Revision of company law 2023 - need to amend the Articles of Association
The new stock corporation law has been in force since January 1, 2023. The two-year transition period expires at the end of 2024. Companies have until the end of 2024 to adapt their articles of association to the new provisions. This article sheds light on which companies are affected, what actions need to be taken before the end of the transition period and what the consequences will be if the necessary amendments to the articles of association are not made.
Companies concerned
The new company law came into force on January 1, 2023. There is a need to amend the articles of association in particular for stock corporations (AG) and limited liability companies (GmbH) that were founded before January 1, 2023, i.e. in accordance with the old stock corporation law. Companies that were founded after the new company law came into force are automatically subject to the new law and already comply with the new company law provisions.
Changes as of January 1, 2023
We have already explained the changes to the new company law in detail in our series of articles on the revision of company law. In summary, the revision of company law contains the following key changes:
The Annual General Meeting no longer has to be held in person. Hybrid, written or fully virtual general meetings are now also permitted.
The share capital can now also be denominated in a foreign currency, provided this currency is essential for business activities.
The nominal value of the shares only has to be greater than zero.
The Articles of Association may provide for a capital band. The capital band enables the Board of Directors to flexibly increase or decrease the share capital by up to 50 % over a period of 5 years.
The articles of association can now include an arbitration clause, according to which all disputes under company law can only be brought before an arbitration court instead of a state court.
The quorum for convening the Annual General Meeting was reduced from 10% to 5% of the share capital or votes in the case of listed companies. For non-listed companies, the quorum of 10 % was retained.
Shareholders who together hold 5% of the share capital or voting rights may inspect the books and records at any time.
If there is a need to benefit from the new possibilities of the revised company law, it is advisable to check the articles of association for necessary amendments (e.g. with regard to virtual or hybrid general meetings, the introduction of a capital band or conditional capital). This also applies if the intention is to retain what was intended and the revised legal provisions now deviate from this (e.g. with regard to the delegation of management, which is already possible under the revised company law through the organizational regulations, unless the articles of association explicitly provide otherwise).
Procedure for amending the Articles of Association
If a company wishes to amend or adapt its articles of association, it is essential to convene a general meeting. This must be announced at least 20 days before the date of the meeting, unless all shares are represented and no shareholder objects to the meeting or individual items on the agenda (universal meeting). During the General Meeting, the new Articles of Association are adopted, the resolution is publicly certified by a notary and the Articles of Association are notarized. Finally, the amendment to the Articles of Association must be registered with the commercial register.
What happens if the Articles of Association are not amended?
The Articles of Association will remain valid during the transition period. However, at the end of this period on December 31, 2024, all provisions of the Articles of Association that are not compatible with the new statutory provisions will be automatically declared invalid and replaced by the corresponding statutory provisions. This means that in future, both the Articles of Association and the law must be taken into account to determine the applicable provisions. Shareholders or partners will no longer be able to rely on the content of the articles of association without restriction, which may impair legal certainty. They also run the risk of not being able to benefit from the possibilities offered by the modernized provisions of company law or that what they previously intended will no longer apply under the new law.
However, there is no obligation to amend the Articles of Association. As already mentioned, invalid provisions of the Articles of Association will be replaced by the statutory provisions.
Our recommendations for action
For reasons of legal certainty and in order to continue to have clear and transparent provisions in the Articles of Association, it is therefore advisable to adapt the Articles of Association to the new legislation. An amendment to the Articles of Association requires a certain amount of time, as the Articles of Association must first be drawn up by the Board of Directors and approved by the General Meeting. For this reason, it is also advisable to start preparing them promptly.
Balthasar Wicki, Vivien Keiser and Arife Asipi can assist you with the drafting of the Articles of Association and will also be happy to answer any questions you may have on the revision of company law.
The following articles by Wicki Partners AG provide a comprehensive overview of the individual changes to the revision of company law:
Revision of company law | Part 1: Capital and reserves
Revision of Stock Corporation Law | Part 2: Electronic Means in the General Meeting of Shareholders
Revision of Stock Corporation Law | Part 3: Strengthening Shareholder Rights