Revision of the Swiss company law: where we stand and what we have to expect
The revision of the Swiss company law is intended to make the formation and capital provisions more flexible, to improve corporate governance in non-listed companies and to aligning the company law with the new accounting law. In addition, there will be a regulation on transparency for economically significant companies active in the field of commodities. Below you will find brief descriptions of the changes that we believe will be made.
Nominal value of shares
A minimum par value of more than zero Swiss rappen envisages for shares in future, which will permit further share splits and nominal value reductions.
For a maximum period of five years, the AGM will now have the opportunity to authorize the BoD to increase or decrease, share capital registered in the commercial register, within a certain range The lower limit may not be less than half the share capital registered in the Commercial Register. The upper limit may not exceed the capital band by more than half of the capital registered in the commercial register. The AGM may restrict the scope of the BoD by imposing conditions or requirements, e.g. it may determine that the share capital may only be increased or reduced. Companies whose Articles of Association provide for a capital band with the option of reduction, should carry out at least a limited audit to protect creditors. Conversely, the waiver of the limited audit is permissible in the case of a capital band that only authorizes the BoD to increase the share capital.
Discontinuation of public certification
The revision of the Swiss company law provides for a standardization of the notarization regulations for corporations. According to this, amendments to the Articles of Incorporation, capital measures and dissolutions will no longer require public certification if the contribution is made in cash, in full and in the currency of the share capital.
Adjustment of the Swiss company law to the accounting law
According to the new accounting law, bookkeeping and accounting is possible in the foreign currency that is essential for the business activity. This corresponds to the currency of the primary economic environment of the company. It must be freely convertible against the Swiss franc. On the other hand, the share capital must in accordance with applicable law, be denominated in Swiss francs. The resolutions of the AGM approving the annual financial statements and the appropriation of retained earnings must also be in Swiss francs. In addition, share capital and reserves in Swiss francs form benchmarks determining whether there is a capital loss or overindebtedness. This lack of coherence between accounting law and Swiss company law may be solved by the nominal value of the shares, no longer necessarily being denominated in Swiss francs. A share capital in the foreign currency that is essential for the business activity must now to be permissible.
Today, shareholders can only assert their claim to information in the AGM. In the Federal Council’s draft, the right to information (in contrast to the preliminary draft) is no longer provided for as an individual right, but is now structured as a minority right in favor of shareholders who control at least 5% of the voting rights or the share capital. A right of inspection will now only be granted to those who control 5% of the voting rights or the share capital. This applies regardless of whether the company has listed shares on a stock exchange or not. Written information on the affairs of the company may be requested insofar as this is necessary for the exercise of shareholder rights and no business secrets or other overriding interests of the company are in conflict therewith. In the case of a special investigation, the applicant must no longer make credible any damage that has already occurred.
Reporting of commodity companies on payments to government agencies
The new regulations are modelled on EU directives. They apply exclusively to companies, which by law are required to carry out an ordinary audit of their annual accounts and are active in the field of raw material extraction. This means only listed and large companies are covered. The draft provides for an obligation to disclose payments of at least CHF 100,000.00 per financial year, which the company has paid to public authorities.
The National Council has advised the revision of the Swiss company law and dismissed a good and moderate revision proposal. The Legal Commission of the Council of States transformed this into a proper regulatory bill. Fortunately, the Council of States pulled the emergency brake and rejected the bill to its Legal Commission with the order to present a business-friendly bill.