The new company law, which comes into force on January 1, 2023, brings many changes. In our current blog series, we present them in detail.
However, some innovations can only be beneficial if they are properly adapted by the general assembly. In some cases, this requires a qualified majority. The already existing legal catalog of these so-called “significant resolutions” has, however, also been expanded with reference to transactions that have nothing to do with the specific changes of the company law revision. However, these also deserve attention.
… as part of specific changes
Art. 704 par. 1 of the Swiss Code of Obligations (“CO”) lists under the heading “Important resolutions” the items for which a decision of the general meeting of shareholders requires at least two-thirds of the votes represented and a majority of the nominal value of the actions represented.
As part of the specific changes to the new company law, the following transactions have again been included in the list of Art. 704 par. 1 revCO:
Point 5: the introduction of a capital band;
Item 9: change of currency of the share capital;
Point 10: the introduction of the casting vote of the president at the general meeting;
Point 11: the introduction of a provision in the articles of association relating to the holding of the general meeting abroad;
Point 14: the introduction of an arbitration clause in the statutes;
Point 15: waiver of the appointment of an independent proxy for the holding of a virtual general meeting of shareholders for companies whose shares are not listed on the stock exchange.
We have already pointed this out in our blog post of January 24, 2022 (“The new Swiss company law will come into force on January 1, 2023”) that resolutions to amend the articles of association with a view to adapting them to the new company law can already be adopted before January 1, 2023 (so-called scheduled and conditional amendments to the articles of association). However, publication EHRA 1/22 of the Federal Office of the Commercial Register (“EHRA”) of January 17, 2022 concerning amendments to the articles of association in view of the revision of Swiss company law does not contain any statement as to whether the revised version of art. 704 par. 1 CO must already be complied with in this context, although it is not yet formally in force. However, this must be affirmed. It would be contrary to the system and could be qualified as circumvention if, for example, the introduction of an arbitration clause in the articles of association could be resolved by a simple majority in 2022 with effect from 1 January 2023, although a qualified majority would be required for this purpose by the new company law.
… in reference to other new items added to the list
However, the catalog according to art. 704 par. 1 revCO has also been extended to include elements that are not related to specific changes in the new company law:
Point 2: the consolidation of shares, insofar as this does not require the agreement of all the shareholders concerned;
Item 3: capital increase by compensation with a claim;
Point 6: conversion of participation certificates into shares;
Point 12: the cancellation of the company’s capital securities.
According to the legislation in force, the consolidation of shares requires the agreement of all the shareholders concerned (art. 623 al. 2 CO). In the case of listed companies with large shareholders, this leads to insurmountable obstacles, for example in the event of reorganization, and is therefore inappropriate. According to the new law, the consent of all shareholders concerned is only required for companies not listed on the stock exchange (Art. 623 para. 2 revCO). For companies listed on the stock exchange, on the other hand, a decision of the general meeting by qualified majority is sufficient (art. 704 al. 1 no. 2 revCO).
According to the current law, it was already possible to carry out a capital increase by offsetting against a claim (so-called contributions by way of offsetting). In doctrine and practice, however, it is disputed that receivables that are no longer fully covered by the assets of the company can also be used as a contribution during an increase in share capital. Art. 634a para. 2 revCO now explicitly allows this, since the other creditors are not disadvantaged by this procedure and the company can thus partially or completely reduce the over-indebtedness. At the same time, however, Art. 704 par. 1 point 3 revCO requires that all contributions by compensation be decided by the general meeting by qualified majority. In addition, the amount of the claim to be offset, the name of the shareholder and the shares to which he is entitled must now appear in the articles of association (art. 634a al. 3 revCO). Depending on one’s point of view, the new company law thus provides welcome clarifications or new, less welcome obstacles in terms of contributions by way of compensation.
In practice, the conversion of participation certificates into shares already requires the approval of the general meeting by qualified majority. Indeed, it concerns the exclusion of the subscription right of existing shareholders, which currently requires a qualified majority and will remain so in the future (art. 704 al. 1 ch. 6 CO). However, the aforementioned conversion is now expressly regulated (Art. 704 para. 1 no. 6 revCO).
Unless otherwise provided in the articles of association, delisting can now be decided by the board of directors (art. 716 al. 1 CO). However, the delisting represents a serious violation of the legal position of the shareholders, since the shares can no longer be sold on the stock exchange, there is a risk of stricter restrictions on transferability, transparency requirements are reduced (for example, no ad hoc publicity and less accounting requirements) and it is no longer mandatory to have the annual financial statements audited. Due to these important economic and legal consequences, the decision to strike out will be explicitly an inalienable competence of the general meeting and subject to a qualified majority (art. 704 al. 1 point 12 revCO).
… according to the statutes
Under the new company law, the general meeting is also empowered to introduce into the articles of association provisions requiring a majority greater than that provided for by law. In addition, the catalog of elements requiring majority resolution may be expanded. The introduction of such provisions into the articles of association requires the corresponding majority. In practice, this has already applied to amendments and repeals of such provisions of the articles of association. However, this is now explicitly anchored in the new law (art. 704 al. 2 revCO).
These statutory quorums are of great practical importance for SMEs. They allow tailor-made solutions for the specific circumstances of the company and the legitimate claims of shareholders or groups of shareholders, some of which differ in various respects. In particular, minority shareholders may be granted a blocking minority adapted to the particular circumstances.