Your Shareholder Register Is Out of Date: What Should You Do?

A Governance Issue Not to Be Underestimated

Many companies – even large ones – are still facing a delicate issue: registered shares whose owners can no longer be identified. These so-called “dormant shares” raise serious compliance and governance concerns. The board of directors must act quickly.

This paper outlines practical steps to address the problem, focusing on how to bring information about registered shareholders back into compliance, bearing in mind that Swiss law abolished bearer shares for unlisted companies in 2019.

1. What Is the Problem?

The issue concerns registered shares whose owners are no longer known to the company.

There are many possible causes: outdated addresses, death of shareholders, dissolved companies, unreported share transfers, or poor record-keeping from past corporate actions.

The main consequence is a loss of shareholder traceability. The shareholder register becomes inaccurate, and the company loses contact with part of its shareholding. As a result, the board of directors fails to meet its obligation to maintain an up-to-date register of shareholders and list of beneficial owners.

2. The Board’s Obligations

The board of directors is responsible for maintaining the share register (Article 686 CO).

An incomplete or inaccurate register may be considered a deficiency in the company’s organization (Article 731b CO) and, in certain cases, expose directors to criminal liability for breach of duty (Article 327a of the Swiss Criminal Code).

Keeping the register accurate and up-to-date is therefore essential to safeguard the legal security of both the company and its shareholders.

3. What Are the Risks?

Having unidentified shareholders entails several risks, which become more serious the longer the situation persists and the more shares are affected:

• Regularization becomes increasingly difficult over time.
• Strategic projects may be delayed, as a clear shareholder structure is often required in mergers or other restructuring transactions.
• Company valuation becomes uncertain, since untraceable shares distort the equity base.
• Corporate risks such as:
  • uncertainty about quorum validity and shareholder meeting decisions,
  • participation thresholds (5%, 10%) potentially reached for certain shareholder actions,
  • complications in calling general meetings or requesting special audits.
• Reputational risk, due to perceptions of weak governance.

4. Our Recommendation

Current law does not impose a formal duty or deadline to regularize “dormant” shares.

However, inaction can undermine the company’s credibility and erode investor or lender confidence. Acting proactively is therefore highly advisable.

Recommended steps include:

• reviewing internal archives,
• contacting former directors,
• writing to the last known addresses of shareholders,
• publications in the Swiss Official Gazette of Commerce (SOGC) and/or local newspapers.

If these efforts are unsuccessful, the company should evaluate the situation and decide whether to:

• correct the shareholder register by means of a well-documented board resolution describing all the steps taken and evidence collected, or
• initiate court proceedings to cancel the shares. Some legal authors consider that companies have a legitimate interest in doing so to clarify their shareholder base, although this right is not expressly provided by law and remains rare in practice.

In both cases, the result would be the cancellation of the affected shares, which then become treasury shares. The company may hold them (within legal limits) or reduce its share capital accordingly, keeping a statutory reserve to compensate any shareholders who later would come forward.

We recommend coordinating every step of the process with the company’s auditor.

5. Outlook and Good Practices

Updating the shareholder register is more than an administrative formality.

It strengthens corporate governance, transparency, and legal certainty—key elements for building trust among investors and business partners.