Getting a certificate when buying Swiss company shares

Hello

I have read the details on this website about online brokers. I am a UK private investor and want to buy shares in a Swiss company that only trades on the Swiss stock exchange. How can I obtain the share certificate for these shares, or some other official document that shows me as the legal owner of the shares (not just the beneficial owner, which is a distinction made for shares held in UK broker nominee accounts)?

Do I need a special share trading account with one of these brokers who can register the shares in my name, or give me an official proof of ownership of the shares? I intend to hold the shares for many years and therefore need a permanent paper record of my shareholding. 

I'm considering buying these shares through a Swiss broker instead of a UK one because I can't find a suitable UK broker.

Thank you in advance for any information.
 

Thank you for your question.

Physical stock certificates are no longer issued by most Swiss companies and brokers.

If you want to hold bearer shares (Inhaberaktien), these will generally have to be held by a custodian bank on your behalf. In Switzerland, custodian banks are generally the same banks which acts as stock brokers and operate online trading platforms.

In Switzerland, as in most countries, custodian banks typically hold bearer shares in street name. In other words, your shares are held in a collective account in the brokers name, along with shares from all of the broker's other customers. When shares are held this way, you do not hold ownership or voting rights. You simply benefit from dividends and capital gains on a usufructuary basis. Brokers must maintain records of bearer share ownership. Some brokers hold shares in a segregated custody account or offer this as an option.

It is possible to transfer shares from one custody account to another, but brokers typically charge high fees for this service. In practice this typically involves the selling of your existing shares by your old broker and the purchase of identical shares by your new broker. You cannot simply withdraw your stock certificates and deposit them at a new custodian like you could in the past.

If you hold registered shares (Namensaktien), you are (or should be) listed as a shareholder in the share registers of the companies you hold shares in. Registered shares give you voting and ownership rights. Because ownership of registered shares is recorded in company share registers, you can prove ownership independently of a broker. Swiss companies generally no longer issue physical stock certificates, so you still have to hold your shares at a custodian bank. Because the process of registering the ownership of registered shares in company share registers requires more effort, brokerage fees for registered shares tend to be higher.

Like bearer shares, registered shares may also be held in collective accounts in the broker's name. You can find more information in the guide to differences between Swiss stock brokers.

Important: Following legal changes to the framework surrounding bearer shares, many Swiss companies have begun converting bearer shares to registered shares.

More information:
Online trading platform comparison
Custody fees in Switzerland explained

Thank you. If I buy registered shares and the shares were registered in my name, could I sell the shares using a different broker and without involving the original broker? This is to give me alternatives when I sell the shares many years later.

newinv wrote on March 31, 2016

Thank you. If I buy registered shares and the shares were registered in my name, could I sell the shares using a different broker and without involving the original broker? This is to give me alternatives when I sell the shares many years later.

Yes, you can sell your stocks using a different broker later on.

But be aware that most brokers will bill you a transfer fee (in case you change providers but don't want to sell your stocks). Transfer fees can amount to more than 100 francs per title!

More information:
Custody Fees at Swiss Banks Compared
How to buy stocks

OK. So it seems that I could not keep my stocks separate from the original broker, even if I registered the stocks in my name. Am I correct?

For example, can I achieve the following situation: if I buy UK shares from a UK broker, the broker can register them in my name, and I can receive a share certificate from the share-register company (which is independent of the broker), which would enable me to sell the shares through any UK broker, without any transfer from (or payment to) the original broker.

Can I obtain similar registration and proof of ownership for these Swiss stocks that would allow me to sell them (many years later) using any (Swiss or UK) broker, and without any transfer from (or payment to) the original broker?  I know that paper certificates are not produced for Swiss stocks, but what other proof of registration / ownership is given?

I understand that Swiss brokers charge custody fees for stocks held in their broker accounts, but I don't want to keep my Swiss stocks in the broker's account.

 

 

Good day,

I am conducting some research and have this question:

Holding shares at home on paper certificates is becoming less and less common. Shares are increasingly being held in immaterial forms. Can we expect to see collectible shares (Liebhaberaktien) disappear as well?

Thanks and kind regards

Hi there,

The results of a questionnaire sent by moneyland.ch to a number of Swiss companies in 2017 show that no major companies in Switzerland issue shares or participation certificates as paper stock certificates anymore.

Instead, shares are listed in a ledger managed by the company, or on behalf of the company by a central securities repository or other service provider.

However, there are some companies which do print paper stock certificates - either as a matter of course or upon request. These are typically non-profit companies and companies which share an emotional link with their customers and shareholders, or which rely on shareholders for support. The Zurich Zoo, for example, issues stock certificates to individuals who purchase its stock.

Unlike physical bearer shares and bearer bonds, these "stock certificates" do not have value in and of themselves. They simply state information about the ownership of registered shares listed in a company's share register, and only have sentimental value.

The phasing out of physical certificates is disadvantageous to investors because owning shares now typically requires a custodian bank, which charges custodial fees. This amounts to paying a service provider to maintain a ledger stating that you own your shares. However, it is worth noting that some Swiss companies provide custodial services to their registered shareholders free of charge.

Best regards from Moneyguru

According to the latest opinion of the attorney in England, Bearer shares in Switzerland are now undergoing some changes that are supposed to affect the whole system in general. I'd be more conscious about that.

newinv wrote on April 1, 2016

OK. So it seems that I could not keep my stocks separate from the original broker, even if I registered the stocks in my name. Am I correct?

If you have your broker enter your shares in the share registers of the companies you hold stocks of, then you will be registered as the shareholder even if you quit your broker. You will still be registered as a shareholder even if you do not have a broker or your broker goes bankrupt, etc. BUT you will generally need a custodian bank to hold your electronic "stock certificates" in order to claim dividends and a broker if you want to sell your shares (barring a company stock buyback). Depending on the company, you may be able to claim dividends directly without a custodian bank, but you would have to clear that up with the company directly.