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After the entry into force of the revised Swiss Corporate Law - what to watch out for

The new Corporate Law came into full force on January 1st, 2023, following the approval of the revision of the Corporate Law in June 2020 by the Parliament and the amendment regarding the introduction of gender benchmarks for management positions in large companies and stricter transparency rules for companies active in the extraction of raw materials. Contrary to what the name suggests, the revision of the Corporate Law also affects limited liability companies (LLC; GmbH). Among other things, more flexible regulations on incorporation and capital apply, there is greater flexibility in the organization of shareholders' meetings and quotaholders' meetings, and the share or quota capital can now also be denominated in foreign currency. In practice, however, what does this mean for your company, and what do you need to be aware of now that the Corporate Law has been revised?

Since your company's annual shareholders' meeting or quotaholders' meeting may be coming up soon, now is a good time to find out about the changes in the Corporate Law that entered into force and, in particular, to check whether any measures need to be considered:Sind die Statuten und/oder das Organisationsreglement anzupassen?

  • Do the articles of association and/or the organizational regulations need to be adapted?

  • Is there a need for action with regard to the preparation and conduct of the ordinary shareholders' or quotaholders' meeting, including the chairman's script, the minutes and the invitation to the meeting?

  • If a shareholders' or quotaholders’ agreement, respectively, or similar exists, should it be adapted to the new law?

  • Is there a need for a limited audit of the annual accounts due to a qualified capital loss?

The following changes of the Corporate Law are the main reasons for possible adjustments:

More flexibility in capital requirements

The share or quota capital may now be denominated in a foreign currency that is essential for the business operation (except cryptocurrencies); the shareholders' or quotaholders' meeting, respectively, may decide to change the currency in which the nominal capital is denominated at the beginning of a fiscal year. In such a case, the board of directors shall amend the articles of association.

The minimum nominal value of a share, which previously was CHF 0.01, and that of a quota, which previously was CHF 100.00, is now reduced to an arbitrarily small amount (greater than zero).

Furthermore, the new instrument of the so-called capital band has been introduced: The articles of association may authorize the board of directors or the management, respectively, of a company to increase or decrease the nominal capital as desired within a predetermined range (maximum plus 50% or minus 50% of the registered share capital) for a period of no more than five years. However, the decrease is subject to the condition that there is no opting-out, i.e. that the limited audit of the annual accounts has not been waived.

Similarly, the provisions on the intended acquisition of assets at the time of incorporation or capital increase have been abolished (no longer a qualifying matter). Under the new law, formation or capital increase reports and audit confirmations no longer need to be prepared for such cases. Disclosure in the articles of association and in the Commercial Register is also no longer required. There is, however, a reimbursement obligation if there is an obvious imbalance between the service and the consideration.

The shareholders' meeting or the quotaholders' meeting, respectively, may now decide on the payment of an interim dividend from the current financial year on the basis of interim accounts. In addition, the statutory capital reserve (premium and other contributions in excess of the nominal value) may be repaid to the shareholders or quotaholders, respectively, under certain conditions.

Possible forms of the General Meeting

The holding of shareholders' or quotaholders’ meetings, respectively, in writing or by electronic means without a meeting place now requires an amendment to the articles of association, as the Covid-19 Ordinance, which allowed this for the last two years, has been abolished. The following forms of shareholders' or quotaholders’ meetings, respectively, may now be provided for in the articles of association:

  • Authorization of the board of directors or the management, respectively, to hold a virtual general meeting (no meeting place, e.g. by videoconference)

  • Shareholders' or quotaholders’ meeting, respectively, abroad (foreign location)

In addition, the following is now possible:

  • Resolutions of the shareholders' or quotaholders’ meeting, respectively, may also be adopted by circular letter (in writing on paper or in electronic form) without complying with the general rules applicable to the convening of the meeting, unless a shareholder or quotaholder, respectively, requests an oral deliberation

  • A meeting held in more than one location is also permitted, provided that the voting is transmitted live in sound and vision to all the meeting locations

Strengthening of shareholder and minority rights

It is further good to know that the requirements for convening an extraordinary general meeting of shareholders and including items on the agenda have generally been made easier for shareholders, without any need for adjustment of the articles of association.

In addition, the capital or voting rights thresholds for information requests outside the shareholders' or quotaholders’ meeting, respectively, inspection of the company's books as well as the request for a special investigation or an action for dissolution have been lowered.

New Duties of the Management or the Board of Directors - Restructuring & Imminent Insolvency

The new Corporate Law now focuses on the liquidity of the company in connection with restructuring cases. The board of directors must continuously monitor the liquidity of the company and is now obliged to take measures to ensure solvency and, if necessary, to take further restructuring measures or to propose them to the shareholders’ or quotaholders’ meeting, respectively. However, in the event of a qualified capital loss (i.e. if the assets less the liabilities do no longer cover half of the sum of the share capital, the statutory capital reserve not repayable to the shareholders and the statutory profit reserve), the convening of a general meeting of restructuring is no longer mandatory.

It is important to note, however, that annual accounts showing such a half capital loss must be audited, even if the company does not have an auditor (limited audit).

Adjustment of Articles of Association, Regulations and Agreements - Time Horizon

Your company now has two years – i.e. until January 1st, 2025 – to adapt its articles of association and any regulations to the new law. However, if you wish to take advantage of the new possibilities – such as the virtual shareholders' meeting or the capital band – this should be included in the articles of association at the next shareholders' or quotaholders’ meeting, respectively. Please note, however, that such an amendment to the articles of association requires the presence of a notary public at the relevant meeting.

Furthermore, you should verify within those two years whether the already existing contracts (e.g. shareholders' agreements or contracts with members of the company’s board of directors or management) comply with the new law; after the transition period expires, any contractual provisions that conflict with the new law will be invalid.

We shall be happy to assist you in this matter so that you can adapt your articles of association and any other documents to the new legal situation in accordance with your requirements.

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