Transparency Register in Deals: Five Points for M&A and Investor Agreements

Companies must determine which natural persons are their beneficial owners and report them to a federal Transparency Register. Looking only at shareholding percentages falls short: in addition to control through a shareholding of at least 25%, it must always be examined whether someone controls the company ‘by other means’, and this must be done in parallel, not only once no one reaches the 25% threshold.

An example: the founder of a start-up holds 60% and a growth investor 18%. In the shareholders’ agreement, all shareholders have undertaken to resolve on capital increases and the raising of debt only with the investor’s consent. The founder must be reported on the basis of her shareholding, and the investor additionally on the basis of its veto right, even though they hold less than 25%. If the investor is a company or a fund, the natural persons who ultimately control it must be reported. In transactions in particular, contract drafting therefore helps determine who appears in the register. The following five points show what matters.

1. Know the veto catalogue and structure it deliberately

Under Art. 3(1)(b) TLEO, a veto right automatically constitutes control if it concerns one of five matters for resolution: amendment of the company’s purpose, election of the management (meaning the executive management, not the board of directors), amendment or extension of the corporate strategy, budgets and investment planning, and financing through equity or debt. A single one of these matters is sufficient. The size of the shareholding is irrelevant. Nor does it help to argue that the right has never been exercised or that it merely serves to protect one’s own investment. A business angel holding 8%, whose consent to the annual budget and the investment plan is reserved under the shareholders’ agreement, is therefore subject to the reporting obligation: without that person, the company simply cannot adopt its planning.

Because this list is exhaustive, it opens up genuine room for maneuver in contract drafting. Investors can also protect themselves effectively outside the five matters, for example through consent requirements for structural measures, anti-dilution protection or consent rights for related-party transactions. Likewise, not covered are vetoes over other amendments to the articles of association, mergers, liquidations, relocations of the registered office or restrictions on the transferability of shares, provided that the company’s purpose remains unaffected. As a rule, such pure minority protection rights do not confer influence comparable to a 25% shareholding. Hybrid forms require closer scrutiny, for example a veto over individual investments of CHF 10 million or more outside the actual investment planning. A simple guiding question helps here: can the company form and implement its strategic will even if the shareholder concerned says no? However, the room for maneuvering has its limits. A quorum tailored to a specific person (such as 76% where a shareholding is exactly 25%) is treated like an expressly granted consent right. And anyone who merely sidesteps the rules formally while still pulling the strings will be caught in any event.

2. Does the clause block the resolution or does it merely have contractual consequences?

What matters is how a clause operates. If, in the event of a breach of contract, a lender can merely terminate or accelerate the loan, the company remains free to pass its resolution; there is then no veto within the meaning of the Ordinance. If, on the other hand, the resolution of the competent body cannot be passed at all without the lender’s consent, the requirement is met. Customary loan conditions (so-called covenants), for instance on compliance with certain financial ratios, therefore do not constitute control. The position is different where a consent requirement is structured as a genuine reservation over the resolution, in particular where it is anchored in the articles of association or secured by a voting agreement among the shareholders.

Conditional rights should also be kept in view. If a bank reserves the right to remove the managing director should certain covenants be breached, there is no control as long as the covenants are complied with. However, if the bank activates its right following a breach, control by other means may exist. What must then be reported is not the bank itself but the natural person behind it; if the bank is listed, reporting the bank is sufficient. Companies must therefore continuously monitor compliance with their covenants.

3. Board seats, attendance quorums and earn-outs

Anyone who can appoint more than half of the members of the board of directors controls the company without further examination. The designation of the body is irrelevant: in a limited liability company (GmbH), for example, it is sufficient if a member holding 20% can appoint two of the three managing directors because the other members have undertaken in a members’ agreement to elect that member’s candidates; the same applies to foreign companies without a board of directors. By contrast, the right to nominate individual members is not sufficient. Nomination rights should therefore remain below a majority. Caution is required with attendance quorums: if the board of directors cannot form a quorum without the appointed representative, this may in economic terms amount to a veto position. Finally, earn-out arrangements, i.e. purchase price components that depend on the future performance of the business, should be scrutinised. Where they are combined with participation rights, such as consent requirements for strategic decisions, budgets or investments, this may already constitute control by other means.

