New Corporate Law: General meeting under the new company law – what is changing? (no. 2)

7 March 2022 New Corporate Law: General meeting under the new company law – what is changing? (no. 2)

The new company law, which comes into force on 1 January 2023, brings many changes. In our current blog series, we present these in detail.

Until the COVID pandemic, Swiss company law knew only one form of general meeting: the general meeting, at which the shareholders or their representatives physically meet.

COVID-19 Regulation 2 gave companies the option of holding the general meeting in writing, in electronic form or with an independent representative. This flexibility for holding the general meeting introduced by COVID-19 Regulation 2 was continued with COVID-19 Regulation 3 and will remain in place until December 31, 2022.

As of January 1, 2023, new forms of general meeting introduced by the new company law will be possible. In this blog post, we present these new general meeting possibilities and explain which actions companies should already take in the current year if they want to fully benefit from the greater flexibility as of next year.

What are the new forms of the general meeting under the new company law?

Virtual general meeting
A virtual general meeting is held without a physical meeting place and exclusively by electronic means. Since the principle of physical immediacy is completely removed, the virtual general meeting requires a provision in the articles of association. Furthermore, the board of directors must designate an independent representative in the notice convening the general meeting. However, non-listed companies may waive the requirement for an independent proxy in their articles of association.

Hybrid general meeting
A hybrid general meeting is when shareholders at a general meeting with a physical venue have the opportunity to exercise their rights without physical attendance using electronic means (direct voting). The board of directors decides on the holding of a hybrid general meeting. This does not require a provision in the articles of association. A distinction must be made between hybrid general meetings and the use of electronic voting devices at a physical general meeting (televoters) and the mere transmission of a physical general meeting via webcast without the possibility of interaction, both of which will not be covered by the concept of electronic means within the meaning of the new company law.

General meeting at several meeting locations
The venue of the general meeting is determined by the board of directors (unless the articles of association provide otherwise). Under the new law, the general meeting may be held simultaneously at different locations. In such a case, the votes of the participants must be transmitted directly in sound and vision to all meeting locations. It is essential that the determination of the place of the meeting does not make it unreasonably difficult for any shareholder to exercise his rights. No provision in the articles of association is required for holding the general meeting at several locations.

General meeting abroad
The general meeting may now also be held abroad if the articles of association so provide and the board of directors designates an independent representative in the notice convening the meeting. The appointment of a representative may be waived in the case of non-listed stock corporations, provided that all shareholders agree.

It is questionable whether a general meeting with several meeting locations in Switzerland and abroad qualifies as a general meeting with a foreign meeting location and therefore requires a provision in the articles of association. If a company wants to ensure that its general meeting with several meeting locations in Switzerland and abroad is in compliance with the law, it would have to amend its articles of association accordingly.

In principle, a company has its main tax domicile at the place of actual management. The holding of the general meeting abroad could, under certain circumstances, be an indication that the place of actual management is not in Switzerland but abroad. We therefore recommend seeking tax advice before including a corresponding clause in the articles of association.

Universal shareholders' meeting
The universal shareholders' meeting was already permissible under the currently applicable company law. Provided that all shareholders or their representatives attend the general meeting and no objection is raised by a shareholder or his representative, the general meeting can be held without complying with the rules applicable to convening the general meeting. The universal meeting can be physical, hybrid or virtual.

General meeting by circular resolution
Under the new law, it is permissible to pass general meeting resolutions in writing or in electronic form, provided that no shareholder requests an oral discussion. The rules for convening the general meeting do not have to be complied with, and a corresponding provision in the articles of association is not required. However, all shareholders must agree on the method of passing resolutions. Consent can be either implied, in that the shareholder participates, or explicit, even if the shareholder does not actively participate in the passing of the resolution. It is advisable to set a time limit for casting votes or requesting that oral discussion be held.

What are the requirements for the use of electronic means?

The board of directors regulates the use of electronic means, unless the articles of association contain specific provisions to this effect. To ensure that technical innovation is not impeded or prevented, the law merely sets the basic requirements for the use of electronic means.

It must be ensured that every shareholder can actively participate in the discussion and submit motions, and that the votes at the general meeting are transmitted immediately. The board of directors must also ensure that the identity of the participants is known and that the voting results cannot be falsified. A requirement for participation by video/image has been waived. Whether the general meeting can also be held as a telephone conference depends on whether a way can be found to establish the identity of the participants.

If technical problems occur during the general meeting, the vote or the election of the board of directors must be repeated. If the technical problems cannot be resolved during the general meeting, it must be held at a later date. However, resolutions passed by the general meeting before the technical problems occurred remain valid. If the technical difficulties (hardware and software problems or problems with internet connection) occur at the shareholder's premises, the shareholder concerned bears the risk. However, area-wide problems of a major telecommunications company cannot be assigned to the risk of the individual shareholder, as this may affect a significant proportion of the participants.

The shareholders have no right to demand the form or place of the general meeting; changes to the right to request the convening of a general meeting and propose items on the agenda, and casting vote by the chairperson

It should be noted that, although the new company law permits many new forms of holding the general meeting, the shareholder (still) has no right whatsoever as to the manner and location of the general meeting. The only reservation in this respect is that the determination of the meeting place must not make it unreasonably difficult for any shareholder to exercise his rights in connection with the general meeting. In particular, the shareholder has no right to cast his vote in writing or electronically if the board of directors does not provide for this. In such cases, the shareholder is still dependent on attending the general meeting himself, on sending a representative or on issuing instructions to the independent representative or corporate representative (in the case of non-listed companies) regarding the casting of votes.

In the case of listed companies, the appointment of an independent representative is mandatory. In the case of unlisted companies where the articles of association provide that a shareholder may only be represented at the general meeting by another shareholder, the board of directors are obliged to appoint an independent representative or a corporate representative at the request of a shareholder.

In the case of listed companies, shareholders representing 5 percent of the share capital or votes will be entitled to request the convening of a general meeting, while for all other companies the threshold of 10 percent continues to apply. Shareholders of listed companies who represent 0.5 percent of the share capital or votes will have the right to request an agenda item. For all other companies, a threshold of 10% will apply (instead of a nominal value of CHF 1 million as before).

Finally, it is worth mentioning that the articles of association may newly provide for the chairperson to have the casting vote in the event of a tie.

In which cases is an early amendment of the articles of association appropriate?

An amendment to the articles of association is required if a company wishes to hold the general meeting virtually or abroad.

Companies that would like to seamlessly benefit from the possibility of a virtual general meeting also in 2023, which is permitted without a provision in the articles of association until December 31, 2022 due to COVID-19 Regulation 3, or that already want to hold the first general meeting abroad in 2023, must already create a corresponding provision in the articles of association this year for the year 2023. As we pointed out in our introductory blog to the new company law, the articles of association can already, in the current year, be conditionally adjusted or adjusted specifying a fixed date when the change comes into force, so that the general meeting can already be held virtually or abroad as of January 1, 2023.

The required amendments to the articles of association can also be resolved in 2023. However, the corresponding general meeting to amend the articles of association as of January 1, 2023 cannot be held virtually or abroad.

If a company wishes to benefit only from the new possibilities of the hybrid general meeting or the general meeting by circular resolution (in writing or electronically) as of 2023, it does not have to amend the articles of association.

If you have any questions, please do not hesitate to contact our team, especially our civil law notaries.

Other articles in the series: