Direct Interest under Art. 1 TLEO: When 25 Percent is sufficient – and when it is not

Key Points at a Glance

• Only a person who holds the interest in their own name and for their own account, without any intermediate level, holds a direct interest; anyone holding through a fiduciary (nominee) always exercises control indirectly.
• The 25 percent threshold applies to either capital or voting rights and is met as soon as it is reached – not only when it is exceeded.
• The decisive event for the acquisition is the transfer of title (the disposition), not the obligating agreement; in transactions, this is generally the closing, not the signing.
• The various control criteria must be examined in parallel; unlike under anti-money laundering law, there is no cascade.
• The transition periods are already running: depending on the circumstances, the initial report must be filed within three to six months or within two years – or within one month if the commercial register entry is changed earlier.

What Art. 1 TLEO regulates

Art. 1 TLEO defines a direct interest in two paragraphs. Under para. 1, an interest is direct if the capital or voting rights are not held through one or more intermediary natural persons, legal entities or trusts. Under para. 2, a direct interest confers control over a legal entity if it comprises at least 25 percent of the capital or voting rights of the legal entity concerned. The provision gives concrete form to the concept of the beneficial owner under Art. 4 para. 1 TLEA, which corresponds verbatim to the definition in Art. 2a para. 3 of the Anti-Money Laundering Act (AMLA).

Two points are essential for classification. First, the definition is framed in negative terms: the sole decisive factor is whether there is an intermediate level between the natural person and the legal entity subject to the reporting obligation. A person holds a direct interest if they hold it in their own name and for their own account. Second, Art. 1 TLEO is not constitutive: Art. 6 TLEA merely authorizes the Federal Council to specify the requirements for indirect control and control by other means; direct control is already exhaustively regulated at the statutory level. Art. 1 TLEO is therefore to be understood as declaratory or as guidance for interpretation. The provision may neither broaden nor narrow the statutory concept of control and serves primarily to distinguish a direct interest from an indirect interest under Art. 2 TLEO.

Legislative History: a Provision arising from the Consultation

The consultation draft did not contain a separate provision on control through a direct interest. The Federal Council revised the provisions on the concept of control in line with the proposals made in the consultation and, in particular, added a new provision to specify control through a direct interest as well. At the same time, the criteria for control by other means were narrowed, and a clearer distinction was drawn between the object and the means of control. Furthermore, to align with anti-money laundering practice, the threshold for indirect control was set at more than 50 percent (instead of at least 50 percent). Finally, the separate provision on fiduciary arrangements contained in the draft was deleted – which, however, does not diminish their practical significance, as will be shown below.

First Pitfall: Fiduciary Arrangements

Art. 1 para. 1 TLEO covers not only intermediary legal entities but also intermediary natural persons and trusts. This is of practical relevance in fiduciary arrangements: if a person holds their interest through a shareholder acting as fiduciary (nominee), control is never direct but always indirect. Once the threshold is reached, the beneficial owner is generally the principal, not the fiduciary.

The following must be reported: the type of control “interest”, the size of the interest held on a fiduciary basis and the role as principal. In addition, information on the chain of control – including the fiduciary – must be provided, regardless of the number of intermediate levels, because a fiduciary arrangement independently triggers the obligation to obtain information under Art. 15 para. 1 lit. b TLEO. Moreover, Art. 3 para. 2 lit. e TLEO lists fiduciary arrangements as a possible means of control by other means; this criterion must also be kept in view.

A particular difficulty is that fiduciary arrangements cannot be identified from the company’s own records: the share register, the register of quota holders and the commercial register show the formal holder, not the person for whose account the interest is held. The same applies to usufruct, which transfers the voting rights to the usufructuary under Art. 690 para. 2 of the Swiss Code of Obligations (CO).

The legal entity therefore cannot rely on its own registers. It must make inquiries of its shareholders, request the relevant supporting documents (Art. 7 para. 2 TLEA) and document the responses. The shareholders, for their part, are obliged to report the beneficial owner to the company within one month of control arising and to provide the necessary information and supporting documents upon request (Art. 13 paras. 3 and 4 TLEA).

