Announcement: New Corporate Laws for Switzerland

In February 2022, the Swiss Parliament announced it was to adopt a corporate law bill that began its entry process in June 2020. The bill has a wide range of measure to update current corporate law.

One of the main amendments changes concerns shareholder General Meetings – both Ordinary and Extraordinary, be it in Switzerland or overseas, virtually and in person.

General Meeting Preparation

Convening

Once the law passes, those with a lower shareholding will now be able to call a meeting – it has gone from 10% to 5%; this figure also applies to private and other companies, not just public listed. Such a request must be made in writing with a list of items for the agenda and motions.

If the board does then not convene a meeting within sixty days of the request, shareholders may request one from a judge. Current law stipulates shareholders may submit a request to a judge if the board does not set out a reasonable timeframe.

Agendas and Motions

Previously, shareholders only with a combined value of one million CHF were permitted to attend. Now, shareholders holding a combined 0.5% may do so. For private and other companies, that threshold will now be 5%. These criteria also apply to who has the right to request motions on an agenda. These limits can be lower but not be higher.

Finally, any shareholder may submit a proposal for any agenda.

Information Acquisition

The new law stipulates that audits, financial statements, and annual reporting must be made available 20 days before the meeting. They are also required to be made available as digital files. If not available electronically, they must be delivered to them. Shareholders may not have a hard copy if they receive an electronic file.

Circular Resolutions

Written and electronic forms of resolutions are permissible unless shareholders wish to discuss them. Shareholders may consent to these, known as “circular resolutions,” if they consent but without participating, or participate in the decision. Previously, this was not allowed.

General Meeting Location

The decision where to hold the meeting is one the board of directors make. However, while deciding, they must not in any way complicate the meeting without due cause. If so, shareholders may challenge such a decision. Such meetings may be held in multiple places simultaneously. Where this is the case, audio or visual transmission must take place.

When Held Abroad

Meetings may take place outside of Switzerland on the condition that:

• It is permitted under the articles of association
• An independent representative is available

However, independent representatives may be a waived in the case of non-listed companies so long as all shareholders concur. The board will set the rules with regard to shareholder consent but only if not already existent in the articles of association.

It is not stated whether the new law requires shareholders to consent ahead of every General Meeting, or whether consent is presumed until revoked. Issues to consider when holding a General Meeting in another country:

• Notarized acts and legalizations must be certified by a competent authority or authorised public officer
• A required jurisdiction as stipulated in the Lugano Convention. In most cases the seat of the corporate body is valid. However, each country decides its own criteria and Switzerland may be considered a foreign jurisdiction

Electronic Media

Virtual Meetings

These are permitted so long as articles of association allow them, and the board appoints an independent representative. Non-listed companies may waive this requirement and do so in the invitation. Notarised resolutions are permissible so long as Cantonal Law does not forbid it. If so, companies are recommended to use a notary in the same canton. It is not required for the General Meeting chairperson to be in the notary’s office.

This may add flexibility for shareholders located in different countries. However, there will be less predictability as there will be more shareholders present and therefore more chance of a change of mind. Normally, a power of attorney granted before the General Meeting makes this less likely.

Media Use

A board of directors may now enable shareholders who are unable or unwilling to attend a General Meeting to vote electronically. The articles do not set out any particular provisions, and the competence to do so is left with the board.

It seems electronic voting is only permissible during a General Meeting which excludes shareholders from voting before it.

Electronic Media Conditions

The board must ensure:

• They can identify all participants
• Live broadcasts of interventions are possible
• Each participant may participate and make proposals
• Votes are not subject to fraud

In deciding which electronic medias to use, the board should account for the needs of the typical shareholder. A shareholder must be able to use the equipment.

Considerations Relating to Technical Difficulty

General Meeting must be re-held if they do not adhere to the new legal stipulations. Where there is only a temporary issue, a re-vote is required. However, if issue is determined to have not impacted the vote, no such re-vote is required.

If there is an ongoing problem that stops the General Meeting from running its course, a reconvention is required. A new date must consider the convenience of the majority of shareholders; the notice is not required to comply with the twenty-days’ requirement.

Resolutions passed before the fault remain valid and do not require a re-vote.

Telecommunications issues for a single shareholder is not a technical problem. However, if the same problem is a major telecoms company, and it impacts most shareholders, it may be classed as such.

Independent Representatives

These are appointed if:

• The board proposes a dependent person or a member of its corporate body to the company shareholders
• A General Meeting takes place outside of Switzerland and where not all shareholders agree to waive such an appointment
• A General Meeting is virtual and where the board does not waive such an appointment
• Articles of association permit shareholders represent other such shareholders, and where the shareholder requests such an appointment

Qualification Criteria

The independent representative shall not have his or her independence limited by certain criteria. Examples include:

• On the board of directors or other part of the company decision-making structure
• Has either a direct or a significant indirect influence over the company’s shares
• No claims of debt against or from the company
• Has a close relationship (blood or otherwise) with any member of the board or other person with a decision-making responsibility, or any substantial holder of shares
• Any duty that may imply dependence
• Where the person has a contractual interest in the conclusion of the vote or election
• Where the person has accepted either gifts or privileges for doing so

In Conclusion

The new law aims for greater flexibility and the authorisation of certain technologies ahead of General Meetings. Such measures aim to make attendance easier for most shareholders.

However, it has been noted that votes and elections that take place during such meetings will become harder to predict. This is because more shareholders may attend and take part in debates.

One final point, independent representatives are now mandatory in far more scenarios than previously.