Shares

A share has two aspects. On the one hand the term refers to a shareholder's legal ownership stake in a corporation, i.e. the shareholder's equity interest - and on the other the share is the security that evidences this ownership interest.

By buying a share an investor becomes a shareholder and hence the owner of a stake in the company's share capital and a co-owner of its assets. He is therefore entitled to a share in the company's profits, either directly through the payment of dividends or indirectly through the performance of the share price. He can influence the company's decisions by reason of his legal interest in the company. The price of the shares is set in stock exchange trading. However, the shares do not confer any right of recovery on shareholders. They cannot, for example, claim repayment of the capital they have invested.

The share as a legal ownership stake

The Swiss Code of Obligations (CO) governs corporation and also contains provisions on shares. Each public limited company determines its share capital (also called nominal capital) on incorporation, which in Switzerland must amount to a minimum of CHF 100'000. This share capital is divided into individual shares. Each share has the same nominal value, which is chosen upon incorporation, for example CHF 100. The share capital is equal to the total number of shares multiplied by their nominal value. In the above example 1'000 shares would therefore be issued if the share capital was equal to the minimum of CHF 100'000 (100 x 1'000 = 100'000). However, the nominal value of the share has nothing to do with its market value. The share price fluctuates in line with supply and demand on the market and the position of the company that issued the shares.

A share confers certain membership and proprietary rights on the shareholder:

Rights	Description
Membership rights	Share ownership confers the right to participate in determining the affairs of the public limited company. According to the Swiss Code of Obligations, this right includes the right to participate in the general meeting of shareholders, the right to vote, the right of inspection and the right to receive information. Each share usually confers one vote.
Property rights	Share ownership confers the right to a share in the assets and profits of the public limited company. Under the Swiss Code of Obligations this right includes the right to dividends (share in the annual profit - if any dividend is paid), the subscription right to subscribe to new shares in the event of a capital increase and the right to a share in the liquidation proceeds in the event of the dissolution of the company.

The share as a security

Securities are instruments which in the case of shares provide documentary evidence of an ownership interest in a corporation. In other words the share is a legal document evidencing the shareholder's ownership interest. A share generally consists of the mantel and the coupon sheet. The certificate evidences the rights attaching to the share. It contains the name of the issuing company, the number of the security, the nominal value, the place and date of issue and the signatures of directors and chairman of the supervisory board. The coupon sheet contains the coupon and the renewal coupon.

According to the Swiss Code of Obligations, membership and proprietary rights are linked to the certificate in such a way that they "could neither be claimed nor transferred to others without the certificate.

Shares used to be physically held in paper form in a custodian account at the customer's bank. If the customer issued a sell order, the securities in question had to be moved from the seller's bank to the buyer's bank, where they were stored in safe deposit again. Today Swiss shares are held in safe custody centrally by SIX Securities Services. In some cases certificates still exist in physical form, but changes of ownership are now only registered electronically. In the case of smaller family-owned public limited companies, the equity interests are not always certificated in the form of securities.