Revision of the Swiss Corporate Law: Shareholders' meeting and resolutions (part 1)
The revCO does not change the parity principle of Swiss corporate law, according to which there is a clear separation and allocation of the competencies, powers and duties between the shareholders' meeting and the board of directors, many of which are and remain untransferable and inalienable, without the possibility of one of these bodies overruling the other, despite the fact that there is a shift of certain important competencies from the board of directors to the shareholders' meeting, namely in the case of listed companies, and a moderate extension of the shareholders' participation rights.
Ordinarily, the shareholders' meeting takes its resolutions with the absolute majority of the voting rights represented by the shareholders or their proxies.
The revCO now extends the existing list of so-called "important resolutions" of the shareholders' meeting which require a qualified majority, i.e., (i) two thirds of the share votes represented and (ii) the majority of the par value of the shares represented:
- the amendment of the company's purpose;
- the consolidation of shares in the case of listed companies, which under current law requires the consent of all shareholders, that is very difficult, if not impossible, to obtain; while the consent of all shareholders will continue to be required also under the revCO in the case of companies whose shares are not listed;
- the capital increase against equity of the company, against contributions in kind by the share subscriber or by offsetting against a receivable of the share subscriber (e.g., conversion of a loan into share capital), and the granting of special benefits to the share subscriber; while it is being questioned under current law whether the company may issue new shares against receivables of the share subscriber which are no longer fully covered by the company's assets, the revCO will explicitly allow it, thus permitting the company to reduce its over-indebtedness, because it does not disadvantage the company's other creditors; however, pursuant to the revCO all capital increases by offsetting a receivable will require the aforementioned qualified majority; furthermore, the articles of association need to state the amount of the receivable offset, the name of the shareholder and the shares issued against it; the revCO does no longer list and abolishes the so-called "acquisition of assets" (Sachübernahme), which, if intended (beabsichtigt) or performed in the context of a capital increase, under current law requires the aforementioned qualified majority and needs to be disclosed in the minutes (public deed), the articles of association and in the commercial register;
- the restriction or cancellation of the subscription right;
- the introduction of conditional capital, the introduction of a capital band or the creation of reserve capital in accordance with the Swiss law on banks in the articles of association; the revCO abolishes the authorized share capital authorizing the board of directors in the articles of association to increase the existing share capital by not more than 50% within not more than two years and introduces the capital band authorizing the board of directors in the articles of association to increase and/or decrease the share capital within a certain bandwidth not to exceed 50% of the existing share capital and, in any event, not to be lower than the minimum share capital of CHF 100,000, and within not more than five years;
- the conversion of participation certificates into shares; the requirement of the qualified majority will become explicit under the revCO, but it is implicitly required already under current law, because it entails the exclusion of the subscription rights of the existing shareholders, which requires such a qualified majority;
- the restriction of the transferability of registered shares in the articles of association;
- the introduction of voting shares (Stimmrechtsaktien, actions à droit de vote privilégié, azioni con diritto di voto privilegiato) with a par value lower than that of ordinary shares);
- the change of the share capital's currency;
- the introduction of the casting vote of the chairman of the shareholders' meeting in the articles of association;
- the introduction of a provision in the articles of association allowing to hold the shareholders' meeting abroad (outside Switzerland);
- the delisting of the company's equity securities; under current law the resolution regarding the delisting from a stock exchange is in the competence of the board of directors, unless otherwise provided for in the articles of association; given the serious impact of the delisting on the shareholders' legal position – e.g., sale of shares becoming more difficult, accounting rules being less strict, audit of annual financial statements no longer being mandatory, ad hoc and other publicity requirements no longer being applicable – the revCO allocates this power to the shareholders' meeting and requires the aforementioned qualified majority for any resolution in this regard;
- the relocation of the company's registered office;
- the introduction of an arbitration clause in the articles of association;
- the waiver of the appointment of an independent proxy for the holding of a virtual shareholders' meeting in the case of companies whose shares are not listed on a stock exchange;
- the dissolution of the company.
Current law allows the shareholders' meeting to introduce provisions in the articles of association requiring for certain of its resolutions higher majorities than those provided for by law. I.e., higher than the aforementioned qualified majority for "important decisions" and higher than the absolute majority of the voting rights represented for any other decisions. The introduction of such provisions is explicitly subject to a shareholders' resolution taken with the same higher majority. While it is common understanding that not only the introduction, but also the amendment and the repeal of such provisions is subject to the same higher majority, the revCO explicitly states it.
The articles of association namely of smaller companies often foresee such higher majorities, by which they are granting minority shareholders blocking rights on certain issues.
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.