Revision of Stock Corporation Law | Part 3: Strengthening Shareholder Rights
This article is part of our series of articles summarizing the "Stock Corporation Law Revision (expected to be in force as of 1.1.2023)". We will highlight amended parts of the revision and outline the possible implications for practice.
One of the main objectives of the revision of stock corporation law continues to be the improvement and modernization of the regulations concerning corporate governance of Swiss companies. In particular, the strengthening of the protection of minority shareholders was taken into account in the revision of the Stock CorporationLaw (Dispatch Stock Corporation Law 2007, p. 1606 f.). In our opinion, the most important points are as follows:
Right to information and inspection
Under current law, the shareholders of a stock corporation may only request information from the Board of Directors on the company's affairs at the General Meeting(Art. 697 para. 1 CO), provided that such information is necessary for the exercise of shareholders' rights and does not conflict with any interests of the company worthy of protection(Art. 697 para. 2 CO). Information may be refused to shareholders without further justification. If this is unjustified, the court acts as the final supervisory authority - it may order the provision of information or inspection at the request of the shareholders(Art. 697 para. 4 CO).
Shareholders of companies that are not listed on a stock exchange may now request information in writing from the board of directors at any time about the company's affairs or inspect the company's business records. This applies at least if they together or alone represent at least five percent of the share capital or votes (Art. 697 para. 2 and Art. 697a para. 1 revOR). Here too, the restriction applies that the information must serve the exercise of shareholders' rights and that business secrets or other overriding interests of the company take precedence. However, a refusal to provide information must now be justified in writing by the Board of Directors (Art. 697 para. 4 and Art. 697a para. 3 revOR). In the event of an unjustified refusal, the court may, as before, be called upon to rule on both requests.
In the case of publicly traded companies, the shareholders' right to information and inspection at any time has not been provided for, as listed companies are additionally subject to the strict information obligations of stock exchange law and the shareholders' right to information is already guaranteed within this framework (e.g. ad hoc publicity pursuant to Art. 53 of the SIX Listing Rules; Dispatch Stock Corporation Law 2007, p. 1708).
Right to convene the General Meeting and right to add items to the agenda
Under current law, the convocation of the General Meeting of Shareholders may be requested by one or more shareholders who together represent at least 10% of the share capital. Shareholders representing shares with a par value of 1 million Swiss francs, or at least 10% of the share capital, may request that an item be included on the agenda(Art. 699 para. 3 CO; BGer, 27.11.2015, 4A_296/2015, E. 2.3).
The threshold for convening the General Meeting of Shareholders is now set lower for public companies. Shareholders may request that a general meeting be convened if they together hold at least 5% of the share capital or votes. For companies whose shares are not listed on a stock exchange, the threshold remains at 10% of the share capital or votes (Art. 699 para. 3 revOR).
Shareholders may request that items be placed on the agenda, provided that they together hold at least one of the following interests:
in companies whose shares are listed on a stock exchange: 0.5 % of the share capital or votes;
in companies whose shares are not listed on a stock exchange: 5% of the share capital or votes (Art. 699b para. 1 revOR).
Other changes
In addition to the points raised, the thresholds for the judicial initiation of a special investigation by shareholders of publicly traded companies have also been reduced, namely to a new minimum of 3 % of the share capital (Art. 697d revOR, instead of 10 % under the current law, Art. 697b para. 1 CO). The hurdle for filing an action for dissolution of the company with the court has also been lowered: shareholders who now individually or collectively represent at least 10 % of the share capital may request dissolution for important reasons (Art. 735 para. 1 item 4 revOR, previously only shareholders who collectively represent 10 % of the share capital under the current law, Art. 736 item 4 CO).
The new stock corporation law strengthens the rights of (minority) shareholders and facilitates their exercise. Shareholders are thus better able to assess when and whether specific measures need to be initiated to protect the company, in particular their enforcement in court. This is to be welcomed from the point of view of transparency within the company and, in particular, modern corporate governance.
Our recommendations for action
We recommend that you think through these changes in shareholder law and contact an expert if you need to take action. We will be happy to help you assert your concerns.
Do you have any questions about the 2023 revision of company law? Please contact Balthasar Wicki or Sebastian Wälti.