Revision of the Swiss Corporate Law: Share Capital – General
The revCO extensively and to some extent materially amended the legal framework in connection with the provisions on the share capital. Inter alia, the authorized capital has been replaced by the so-called capital band and several provisions on the conditional capital as well as the ordinary capital increase and decrease have been amended. In the following newsletters we shall systematically look at the relevant changes. Hereafter, we shall start with certain smaller general amendments as well as the new rules on the denomination of the capital in foreign currency.
1. General Amendments
The revCO has implemented the following amendments to the law with respect to the share capital:
- Minimum nominal value: The minimum nominal value of shares is no longer set at CHF 0.01, rather it only needs to be greater than CHF 0.
- (Intended) acquisition in kind: The rules on the (intended) acquisition in kind ("beabsichtigte Sachübernahme") in connection with the payment of the contribution for newly issued shares of a company have been deleted. Therefore, founders and, in the case of a capital increase, shareholders are no longer required to go through the (burdensome) so-called qualified incorporation respectively capital increase if (after its constitution respectively the capital increase) the company intends to buy assets from the founders respectively shareholders or their close associates.
- Contribution by set-off: The contribution of the share capital by set-off of receivables was already permitted prior to the entry into force of the revCO. The law now specifies that the contribution requirements are satisfied even if the receivable is no longer covered by assets (i.e. may no longer be valued at its full nominal value). Furthermore, the revCO also added certain disclosure obligations, whereby the articles of association of the company are required to indicate (i) the amount(s) of the claim(s) being offset, (ii) the name(s) of the shareholder(s) and (iii) the number and category of shares received by said shareholder(s) (the same provisions apply for capital increases from equity capital). These pieces of information may only be cancelled from the articles of association 10 years from the conversion.
- Contribution in kind: Founders and, in the case of a capital increase, shareholders may still satisfy the contribution requirements in kind (i.e. by contributing assets instead of cash). The revCO does not bring any material amendments to the requirements relating to the assets to be contributed, but codifies the current practice, explicitly setting them out:
- The items (to be contributed) may be entered as assets on the balance sheet;
- They must be transferrable to the company;
- Upon registration with the commercial register, the company immediately acquires ownership and may freely dispose of the items or, in the case of immovable property, receives an unconditional right to be entered in the land register as owner; and
- The items' value may be realized by transfer to a third party.
- Participation capital: While for non-listed participation capital (non-voting shares), the maximum limit remains an amount equal to double the share capital as set out in the commercial register, for listed participation capital the limit has been increased to ten times the registered share capital.
2. Foreign currency capital
Since the revision of the financial reporting law in 2013 companies are permitted to carry out their accounting in the national currency (the Swiss francs) or in the currency required for business operations (the so-called "functional currency"). This option has been adopted mostly by (listed) companies with a broad international business. However, the capital of the company as well as other metrics related to it (such as, for instance, the appropriation of results as well as the reserves etc.) still had to be shown in Swiss francs, which resulted in difficult questions relating to exchange rate differences.
Pursuant to the revCO, Swiss companies may now decide to denominate their share capital in a foreign currency, as long as the foreign currency is the functional currency to the company's business. At the time of establishment of the company, the capital (in foreign currency) must have a value equivalent to at least CHF 100'000. Furthermore, the accounts must be kept and the financial reports must be filed in the same (foreign) currency. The federal council may from time to time specify which currencies are admitted (as of today, the admitted foreign currencies are: the euro, the US-dollar, the British pound and the Japanese yen).
The shareholders' meeting may, with a qualified majority (cf. our newsletter "Revision of the Swiss Corporate Law: Shareholders' meeting and resolutions"), resolve to change the currency of the share capital at the start of any financial year. Thereafter, the board of directors has to proceed with the amendment of the articles of association and confirm the compliance of the company with the requirements for the change of the currency as well as specify the exchange rate which was applied.
Should you have any questions regarding the revCO or should you require any assistance in corporate matters, please do not hesitate to contact our specialists in Geneva, Lugano or Zurich. We would be more than happy to assist you.