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10 August 2009
The last amendments to the rules on corporations entered into force on January 1 2008 (for further details please see "Regime Governing Swiss Corporations Is Revamped"). This update focuses on an upcoming revision of the law on corporations and new accounting legislation that will create standardized rules for all company forms in Switzerland. On December 21 2007 the federal government issued its opinion on the revision, which at present is under parliamentary debate. However, in light of the global financial crisis, the government has now extended the revision and has issued an additional opinion as a counter-proposal to a popular initiative submitted in 2008.
The revisions aim to:
This update considers the key aims of the revision.
Compensation and election of senior management
According to the federal government's opinion, the general shareholders' meeting shall be authorized to add rules to the articles of incorporation regarding the determination of compensation for the members of the board of directors and the issue of shares and options to employees. Furthermore, the shareholders' meeting shall approve the compensation of directors and persons related to directors of corporations listed on a stock exchange on an annual basis.
Contrary to the existing law, members of the board of directors shall be elected individually and annually. In addition, the new provisions will prevent members of the board of directors, or the management of exchange-listed corporations who are also members of the board of directors or management of another exchange-listed corporation, from exerting influence over their own compensation.
Right to disclosure
Shareholders of a non-listed corporation shall have a right to request a written report on the corporation's business at any time. Pursuant to the government's opinion, the board of directors must answer within 90 days, subject to the protection of business secrets.
The revised law shall also give shareholders the right to access information regarding the compensation paid to senior managers of privately held corporations.
Thresholds for exercising shareholder rights
The revision will considerably lower the thresholds for exercising certain shareholder rights, such as:
It is proposed that the thresholds shall be different for listed and non-listed corporations.
Obligation to reimburse unjustified benefits
Shareholders, members of the board of directors and the executive board and their related parties shall be obliged to reimburse unjustified benefits. In contrast to the existing law, it will no longer matter whether the person who received the unjustified benefits acted in good or bad faith.
Consent of general shareholders' meeting for board decisions
The articles of incorporation can provide that certain decisions of the board of directors need the consent of the general shareholders' meeting. According to the proposal, this may even be the case for decisions falling under the non-transferable and inalienable duties and responsibilities of the board of directors.
Securities lending or repurchase agreement
Pursuant to the bill, the corporation may refuse registration in the share register if the acquirer, upon the corporation's request, does not expressly declare that no securities lending or repurchase agreement exists.
Flexibility of Capital Structure
The second area of revision concerns the rules on capital structures, which shall provide for greater flexibility. The statutory provisions for the authorized increase of share capital shall be abolished. Instead, the general shareholders' meeting can, in the articles of corporation, authorize the board of directors to increase or reduce the share capital within a stipulated capital spread and a time period of three years.
The maximum capital may not exceed the registered share capital by more than half the registered share capital, as recorded in the Commercial Register. The minimum capital may not fall below half the registered share capital and cannot be less than the statutory minimum share capital of Sfr100,000. Moreover, the general shareholders' meeting may limit the discretion of the board of directors.
The statutory minimum par value for shares shall be abolished. Pursuant to the bill, shares need only have a nominal value of more than Sfr0.00.
Modernization of General Shareholders' Meeting
The legislation shall create a legal foundation for the use of electronic communications in preparing and holding the general shareholders' meeting. Two of the main aims are to reduce administrative costs and to facilitate shareholder participation.
Pursuant to the bill, the general meeting can be called by electronic means and shareholders can issue electronic proxies. Furthermore, the shareholders' meeting may be held virtually, without any physical meeting taking place, if all shareholders agree. In each case, the use of electronic means must be expressly stipulated in the articles of association.
Pursuant to the bill, shareholders' meetings may also be held in different places at the same time or abroad.
Revision of Accounting Requirements
The bill creates standard accounting rules for all forms of company. Nonetheless, the accounting requirements shall differ depending on the economic significance of the company. Therefore, in the Code of Obligations the relevant provisions will no longer appear under the heading of a specific type of company, but rather under Section 32 (book-keeping and accounting).
Most companies will have to establish annual financial statements composed of a profit and loss statement, a balance sheet and its attachment. Larger companies and groups of companies are subject to stricter rules and will be obliged to prepare an annual report and a cash-flow statement. Under certain circumstances the annual financial statements must be drawn up according to a private set of rules to give a true and fair representation of the company's actual financial circumstances - for example, if the company is:
The revision of the law on corporations is subject to intense parliamentary debate and Parliament is expected to introduce further changes. Thus, the revised law is unlikely to come into effect before 2011.
For further information on this topic please contact Markus Dörig or Philipp Schaller at BADERTSCHER by telephone (+41 44 266 20 66), fax (+41 1 266 20 70) or email (email@example.com or firstname.lastname@example.org).
The materials contained on this website are for general information purposes only and are subject to the disclaimer.
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