At the end of March, the Federal Council submitted amendments to various federal laws to the developments in technology for consultation. In the future, rights shall be displayed and transferred by law using DLT technology. The Federal Council emphasizes that the current law already offers a lot of flexibility and possibilities, but that selective adaptations are necessary for the implementation of promising DLT- and blockchain-based applications, in particular to increase legal certainty and to remove hurdles. In particular, the focus is on corresponding changes in general securities law with the introduction of the category of so-called DLT-registered uncertificated securities.
Securities law is governed by Art. 965 et seq. Code of Obligations (CO) and defines the concept of a negotiable security as “any instrument to which a right attaches in such a manner that it may not be exercised or transferred to another without the instrument”. Consequently, for the transfer of ownership of the certificated (negotiable) security, the transfer of the instrument itself is mandatory. Such physical documents are unusual in the digital environment. Therefore, uncertificated securities within the meaning of Art. 973c CO are more and more often issued. Such dematerialized uncertificated securitiesare linked to a constitutive entry in the uncertified securities register which is non-public. An electronic book-keeping of the register is sufficient. However, the transfer of uncertificated securities requires a written declaration of assignment in accordance with Art. 973c para. 4 CO (Art. 165 CO). Alternatively, uncertificated securities can be transferred informally by means of a transfer agreement involving the debtor as well as the assigning and acquiring creditor (“tripartite transfer agreement” as used on the daura platform).
The rules governing the securitization of rights (cf. Federal Act on Intermediated Securities (FISA) and Art. 973a-973c CO) are now to be adapted and revised again New Art. 973d et seq. of the CO are intended to take a further step towards dematerialization. With the DLT- uncertificated securities, an electronic registration of securities based on Distributed Ledger Technology will be possible in the future. A new category will be introduced in addition to the traditional forms of securities, i.e. certificated (negotiable) securities according to Art. 965 CO and uncertificated securities according to Art. 973c CO. Following the securities and in contrast to the uncertificated securities, the DLT-uncertificated securities will grant the three traditional functions of securities: legitimation, transport and traffic protection function. DLT-uncertificated securities shall be uncertificated securities with the character of a certificated (negotiable) security. The prerequisite is that the rights are displayed in a distributed electronic register based on DLT technology, meeting certain requirements, and that the parties entitled and obliged by the right previously have agreed to this registration. In this context, the margins of Art. 973c CO will be adjusted, so that it will be made clear that the uncertificated security is a "right without securities character". With this legal qualification of the DLT-uncertificated security, decentrally registered rights are to be asserted and transferred exclusively via the register. Therefore, the transfer of the DLT-uncertificated security off-chain, i.e. outside the register, is excluded. Also, the draft consultation does not provide any more detailed requirements concerning the establishment and maintenance of such registers. Thus, it is basically permitted for anyone to operate and/or use a corresponding DLT register. As in the case of securities, the DLT-uncertificated securities or tokens embody obligatory claims. If - contrary to the statutory provision - existing physical securities (e.g. share certificates) are additionally issued as DLT-uncertificated securities, the draft consultation provides for a priority regulation according to which the physical security takes precedence over the receipt in good faith of a DLT-uncertificated security. Finally, the draft consultation remains silent on the concrete design of the register infrastructure. This is primarily left to the industry, whereby new Art. 973d CO provides for the competence of the Federal Council to introduce minimum requirements for the distributed electronic register.