Organising shareholders meetings under the new Swiss corporate law rules
New provisions of the Swiss Code of obligations on corporate law came into force on 1 January 2023, notably concerning the holding of general meetings (GM) of corporate entities. This article focusses on the main changes in this respect and the opportunity of amending the company’s articles of association (AoA).
Several amendments of the new law are a confirmation of the temporary regime adopted during the pandemic to allow for more flexibility. The main changes compared to the regime prevailing so far in “normal times” are:
- A GM can be held abroad or in parallel at different locations.
- GMs can be held virtually.
- The GM may take decisions by circular resolution.
- Shareholders can exercise their rights at GMs via electronic means.
The above results in multiple formats in which GMs can now be held, namely (with indication of whether a specific clause in the AoA is required and conditions):
- In person GM at a physical location. Sub forms of this format can then be:
- All participants are in the same location (no specific clause required)
- Multisite meeting (no specific clause required). Condition: live audio-visual broadcasting at all meeting venues.
- Location outside of Switzerland (specific clause required). Condition: the appointment of an independent representative is required for listed companies. For non-listed companies, such requirement can be waived in the specific clause of the AoA. In case of decisions requiring authentication, Swiss notaries are not competent but authentic instruments issued abroad can be recognised.
- Virtual GM. Specific clause required. The appointment of an independent representative is required for listed companies. For non-listed companies, such requirement can be waived in the specific clause of the AoA.
- Hybrid GM with physical location. No specific clause required. It has to fulfil the conditions of both the in person and the virtual GMs, i.e. to guarantee the shareholders right to participate in person and the possibility to exercise their rights via electronic means. Direct voting must be possible for any participant (guaranteeing a vote via the independent representative is not sufficient).
- GM by circular resolution. No specific clause required. Only possible if no shareholder requires discussion. Rights are exercised in written or electronic form.
Electronic media can be used in GMs if they meet the following criteria: (1) participants can be identified; (2) speeches are broadcasted live; (3) participants can make proposals and take part in debates; (4) results of the vote cannot be falsified. Should technical issues attributable to the organising company (e.g. issues with the conferencing platform used) occur, votes have to be repeated even if the issue had no impact on the result.
Given the multiple formats that a GM can now have, any convening notice now needs to include, in addition to the date and time, the form and place of the GM.
As the benefits for the shareholders in terms of flexibility are numerous, we strongly recommend companies amending their AoA to include the options set out above. Especially shareholders living outside of Switzerland are likely to prefer participating in person to virtual GMs where they will feel more involved than being represented at a GM by a proxy if they cannot make their way to the physical location. Many shareholders will also have positively experienced direct participation at GMs during the pandemic. The strict legal frame on how remote meetings and votes have to be conducted are in our opinion sufficient to mitigate the risk that these new forms of holding GMs can be used to manipulate the outcome of votes. For shareholders concentrated in a country outside of Switzerland, they are likely to want to make use of the option to hold the GM in their country of residence.
Whilst making such amendments requires a GM to be held before a public notary, this should not be an obstacle to this process.
Companies now have two years, i.e. until 31 December 2024, to adapt their statutes and regulations to the new provisions. If a company does not make the necessary amendments within this time limit, the provisions of the articles and regulations which are still not in conformity with the new law shall be null and void.