Second Pitfall: The 25 Percent Threshold

Capital and voting rights are alternative criteria; it is sufficient for either of them to reach the threshold. For example, a person who holds only 10 percent of the capital but, owing to a provision in the articles of association (such as voting shares under Art. 693 CO), holds 50 percent of the votes is a beneficial owner. Note also that the threshold is already reached at exactly 25 percent and does not need to be exceeded. For the capital ratio of a stock corporation, the sum of the registered share capital and participation capital is decisive. Dividend rights certificates (Genussscheine) and conversion and option rights are disregarded in this respect, but may become relevant as a means of control by other means (Art. 3 para. 2 lit. b TLEO). For the voting rights ratio, by contrast, only securities carrying voting rights are taken into account.

Third Pitfall: The Timing of the Acquisition of Control

Control through an interest is generally deemed acquired as soon as the person becomes the owner of the relevant interest. The mere conclusion of a purchase agreement is not sufficient; in addition to the obligating agreement, the act of disposition (transfer of title) is required. In a share deal, the acquirer therefore generally becomes a beneficial owner only upon closing. In the case of registered shares with transfer restrictions, it is additionally required that the share certificates be delivered and that the company grant its consent (Arts. 685a and 685c CO). Entry in the share register, by contrast, generally has only declaratory effect (Art. 686 CO). To the extent that the legislative materials additionally refer to the entry in the share register, this is to be understood as a separate point in time for adjustments for transparency law purposes, not as a general acquisition event under corporate law.

This is a deliberate departure from stock exchange law, under which the disclosure obligation under Art. 120 FinMIA already arises upon conclusion of the obligating agreement (Art. 13 para. 1 FinMIO-FINMA). Reserved are cases in which the purchase agreement grants the acquirer such extensive rights of influence over the target company before closing that control by other means under Art. 3 TLEO must already be examined as of signing.

No Cascade: Parallel Assessment of all Control Criteria

The assessment under Art. 1 TLEO is not exhaustive. The legal entity may not limit itself to identifying the holders of controlling interests. It must examine in parallel – and not merely on a subsidiary basis – whether other persons exercise control by other means (Art. 3 TLEO) or act in concert (Art. 4 TLEO). The cascade approach known from Art. 2a para. 3 AMLA does not apply here. This has a practical consequence: the inquiry of shareholders must be comprehensive and must not be limited to the size of the interest. In particular, shareholders’ agreements and informal voting arrangements must be covered. If several persons act in concert, the jointly held interest is decisive for the threshold (Art. 13 para. 2 TLEO).

A further departure from anti-money laundering law concerns domiciliary companies. Under anti-money laundering law, the beneficial owners of such companies are, in principle, the persons to whom the company’s assets are attributable – without any threshold. Art. 4 TLEA does not make this distinction and applies the 25 percent threshold uniformly to all legal entities within its scope. Anyone who adopts anti-money laundering findings for the register filing without scrutiny therefore risks over-reporting. That the register entry and anti-money laundering documentation may diverge is inherent in the system: Art. 56 lit. a TLEO expressly exempts differences resulting from divergent provisions of anti-money laundering legislation – in particular from the definition of the beneficial owner of a domiciliary company – from the financial intermediaries’ obligation to report discrepancies.

What must be reported

If the criteria are met, the legal entity must identify the person concerned in accordance with Art. 10 TLEO (name, date of birth, nationalities and place of residence; in addition, clarification of the AHV number (Swiss social security number) or – if none exists – a copy of an identity document). Under Art. 12 TLEO, the type of control must be stated – alone or in concert, direct or indirect, through an interest or by other means. Under Art. 13 para. 1 TLEO, the size of the interest must be stated within one of three ranges: at least 25 percent and up to 50 percent, more than 50 percent and up to 75 percent, or more than 75 percent. An exact figure is not required. Consequently, changes in the interest need to be reported only if they cause the interest to move above or below the limits of one of these ranges (Art. 39 para. 3 TLEO).