4. Timing: signing, closing and reporting deadlines

In a share purchase, weeks or months often pass between signing and closing. For the Transparency Register, it is in principle only closing that counts: control arises when the shares have actually been transferred and, in the case of registered shares with restricted transferability, only once the company has also given its consent. This differs from the stock exchange disclosure obligation for shareholdings in listed companies under Art. 120 FMIA, which is already triggered at signing. An exception is conceivable where the purchase agreement very significantly restricts the target company’s management in favour of the buyer until closing. It must then be examined whether the buyer already acquires control by other means at signing. Where the acquisition is made through a specially incorporated acquisition vehicle (NewCo), the target company must identify the beneficial owners of the NewCo and its chain of control. In private equity structures with several fund layers, this means tracing the chain back level by level to the natural persons.

The deadlines are short. The new shareholder must notify the company of the control within one month of it arising. Anyone who controls the company by other means without being a shareholder reports directly to the company. The company, in turn, must pass the change on to the register within one month of becoming aware of it. A special rule applies during the initial phase: as long as the company has not yet made its initial report and the transitional period is running, a change need not be reported separately; the initial report is then made with the current persons. However, caution is required if the board of directors is replaced or the articles of association are amended at closing: the first change in the commercial register shortens the deadline for the initial report to one month. The purchase agreement should therefore expressly provide who is to arrange which report and what information the parties are to provide to each other for that purpose.

5. The register belongs in due diligence and the purchase agreement

The target company’s Transparency Act compliance now belongs in every due diligence. The first step is to check whether a report has been made to the Transparency Register and whether there are any obvious deficiencies; a full review of the substance is usually not even possible for the buyer. It is also relevant whether the efforts to identify the beneficial owners have been properly documented and whether any proceedings by the Control Office are pending. Under the Ordinance, the CEO or the chair of the executive management is in principle responsible; only where there is no separate executive management is it the chair of the board of directors. This is particularly relevant if that person remains in office after closing. Shareholders’ agreements, side letters and investor agreements should also be reviewed for clauses that confer control. As regards legacy issues, there is some reassurance: if former shareholders breached their reporting obligation, responsibility in principle lies with them personally; the target company is not jointly and severally liable for it. The position is different if the target company itself failed to carry out the required verification.

In the purchase agreement, a warranty that the register entry is correct and up to date, together with an indemnity for breaches from the period before closing, is therefore advisable. The sanctions show what is at stake: anyone who willfully breaches the reporting obligations risks a fine of up to CHF 500,000. This is in principle imposed on the natural persons acting, not on the company. In practice, the administrative measures are often more drastic: if reporting obligations are breached repeatedly or deficiencies are not remedied despite repeated requests, the Control Office may suspend the participation and property rights of the shareholders concerned, for example their voting and dividend rights.

Conclusion

Since 1 October 2026, governance rights in M&A and investor agreements have taken on an additional dimension: they help determine who appears in the Transparency Register. They should therefore be structured deliberately and documented carefully. The good news: only a willful breach of the reporting obligations is a criminal offence. Anyone who, in a borderline case, reaches a justifiable, reasoned and documented assessment will therefore generally not be acting willfully. Conversely, reporting ‘too much’ as a precaution is not a risk-free shortcut, because anyone who has been wrongly registered must first obtain a correction. What remains decisive is a careful and comprehensibly documented assessment of the individual case.

How MLL Legal can help

MLL Legal advises investors, buyers, sellers and companies on structuring investor and purchase agreements in compliance with the Transparency Act, on due diligence and on coordinating reporting obligations around signing and closing. Please do not hesitate to contact us.