On 1 January 2023, the new provisions on limited company law came into force. The foundation and capital provisions are now more flexible, the shareholders' rights have also been amended. The provisions have been adapted to the existing accounting law. There will be a transitional period of two years for the adaptation of the articles of association of existing companies to the new law. The articles of association of companies founded after 1 January 2023 must comply with the provisions of the new law as soon as they are incorporated.
The revision of the legal provisions on limited company law was adopted by the Parliament in June 2020.
It is a major event for Swiss company law and implies the modification of most of the provisions on companies limited by shares in the Swiss Code of Obligations of 30 March 1911 (“CO”)  and of several related ordinances, such as the Ordinance on Commercial register of 17 October 2007 (“ORC”).
This revision of the provisions on companies limited by shares pursues four (4) main objectives:
- to improve corporate governance, by strengthening shareholders’ rights and the role of the General Meeting;
- to make capital structures more flexible;
- to modernise the conduct of the general meeting;
- to update accounting provisions.
Without seeking to be exhaustive, this newsletter focuses on the main changes.
II. Share and capital provisions
The revised law provides for a softening of the provisions on the foundation and capital of companies.
Share capital in foreign currency
The new art. 621 para. 2 CO permits the share capital to be in the foreign currency required for business operations is permitted. The chosen currency must be convertible into Swiss francs.
At the time of foundation, the share capital must have a value equivalent to at least CHF 100,000.- (art. 621 para. 1 CO).
The new law also provides that, even if the share capital is fixed in Swiss francs, it is possible to pay it in a foreign currency.
If the share capital is in a foreign currency, the accounts must be kept and financial reports must be filed in the same currency (art. 958d CO).
According to Annex 3 of the ORC, the below four (4) foreign currencies are allowed for the share capital of a Swiss limited company:
- British pound (GBP);
- Euro (EUR);
- American dollar (USD);and
- Japanese yen (JPY).
The currency of the share capital may be changed at the start of any financial year under the conditions of art. 621 para. 3 CO.
The articles on the foundation of a company limited by shares have been adapted accordingly (art. 629 para. 3 and 631 CO), as well as the articles on the payment of contributions (art. 634, 634a and 636 CO).
Whereas the previous version of the CO provided that the nominal value of the shares could not be less than 1 centime, the new art. 622 para 4 CO provides that shares shall have a nominal value that is greater than zero.
The reform of the CO introduces a new instrument: the capital band (art.653s ff. CO).
From now on, the Board of Directors is empowered to increase or reduce the company’s capital for a maximum period of five years, within the limits set in the articles of association. Companies that have waived the limited audit will be limited to using the capital band for capital increases only.
The fluctuation may vary between half and one and a half time the share capital registered with the Commercial Register. It may not fall below the minimum share capital requirement of CHF 100’000.-.
The possibility to use the capital band must be provided for in the company’s articles of association and include a number of elements detailed in art.653t CO.
The General Meeting has power to limit the power given to the Board of Directors to a certain amount, or event to restrict it to a certain type of transaction(art. 653v CO).
This new tool aims to facilitate the procedures of share capital increase and reduction while ensuring the protection of creditors. This will facilitate the financing of new expansion projects, the entry of new shareholders and the re capitalisation in case of financial difficulties .
From a tax perspective, the introduction of the capital band also require some anticipation from companies.
The principle is that a stamp duty is due on capital increases. However, the fluctuation of capital resulting from the use of the new provisions on capital band will be taxed differently .Indeed, the confirmation of the capital contribution reserves built during the maximum period of five years of the capital band can only take place at the end of this period .Thus, any eventual stamp duty will be due on the net amount exceeding the initial capital, at the end of the five years period. It will be necessary to take into account not only any capital increases but also reductions during this period.
III. General Meetings
Request to convene of a meeting
The request to convene of a meeting must be made in writing and must state the items on the agenda and the proposals (art. 699 para 4 CO). This remains unchanged.
The thresholds to request a General Meetings of shareholders have been lowered (art. 699 al. 3 CO). This aims to achieve a better balance between strengthening the protection of minorities and the interests of the majority or of the Board of Directors .
For listed companies, shareholders may request the convening of a General Meeting if they together hold at least 5% of the share capital or votes. For unlisted companies, the threshold is 10% of the share capital or votes. The shareholders must demonstrate that they hold the required percentage of the share capital or votes when they make the request to convene of the meeting .
The « appropriate period » referred to under the old law (art. 699 para.4 old CO), is specified under the new art. 699 para. 5 CO: the Board of Directors now has 60 days from receipt of the request to convene a meeting.
Art. 699b para. 1 CO lowers the thresholds for placing an item on the agenda to 0.5% of the share capital or votes for listed companies, respectively 5% for non-listed companies.
The threshold related to the percentage of shares representing a nominal value of 1 million francs is abolished.
Right to information
Art. 697 para. 2 and 697a para. 1 CO set the thresholds:
- 10% of share capital or of the votes to request to provide information on company matters;
- 5% to inspect the company ledgers and files.
The Board of Directors shall provide the shareholders with a response within four months of receiving the request (art. 697 para. 3 and art. 697apara. 2 CO).
In case of refusal (explicit or lack of answer), the shareholders have30 days to challenge the decision in Court (art. 697b CO) or before an arbitral tribunal if the articles of association so provide (art. 697n CO).
Communication of the annual report
Art. 699a CO introduces the modernisation of the ways to communicate the annual report to the shareholders. In particular, the annual report can now be electronically accessible (para. 2).
