The Swiss Parliament revises law on stock corporations

On June 19, 2020, the Swiss Parliament approved the revision of the Swiss law on stock corporations (Company Law), which aimed at introducing simplifications (such as new provisions for the use of technology in support of general meetings) while allowing for greater flexibility and protection of specific interests.

In particular, there has been a reinforcement of minority shareholder’s rights, given that:

  • for non-listed companies, shareholders with a minimum of 10% of the share capital or votes have acquired the right to raise matters to the board of directors at any time, with the duty for the board to answer the questions within four months;
  • for listed companies, shareholders who together hold at least 0.5% of the share capital or votes (5% in the case of non-listed companies) can request to add matters to the agenda;
  • Shareholders who hold at least 5% of the share capital or votes for listed companies have now the right to convene a general meeting;
  • Shareholders who hold at least 5% of the share capital or votes will also be able to request access to the company’s books and correspondence without authorization of the general meeting.

Minorities have also been safeguarded through the introduction of a gender quota, which is a benchmark for the representation of both genders on the board of directors (30% benchmark) and the executive board (20% benchmark) of listed companies. Companies which do not comply with the provisions will have to provide sufficient proof of the measures they are implementing for the support of gender equality.

Other major changes have also been affecting rules on capital structure and distribution of dividends:

  • Share capital can now be denominated in a foreign currency;
  • The nominal value of shares can also be smaller than the current minimum of CHF 0.01 as long as it is higher than zero;
  • Companies can now enjoy a capital band ranging from +50% to -50% of the registered share capital. Within this range, the board of directors can increase or decrease capital within a maximum of 5 years;
  • Companies will be able to pay interim dividends out of profits of the current financial year;
  • The distribution of capital reserves is now permitted.

The law also aims at monitoring excessive remuneration in listed companies while measuring companies’ liquidity, which the board of directors will now have to keep track of more closely.

The revision will come into force only with the approval of the Federal Council, and after that, companies will have two years to make the necessary amendments to their articles of association.