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.
Right to information and inspection
One of the objectives of the reform of the company law is to strengthen shareholders' rights. As far as the fulfilment of the shareholder's right to information is concerned, a backlog was identified in the case of companies not listed on the stock exchange. While listed companies are subject to an ad hoc publicity obligation, i.e. events that could change the price of a share beyond the fluctuations customary in trading must be communicated immediately and clearly, in contrast the right of shareholders of unlisted companies to information was previously limited to requesting information from the board of directors on the company's affairs and from the auditors on the conduct and results of their audit at the general meeting (this right to information was also available to listed companies).
Under the new company law, in unlisted companies shareholders who together represent at least 10 percent of the share capital or votes may request information in writing from the board of directors (outside the general meeting) on the affairs of the company. The board of directors must provide the information within four months. The answers of the board of directors must also be made available for inspection by the shareholders at the next general meeting at the latest (Art. 697 para. 1 and 2 revCO). Such a duty to provide information outside the general meeting is not provided for shareholders of listed companies.
For the right to inspect the company's books and records (whether listed or not), a threshold of 5 percent of the share capital or votes applies under the new company law. Previously, the law referred to business books and correspondence and did not provide for a threshold. Unlike in the past, the general meeting no longer has any decision-making power regarding the granting of the right of inspection. Such a request is now decided on exclusively by the board of directors. The board of directors must grant inspection within four months of receipt of the request. Shareholders may take notes, but there is no entitlement to copies (Art. 697a revCO).
It should be noted that the threshold for the right to request and submit an agenda item is also 5 percent for unlisted companies. This creates a somewhat strange situation in which for unlisted companies the threshold for the right to information is higher than for the right to inspect, request and submit an agenda item, although a connection cannot be denied. The draft of the new company law had also originally provided for a threshold of 5 percent for the right to information.
As before, the right to information and inspection exists only insofar as this is necessary for the exercise of shareholders' rights and insofar as no business secrets or other interests of the company worthy of protection are jeopardized. Any refusal of information or inspection must be justified in writing (Art. 697 para. 4 and Art. 697a para. 3 revCO). In such a case, the shareholder has recourse to the courts. A period of 30 days must now be observed, which creates legal certainty (Art. 697b revCO).
Special investigation
Closely related to the right to information and inspection is the right to initiate a special investigation. A special investigation is designed in particular as a possible precursor to a liability action or other shareholder action and is conducted by an independent expert.
The request for a special investigation must be addressed to the general meeting and may cover all questions which were the subject of the request for information or inspection or which were raised in the discussion of the request for a special investigation at the general meeting, insofar as their answer is necessary for the exercise of shareholders' rights (Art. 697d para. 2 revCO).
If the general meeting approves the motion, the company or any shareholder may, within 30 days, request the court to designate the experts who will conduct the special investigation (Art. 697c para. 2 revCO).
If the general meeting does not comply with the motion, shareholders of listed companies who together represent at least 5 percent of the share capital or votes, or shareholders of unlisted companies who together represent at least 10 percent of the share capital or votes, may request the court to order a special investigation within three months.
The court is obliged to order a special investigation if the applicants credibly demonstrate that founders or governing bodies have violated the law or the articles of association and that this violation is likely to harm the company or the shareholders (Art. 697d para. 3 revCO). The required prerequisites must be presented in a sufficiently convincing manner. Mere allegations are obviously not sufficient. In contrast to the previous law, however, it is no longer required that damage that has already occurred be shown to be credible, but it is sufficient that a violation of law is likely to cause damage.
The special investigation is concluded with a report. If the special investigation has been ordered by a court, this report must be submitted to that court, with the company and the applicants being given the opportunity to comment and to ask supplementary questions (Art. 697g para. 3 revCO). At the request of the company, the court will decide whether any parts of the report violate the company's business secrets or other interests worthy of protection and may therefore not be submitted to the applicants (Art. 697g para. 1 and 2 revCO).
The board of directors must submit the report of the experts as well as its response and that of the applicants to the next general meeting (Art. 697h para. 1 revCO).
Your VISCHER team will be happy to answer any questions you may have.
Other articles in the series:
- New Corporate Law: New Swiss company law to come into force on 1 January 2023 (no. 1)
- New Corporate Law: General meeting under the new company law – what is changing? (no. 2)
- New Corporate Law: The capital band (no. 3)
- New Corporate Law: Loss of capital, over-indebtedness and (in)ability to pay (no. 4)
- New Corporate Law: Important resolutions (no. 5)
- New Corporate Law: Capital increase and capital reduction (no. 6)
- New Corporate Law: The (intended) acquisition of assets (no. 7)
- New Corporate Law: The offsetting contribution (no. 8)
- New Corporate Law: The Interim Dividend (no. 9)
- New Corporate Law: The Return of Benefits (no. 10)
- New Corporate Law: Share capital in foreign currency (no. 11)
- New Corporate Law: Simplified rules on reserves (no. 12)
- New Corporate Law: Representation of the shareholders in the new company law (no. 13)
- New Corporate Law: Relevant changes from a tax perspective (no. 14)
- New Corporate Law: Arbitration Clause in the Articles of Association (no. 16)
- New Corporate Law: Simplification in Signing of Commercial Register Applications (no. 17)
- New Corporate Law: The Board of Directors (no. 18)
- New Company Law: Circular Resolutions of the Board of Directors (no. 19)
- New Corporate Law: Commercial Register Application by an Authorized Third Party (no. 20)
Authors: Thomas Steiner-Krizaj, Peter Kühn, Lukas Züst