Conduct of the General Meetings
The new law introduces multiple possibilities regarding the venue of the General Meeting. The principle is that no shareholder shall be unduly obstructed in exercising their rights in connection with the general meeting by the choice of venue (art. 701a para. 2 CO).
The possibilities are the following:
- art. 701a para. 3 CO: General Meeting held in various locations at the same time;
- art. 701b CO: the General Meeting may be held abroad - if the articles of association so permit (see also art. 704 para. 1 ch. 11 CO);
- art. 701d CO: the General Meeting is held virtually, with no venue by electronic means only – if the articles of association so permit. The requirements for the use of electronic means are detailed at art. 701e CO;
- art 701c CO: hybrid system, which must comply with the conditions of the face-to-face and the virtual General Meeting.
Art. 702 CO introduces welcomed precisions regarding the content of the minutes: in particular, it specifies that the minutes must be signed by the minute-taker and by the person chairing the general meeting (art. 702 para. 4CO) In addition, art. 702 para. 4 CO now allows shareholders to demand that the minutes be made available within 30 days after the General Meeting.
Powers of the General Meeting
Art. 698 CO lists the inalienable powers of the General Meeting.
The reform of the CO introduces the following powers of the General Meetings:
- to determine the interim dividend and approve the interim account required therefor (art. 698para. 2 ch. 5);
- to pass resolutions on repaying the statutory capital reserve (art. 698 para. 2 ch. 6);
- to discharge the members of the board of directors (art. 698 para. 2 ch. 7);
- to delist the equity securities of the company (art. 698 para. 2 ch. 8);
- to pass resolutions concerning the matters reserved to the general meeting by law or the articles of association (art. 698 para. 2 ch. 9).
In addition, art. 698 para. 3 CO include the competencies that were in the Ordinance against abusive remunerations in companies whose shares are listed on a stock exchange of 20 November 2013 (“ORAb”; RS 221.331). The ORAb was abrogated as of 1 January 2023 . The inclusion of these provisions in the CO is a welcome implementation of art.95 para. 3 of the Federal Constitution of the Swiss Confederation of 18 April1999 (“Cst.”; RS 101) with clarifications and adjustments.
Art. 732 to 735d CO set further obligations with regard to the remuneration in companies whose shares are listed on a stock exchange.
The new provisions of the CO on reserves set a more logical and coherent regime based on the source of the funds retained.
Art. 672CO on statutory earnings sets that:
- 5% of the annual profit shall be assigned to the statutory retained earnings;
- before any dividend is paid;
- it shall be increased until, when taken together with the statutory capital reserve, they reach 50%of the share capital.
The statutory capital reserve (art. 671 CO) is:
- funded by shareholders’ payments;
- therefore by the agio, even beyond the 50% of the share capital;
- and other payments (no change on that matter).
Both reserves are shown in the balance sheet as equity, together with the share capital (art. 959c para. 2 CO).
V. Imminent insolvency, loss of capital and over indebtness
The reform of the law on companies limited by shares introduces modifications in the definition and scope of:
- imminent insolvency (art. 725 CO): in which case the Board of Directors must take measures to ensure solvency and restructure the company;
- capital loss (art. 725a CO): if the most recent annual accounts of the company indicate that the assets minus the liabilities no longer cover half of the sum of the share capital + the statutory reserve not to be repaid to the shareholders + the statutory retained earnings ; and
- over indebtedness (art. 725b CO): if there is justified concern that the company’s liabilities are no longer covered by its assets.
These modifications can be summarized as follows:
- consolidation and systematisation of the remediation measures in the CO;
- emphasis on insolvency risk and preventive measures;
- clarification of the scope of application of capital loss and the measures that can be put in place;
- flexibility within the scope of remediation measures.
VI. Transparency rules
In line with the Indirect Counter-Proposal to the Popular Initiative “For responsible businesses – protecting human rights and the environment”, several provisions on transparency have been implemented in the CO, in the form of an obligation to report.
The companies concerned about these new obligations are big companies, which, among others, have at least 500 full-time equivalent positions on annual average and exceed in two successive financial years a balance sheet total of20 million francs or sales revenue of 40 million francs (art. 964a para. 1 CO).
There are three (3) types of transparency obligations:
- Art. 964a-c CO: Transparency on non-financial matters;
- Art. 694d-i CO: Transparency in raw material companies;
- Art. 964j-l CO: Transparency in relation to minerals and metals from conflict-affected areas and child labor.
VII. Transition period
Companies have two (2) years (until 1 January 2025) to bring their articles into line with the new provisions. In particular, they will have to make these changes in order to benefit from the capital band.
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This newsletter is for information purposesonly. It does not constitute professional advice or an opinion. Please contact Ms.Lucile Cesareo-Hostettler for any questions.
 RS 220.
 RS 221.411.
 Revaz Marie-Hélène/GarcinFlora, Réforme du droit de la société anonyme : vers une flexibilité dufinancement !, mars 2022, https://fre.mazars.ch/Accueil/Insights/Newsletters/Swiss-Tax-Newsletter/Swiss-Tax-e-newsletter-Mars-2022/Nouveau-droit-de-la-SA-financement-flexible
 Baumann Stephan/ForichonCharles, Allègements fiscaux suite au nouveau droit des sociétés anonymes,janvier 2023, https://www.grantthornton.ch/fr/insights/allegements-fiscaux-nouveau-droit-sa/
 FF2017 409 f.
 Decisionof the Swiss Federal Court dated 15 February 2015, 4A_605/2014, recital 2.1.2.
 RO 2022 113 ; FF 2017 373.