New Corporation Law as of January 1, 2023: What Action Is Required?
The Swiss Federal Council has declared the new Swiss corporation law effective as of January 1, 2023 (overview of the new rules in Homburger Bulletin of June 22, 2020). At the same time, the Commercial Register Ordinance has been amended.
This Bulletin explains what action listed and private companies should take already in 2022 in order to benefit from the new possibilities and comply with the new rules.
1. Review of Articles of Association and Internal Regulations
Companies’ existing articles of association and internal regulations typically do not harness the flexibility offered by the new law and may contain provisions that do not comply with the new rules. These provisions will remain in force until January 1, 2025 at the latest, but must be amended by then.
Both listed and private companies are well-advised to review their existing articles of association and internal regulations and to decide whether and when they should be amended. In certain cases, adaptations might already be warranted this year. In other cases, the two-year transition period could also be exhausted.
In principle, companies could add new provisions that will only be permissible under the new law to their articles of association already now. However, the articles must provide that these provisions will only become effective as of January 1, 2023.
2. Change of Currency and Introduction of Capital Range as of January 1, 2023
As of January 1, 2023, stock corporations (Aktiengesellschaften) and limited liability companies (GmbH) may express their nominal capital not only in Swiss francs, but also in euros, U.S. dollars, pound sterling or Japanese yen if this is their functional currency. The nominal capital’s currency may be changed, prospectively or retrospectively, as of the beginning of the company’s financial year.
There is much to decide
- already this year
Stock corporations may also introduce a capital range (Kapitalband) under which the board of directors is authorized to increase and/or decrease the share capital by up to 50% during up to 5 years. This makes changes in capital considerably easier.
A change of currency or the introduction of a capital range as of January 1, 2023, may already be resolved in 2022. The corresponding amendment to the articles of association has to be conditioned on the new law taking effect. If the articles are amended again before January 1, 2023, the conditional amendment would have to be resolved again.
3. Planning of the AGM 2023
As of January 1, 2023, so-called «Covid 19 general meetings» will no longer be permitted. In addition to traditional physical shareholder meetings, the new law allows virtual and hybrid meetings as well as written shareholder resolutions. The new law brings about numerous other changes in connection with shareholder meetings and the exercise of shareholder rights.
It is advisable, particularly for listed companies, to determine the form in which they would like to hold their AGM in the future. Existing processes relating to the AGM should be reviewed and adapted accordingly. In doing so, it has to be taken into account that virtual shareholder meetings (e.g., by video conference) and shareholder meetings outside Switzerland will only be permissible if the articles of association so provide.
4. Compensation at Listed Companies
The rules on compensation at listed companies will change as of January 1, 2023. The compensation system and contracts with directors and executive officers should already be reviewed this year for compliance with the new rules. Contracts already existing on January 1, 2023, must be updated by January 1, 2025. After this date, contractual provisions that conflict with the new rules will no longer be enforceable.
If the articles of association provide for a forward-looking shareholder vote on variable compensation, the compensation report for 2023 and the following financial years must be submitted to a non-binding shareholder vote.
5. Financial and Non-Financial Reporting, Due Diligence Obligations
The (few) new financial reporting rules according to the Swiss Code of Obligations and rules regarding the compensation report must be implemented for the first time in the annual report for the year 2023.
The due diligence and reporting obligations regarding conflict minerals and child labor, as well as the reporting obligations for natural resource companies and regarding non-financial matters are already in force. Companies that are subject to these obligations must apply the new due diligence requirements from the financial year 2023 and report on these matters for the first time in their annual report for the year 2023. For more information please refer to the Homburger Bulletin of December 8, 2021.
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Homburger will be holding events on the new corporation law in the course of this year. If you are interested in receiving an invitation, please feel free to contact the author of this bulletin or write to email@example.com.
This Bulletin expresses general views of the authors as of the date of this Bulletin, without considering any particular fact pattern or circumstances. It does not constitute legal advice. Any liability for the accuracy, correctness, completeness or fairness of the contents of this Bulletin is explicitly excluded.