📯 On 1 January 2023, the final tranche of the revision of the law on limited companies (hereinafter: "PLC") will enter into force. These final amendments to the Swiss Code of Obligations (hereinafter: "nCO") and the Ordinance on the Commercial Register (hereinafter: "nORC") which will come into force will thus complete the reform of the law on public limited companies.
1. 1. The need for a revision
The revision of company law was crucial for several reasons.
Firstly, it helps to update the legal framework governing public limited companies to make them more suitable for daily needs and business practices.
Secondly, it can also help to improve the transparency and accountability of public limited companies, obviously enhancing the confidence of shareholders but also of all stakeholders more generally.
Finally, the revision of company law can help to encourage business growth and prosperity by providing a stable and business-friendly legal framework.
2. The key points of the revision
a) 💴💱💵 The currency in which the share capital may be fixed
This final set of amendments, which will come into effect from 2023, will, among other things, make the provisions on foundation and capital more flexible.
From now on, a share capital in foreign currency will be allowed (Art. 621 para. 1 of the new CO, hereinafter "nCO"). Indeed, the latter may be denominated in GPB, USB, EUR and JPY (nORC 45a, Annex 3) under three conditions:
1. The currency is freely convertible into Swiss francs
2. The currency must be the most important one regarding the company's activities (Art. 621 para. 2 nCO)
3. The currency shall be used for the presentation of the accounts, with an indication of the equivalent value in Swiss francs (Art. 958d para. 3 NOC)
Share capital in a foreign currency can have several advantages for a company.
Firstly, it may allow the company to diversify its sources of finance by making it easier to access foreign investors.
Secondly, depending on the foreign currency chosen, it could also provide some protection against exchange rate fluctuations by allowing it to issue shares in a foreign currency that would be more stable than the domestic currency.
❗ ❗ ❗ Finally, share capital in a foreign currency may also be an asset for the company when it wishes to expand internationally, providing it with a means of financing appropriate to its activities in the various countries in which it operates.
b) 💴💱💵 The share capital fluctuation band
So far unknown in Swiss law, the so-called capital fluctuation band will allow the general meeting to allow the board of directors to reduce or increase the capital of the public limited company for a maximum period of five years (Art. 653 ff nCO).
The articles of association may provide that the board of directors is authorized either to increase the share capital or to reduce it (Art. 653 ff nCO).
📍 📍 📍 From now on, companies will have the possibility to increase or reduce their share capital without having to amend their articles of association, which may be useful in certain situations, such as issuing new shares to finance an expansion or buying back one's own shares to reduce the share capital.
📍 📍 📍 However, it should be noted on the one hand that the upper limit may not exceed 50% of the share capital registered in the commercial register (Art. 653a nCO). On the other hand, companies providing for a capital fluctuation band must at least submit their annual accounts to a limited audit (Art. 653s para. 4 and Art. 727 para. 2 nCO).
The capital fluctuation band is undoubtedly positive for companies, as it offers the company a certain flexibility in managing its capital.
c) Holding general meetings abroad and the use of electronic devices
As of 1 January 2023, a fundamental change is the introduction into the CO of the use of electronic devices in order to take into account, in the context of the holding of general meetings, the evolution of communication means.
At present, the board of directors sends the notice to the shareholders at least 20 days before the general meeting (Art. 700 para. 1 OR).
Once the revision comes into force, the board of directors may hold the general meeting in a form provided for in the articles of association (Art. 626 (1) no. 7 NOC) and the general meeting 'may be held exclusively in electronic form' (Message on the 2016 revision draft, p. 501). The 20-day deadline for convening the meeting is maintained.
Since the general meeting can be held remotely, it will be necessary to indicate the date, time, form and place of the general meeting (Art. 700 para. 2 no. 1 CO).
However, the use of electronic means will only be possible under these conditions:
1. The identity of the participants is established
2. Votes are transmitted directly to the general meeting
3. Each participant can submit proposals to the general assembly and participate in the debates
4. The result of the vote cannot be distorted
The possibility of holding remote general meetings is an advantage in that shareholders can participate in the general meeting without having to travel.
On the one hand, this is practical and economical. On the other hand, it will strengthen the decision-making process and democracy within the company since a larger number of shareholders could easily participate.
This modernization of company law creates many novelties for limited liability companies. By creating new regulations and aiming primarily at adapting to the current economic conditions, this new company law, including the above-mentioned changes, creates favorable conditions for the economic prosperity of Swiss companies and for the flexibility of their organization.
The above-mentioned proposals are therefore to be welcomed as they contribute to making Switzerland an internationally attractive location for new companies.
▶️ ▶️ ▶️ After 1 January 2023, companies will have two years to adapt their statutes and any internal regulations.
▶️ ▶️ ▶️ After this period, articles of association contrary to the new law would be null and void.
Furthermore, the adaptation of the articles of association is not mandatory but advisable in the sense that companies have an interest in making the most of this increased flexibility and the possibilities that the new law allows them to exploit.