Switzerland: European no par value shares – an overview

Joint-stock companies in the Euroland have to consider how they will react to the impact of the Euro on their share capital. To prevent the companies from having to even up the par value converted in Euro by capital increase or reduction relevant legislator decided to introduce no par value shares.

There is a choice of two basic types of no par value share: the "true" version permitted in the USA and Canada(I) and the "accountable par" model, permitted in Belgium and Luxembourg(II).

The "true" no par value share according to the American model has no par value and no share capital. The solution for voting rights, profit-sharing and the liquidation quota for the remaining assets is reduced to "one share-one vote" and the profit-sharing and the liquidation quota correspond to the number of shares. Under this model, the share capital is not reflected in the balance sheet. By implication, there is no direct correlate between shares and capital - as a result, both quantities can be changed independently of one another.

In the case of the "accountable par" value share, the share capital remain a balance sheet item, but the par values of the individual shares are repealed. By consequence, an arithmetical or "fictive" par value can still be assigned to the share by determining the amount of the individual share with respect to the entire share capital.

Both types of no par value shares can be formed as unit or quota shares. The quota share represent a fraction of the share capital. The fraction must figure in the articles of incorporation and on the share certificate itself. In the case of a share capital increase or reduction, the quotas have to be changed in the articles of incorporation and on the share certificates (provided that such certificates exist). By contrast, the unit share has no par value and represents no quota of the share capital. All shares have equal rights.

1. No par value unit shares represent already the preferred solution.
2. Possible in the transitional period.
3. The par values can be rounded to Euro: But the rounding to a 1-Euro-share is not absolutely necessary.
4. Introduction is planned in the year of 2002.
5. Introduction at the beginning of level 3 is not planned. A later introduction is being discussed.
6. Not yet decided, but in practice it is ascertainable that many companies have "splitted down" their shares on the equivalent value of PTS, for changing to the par-value of 1 Euro without having to adjust the capital.

The content of this article is intended to provide general information on the subject matter and is not a legal advice. An individual matter requires legal advice according to the specific circumstances.

For further information please contact Dr. Gaudenz G. Zindel or Dr. Peter Burkhalter.