The Swiss parliament has decided to eliminate anonymous shares in private companies amid international pressure to increase transparency around taxation.
Following several rounds of discussions, both chambers on Wednesday agreed to abolish so-called bearer shares which can be used to help owners to dodge taxes by hiding their identities.
The reform foresees that bearer shares will be converted into registered name shares within 18 months. Exceptions are allowed for listed companies.
Finance Minister Ueli Maurer said the solution would allow Switzerland to fulfil the recommendations of a body of the Organisation of Economic Cooperation and Development (OECDexternal link) and limit the risk of being blacklisted.
He added that further legal amendments might become inevitable a few years from now to ensure Switzerland stays in line with international rules on transparency and the exchange of tax information.
The government had tried since 2005 to convince parliament to adapt Swiss law, while in 2015 the OECD said it considered Swiss attempts to tighten rules on bearer shares insufficient.
However, parliament on Wednesday also threw out a proposal to grant legal assistance in cases of stolen tax data. It was argued that Swiss jurisdiction was adequate to handle international requests.
Peter V. Kunz, professor of economic law at Bern University, has downplayed the impact of scrapping bearer shares in Switzerland.
He told the Swiss news agency, Keystone-SDA, that the move is a relatively minor step, as most companies only issue named shares.
Kunz also said the elimination of bearer shares would not really help in the fight against money laundering or tax evasion.
“This is mere window dressing. There are enough other possibilities to launder money without using bearer shares,” he is quoted as saying.
Though most of major firms only issue named shares, it’s nevertheless estimated that tens of thousands of other Swiss companies will be affected by the reform.
The move comes ten years after Switzerland was forced to dismantle banking secrecy by agreeing to send information about customers’ accounts to foreign tax agencies.