On 19 June 2020, the Parliament in Switzerland approved the law on stock corporations, which aims to modernise Swiss corporate law and make the country even more attractive for business. This has been a long time coming, as the change was originally initiated in 2005. Whilst the law is not expected to be implemented until the end of 2021, companies have the interim period to adapt to the following changes.
General Shareholders Meetings – virtual meetings
Virtual general shareholders meetings will be possible, provided (i) the articles of association allow it and (ii) an independent proxy is appointed. For privately held companies the final requirement may be waived unanimously by the shareholders.
General Shareholders Meetings – holding abroad
Companies can hold their general shareholders' meetings abroad. Conditions do apply: (i) the articles of association allow for it, (ii) the holding of meetings abroad does not impede any shareholders in exercising their rights and (iii) an independent proxy is appointed. For privately held companies the final requirement may be waived unanimously by the shareholders.
General Shareholders Meetings – thresholds
It will become easier for shareholders to put items on the agenda of general shareholders meetings, to obtain information from the board, or to inspect the books of the company, as thresholds will be reduced.
Share capital – bandwidth
The law introduces flexible share capital, meaning the articles of association allow the board to increase or decrease the share capital up to 50% of the that listed with the commercial register. This will be possible for a maximum period of five years. Prior approval of the shareholders for the increase or decrease will not be required.
In addition, it will be possible to have shares with a nominal value below the currently required minimum of CHF 0.01. As long as it is higher than 0.
Share capital – foreign currency
Companies may have their share capital denominated in a foreign currency, if this is deemed essential for the business of the company. However, bookkeeping and accounting must then be kept in the same currency.
It will also become possible to pay dividends from profits of the current year.
Listed companies – gender guidelines
Each gender shall be represented by at least 30% on the board and 20% in executive management. If a company does not meet these requirements, no sanctions will apply. However, Switzerland takes the ‘comply or explain' approach: the reason why a company does not comply must be explained in the remuneration report. The start for reporting is 5 years – for the board – and 10 years – for executive management – after the law comes into force.
Listed companies - remuneration
The ordinance in force since 2014 will be replaced with the law.
This entails very few changes compared to current practice.
Commodity-trading companies subject to an ordinary audit will be required to prepare an annual report on payments to government agencies. The threshold for inclusion in the report is CHF 100,000.
The law will now be published, after which the referendum period of 100 days will start although it is not thought that a referendum will take place.
Entry into law is expected in the second half of 2021.
A transition period of two years will apply during which companies have the time to amend their articles of association and update their authorised share capital.
Companies should review their existing set-up in order to prepare for the potential impact of the amendments and where possible, make use of the new possibilities.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.