The new company law, which came into force on 1 January 2023, primarily brought about greater flexibility in the formation and capital regulations. Companies have until 31 December 2024 to adapt their articles of association to the new law. We will show you which amendments you should make to your articles of association and therefore take into account for the next GA.
Changes at a glance
The major revision of company law came into force on 1 January 2023 after years of preparatory work. The changes are aimed at modernising and adapting to economic needs.
We already explained the most important changes to the new company law in detail in our article from 7 November 2022. The most important points are discussed again below:
- Share capital: The capital base has been made more flexible and now allows financing in foreign currency. In addition, the introduction of a capital band allows the capital structure to be adjusted more flexibly, with the Articles of Association authorising the Board of Directors to reduce or increase the share capital within a defined range for a maximum of five years.
- Strengthening shareholder and minority rights: Under the new share law, shareholders of non-listed companies who hold at least 10% of the share capital or voting rights can ask the Board of Directors questions at any time and not just at the Annual General Meeting. Shareholders of unlisted companies who hold at least 5% of the share capital or voting rights can also request access to the company’s books and correspondence without the authorisation of the General Meeting, provided this is necessary for the exercise of shareholder rights.
- Flexible general meetings: With the new company law, general meetings can be held in writing by means of a circular resolution or a ballot vote. In addition to a hybrid general meeting, it is also possible to hold a purely virtual general meeting, provided the articles of association have been amended accordingly. The articles of association may also provide for general meetings to be held abroad.
Amendments to the Articles of Association
The amendments mentioned above have one thing in common: they require an amendment to the Articles of Association for their introduction. Although these amendments have been in force since 1 January 2023, thetransitional period does not end until 31 December 2024. Thanks to this transitional period of two years, old provisions of the Articles of Association that are not compatible with the new law will remain in force until then. After this period, however, they will automatically be declared invalid and will be replaced by the statutory provisions if they are not compatible with the new provisions of company law. In principle, there is therefore no obligation to adapt the articles of association to the new company law. However, in order to continue to have clear and transparent provisions, it is advisable to take a proactive approach and amend the articles of association by the end of 2024 at the latest.
Accordingly, if the share capital is to be fixed in an authorised foreign currency, the Annual General Meeting can determine the change either prospectively at the beginning of the next financial year or retrospectively at the beginning of the current financial year. In either case, however, the Board of Directors must amend the Articles of Association accordingly. It should be noted, however, that the currency change may not lead to a concealed capital increase or reduction.
The introduction of a capital band also requires a corresponding stipulation in the articles of association. The General Meeting can also specify or restrict the powers of the Board of Directors in the Articles of Association. Restrictions, requirements or conditions can be formulated in the articles of association. In particular, the articles of association may stipulate that the Board of Directors may only increase or reduce the share capital. It should also be noted that although the authorised capital increase remains valid under current law until it expires, it cannot coexist with a capital band. Therefore, if a capital band is to be introduced, the existing authorised share capital must be cancelled in the articles of association.
If the threshold values for capital or voting rights (e.g. for information rights) were previously set out in the articles of association, which have now changed with the new share law, these should also be adjusted in the next amendment to the articles of association for reasons of transparency.
Finally, the possibility of a virtual general meeting must be authorised with corresponding provisions in the articles of association. In addition, an independent proxy must be appointed, unless the articles of association expressly exempt them from this obligation. On the one hand, it must be ensured that every shareholder can actively participate in the Annual General Meeting and submit motions, and on the other hand, votes must be able to be transmitted directly. The Articles of Association can regulate the use of electronic means, otherwise the Board of Directors determines this.
Finally, a corresponding provision must also be made in the Articles of Association if the Annual General Meeting is to be held abroad. If a general meeting is to be held with several venues in Switzerland and abroad, it is currently disputed whether such a meeting qualifies as a general meeting with a foreign venue and therefore requires a basis in the articles of association. In such a case, however, it is recommended that the Articles of Association be amended so that holding the General Meeting abroad is legal. It should also be noted that holding the general meeting abroad may have tax implications. This is because the company limited by shares generally has its main tax domicile at the place of effective management. Consequently, a general meeting held abroad could, under certain circumstances, indicate that the effective management is also located abroad. We therefore recommend obtaining tax law advice before including a corresponding provision in the articles of association.
Amendments to the articles of association must be legally approved by the general meeting and publicly notarised in the presence of a notary. As these amendments must be prepared in advance by the Board of Directors and placed on the agenda for the next Annual General Meeting in good time, it is advisable to start preparations as soon as possible. The HÄRTING team will be happy to answer any questions you may have about amendments to the articles of association and provide notarisation services.