For simple structures, the Ordinance also provides for a simplified reporting procedure, in particular for limited liability companies (GmbH) whose members are exclusively natural persons exercising control through their capital holdings, and for single-shareholder stock corporations whose sole shareholder is also the sole member of the board of directors (Arts. 35 and 36 TLEO).

If no one reaches the threshold and there is no control by other means either, the most senior member of the managing body is deemed, on a subsidiary basis, to be the beneficial owner (Art. 4 para. 2 TLEA); depending on the organization, this is the chair of the executive management or the chair of the board of directors (Art. 20 para. 3 TLEO). This must be distinguished from the case where a beneficial owner exists but cannot be identified or verified: in that case, the available relevant information must be reported, together with the most senior member of the managing body as contact person (Art. 21 TLEO).

A Look at the EU

The EU Anti-Money Laundering Regulation (Regulation (EU) 2024/1624, AMLR), applicable from July 10, 2027, takes the same starting point: a beneficial owner is anyone who holds at least 25 percent of the shares or voting rights; reaching the threshold is sufficient. However, the differences run deeper than the common threshold might suggest. In addition to capital and voting rights, the AMLR also covers other ownership interests, including the right to a share of profits; it permits a risk-based lowering of the threshold and calculates interests through multi-tier chains, aggregating interests held through different chains. Art. 2 TLEO, by contrast, requires an interest of more than 50 percent at the intermediate levels, without multiplying the interests at the individual levels. A person who reaches 25 percent cumulatively across several chains without holding a majority at any level may therefore be a beneficial owner in the EU, but not under Arts. 1 and 2 TLEO. For groups with an EU nexus, this means that the assessment must be carried out independently under Swiss law; adopting foreign register or compliance findings may, depending on the circumstances, lead to over- or under-reporting.

Conclusion and Recommendations

Art. 1 TLEO is quick to read but not always quick to implement. In practice, a structured approach is recommended:

(i)    Determine whether there is genuinely no intermediate level, in particular no fiduciary arrangement.

(ii)    Calculate the capital ratio and the voting rights ratio separately, treating participation capital and voting rights provisions in the articles of association correctly.

(iii) Examine in parallel whether other persons exercise control by other means or act in concert.

(iv) Make the inquiry of shareholders comprehensive and expressly address fiduciary arrangements, usufructs and voting agreements.

(v)   Document the inquiries, responses, supporting documents and the legal entity’s own assessment in accordance with Art. 8 TLEA, keep them up to date and retain them for ten years after the person concerned ceases to be a beneficial owner.

Careful documentation is key. It enables the legal entity to demonstrate the diligence of its inquiries to the supervisory body, which reviews the entries on a risk-based and random-sample basis.

The consequences of non-compliance should not be underestimated: intentional breaches of the reporting obligations are punishable by a fine of up to CHF 500,000 (Art. 43 TLEA). If the reporting obligations are breached repeatedly or a breach is not remedied despite several requests, the supervisory body may also suspend the participation and financial rights of the shareholder or quota holder concerned (Art. 38 para. 2 TLEA).

Finally, the staggered transition periods under Art. 51 TLEA must be observed. If all beneficial owners are already entered in the commercial register as shareholders or quota holders or as officers, the period for the initial report is two years, i.e. until October 1, 2028. For other legal entities, periods of three to six months from entry into force apply, depending on their legal form and audit obligation.

If the commercial register entry is changed before the applicable transition period expires, the initial report must be made within one month of that change.

Companies that have not yet determined their ownership structure should initiate the necessary inquiries now – particularly if changes to the commercial register or transactions are planned in the coming months. We would be pleased to assist you in identifying beneficial owners and filing reports with the transparency register.

This article is part of our series on the new Transparency Act. An overview of the main changes can be found in the article “The New Transparency Act (TLEA): Overview of the Main Changes”. Subsequent articles will address control through an indirect interest (Art. 2 TLEO), control by other means (Art. 3 TLEO) and acting in concert (Art. 4 TLEO). For further reading: Vogel, Orell Füssli Commentary on the TLEA and the TLEO, 2027 edition.