transfer of its associated membership rights. For the purposes of listing, it is irrelevant whether shares are traded in certificated form or as a mere book entry (i.e. a right to value); however, differing provisions govern their respective transferability and settlement.

In terms of the rights associated with shares, a differentiation is made between common and preferred shares (the latter confer special preferential rights in terms of dividends and liquidation proceeds). However, if a company has only one category of outstanding shares, as is generally the case in Switzerland, they can essentially be regarded as common shares.

Participation Certificates

Participation certificates represent the proportional ownership of participating capital that a company may choose to create in addition to share capital. In essence, they are "non-voting shares" that are issued in exchange for a specified amount of money. The holder of a participation certificate mainly enjoys asset rights: the right to receive a portion of the net profits (i.e. dividends) and proceeds of any liquidation of the company, as well as the right to subscribe for new shares. The introduction of this type of security satisfied the need among companies to obtain non-voting, low-par-value equity capital that, subsequent to the initial offering, is publicly tradable in the form of securities. Switzerland's first issue of participation certificates was exchange-listed in 1963, but in recent years the significance of this type of security has waned.

Bonus Certificates

Bonus certificates are, according to Swiss corporate law, equity securities that confer asset rights on the holder (e.g. a share in net profits, a claim on liquidation proceeds, or rights to subscribe for new shares) as stipulated in the issuer's articles of association, but do not grant any membership rights.

There may be various reasons for issuing bonus certificates. For example, issuing bonus certificates may counterbalance founder benefits (founder shares). In the context of financial restructurings, creditors may receive bonus certificates in return for waiving their claims, and shareholders may receive them in connection with capital reductions. Bonus certificates are also used as an instrument for employee profit-sharing.

Bonus certificates differ from participation certificates in that, under Art. 657 para. 3 CO (in german), they have no par value and are not issued against deposit.

Under the law, holders of bonus certificates constitute a community that is subject to the provisions regarding creditor communities in connection with bonds (Art. 657 para. 4 CO, in german).