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