After a long revision phase, the Federal Council put the changes in the Code of Obligations (OR) and the Commercial Register Ordinance (HRegV) into force at its meeting on 2 February 2022. The new legislations will apply from 1 January 2023 and will bring various innovations as well as more flexibility for Swiss companies. Below we will present some of these innovations.
Capital in foreign currency
While so far the share capital had to be in Swiss francs, it will now also be possible to choose capital in the for the business activities essential foreign currency. At the time of establishment, this capital must correspond to the equivalent of at least CHF 100,000 and bookkeeping and accounting must be carried out in the same currency. The following currencies are permitted: Swiss francs CHF, British pounds GBP, Euro EUR, US-Dollar USD and Yen JPY.
The selected currency is relevant for all aspects of company law, such as for the establishment, capital increase or decrease, profit appropriation (dividends, formation of reserves), assessment of a capital loss/over-indebtedness, etc. For tax purposes, the taxable net profit respectively the taxable equity will have to be converted into Swiss francs with the average exchange rate (sale) of the tax period (for the taxable net profit) or the exchange rate (sale) at the end of the tax period (for the taxable equity) being decisive.
The applicable currency is determined by the General Assembly and is possible as per the beginning of each financial year. The General Assembly can decide to change the currency in advance for the next financial year or in retrospect for the current financial year. It must be pointed out that any rounding up or down of the capital amount calculated with the applicable exchange rate to a round sum (e.g. USD 150,750.25 down to USD 150,000 or up to USD 151,000) requires a capital decrease or increase in the amount of the corresponding difference. Accordingly, extensive documentation must be prepared, notarized, and submitted to the Commercial Register. If the Company provides for the new institution of the capital band (see below) in its articles of association, it will create easement for the Board of Directors who is responsible for the implementing of the change of currency and the capital decrease or increase.
Nominal value of shares
Until now, the nominal value of the shares had to be at least one centime; now just a value greater than zero is required.
New institution: Capital band
The newly introduced institution of the capital band allows capital increases and decreases to be structured more flexibly. The corresponding article can be added to the articles of association by the General Assembly, thereby authorizing the Board of Directors to amend the share capital within the range defined in the articles of association for a period of maximum five years. The capital band may not exceed or fall short by more than half of the share capital entered in the Commercial Register. It should be noted that the minimum capital of CHF 100,000 for a limited company may not be undercut and a capital decrease under the capital band is only permitted if the Company has not waived the limited audit of the annual financial statements.
The new institution of the capital band replaces the current "approved capital increase" and introduces a quasi "approved capital decrease".
Innovations regarding capital decrease and capital increase
The new law simplifies the ordinary capital decrease. Only one call to creditors (instead of the previous three) has to be published in the Swiss Official Gazette of Commerce and the call to creditors can occur before the General Assembly decides on a capital decrease. In addition, the creditors have to demand indemnification of their claims within 30 (instead of the previous 60) days. The confirmation to be prepared by the authorized audit expert that the claims of the creditors are fully covered despite the reduction in share capital may also be prepared before the resolution of the General Assembly.
For ordinary capital increase the Company's Board of Directors is granted more time for implementation after the resolution of the General Assembly: So far, a capital increase had to be implemented and entered into the Commercial Register within three months after the resolution of the General Assembly; now the Board of Directors is granted six months to implement the capital increase and enter it into the Commercial Register. Additionally, compliance with this deadline no longer depends on the entry in the Commercial Register, which the Company cannot influence, but on the legally compliant application of the capital increase with the Commercial Register.
The new company law explicitly allows the General Assembly to decide on the payment of interim dividends based on interim financial statements. The interim financial statements are generally audited by the auditors unless the Company has waived the limited audit of the annual financial statements (opting out) or all shareholders agree to the payment of the interim dividend and the creditor claims are not jeopardized by such payment.
Until now it was controversial whether a company can provide arbitration clauses for corporate law disputes in its articles of association and thus bind all shareholders. The new law explicitly provides for the possibility of including arbitration clauses in the articles of association. Corporate law disputes can now be judged by an arbitral tribunal based in Switzerland if they are anchored in the articles of association and thus bind the Company, the Company's bodies, the members of the bodies and the shareholders.
The new law allows for various modernizations regarding the preparation and execution of the General Assembly. For example, while the General Assembly was already held virtually ("virtual General Assembly") during the pandemic in accordance with the covid-19-regulations, this option is now explicitly anchored in the Swiss Code of Obligations (OR). Among other things, the new features include the option of exclusively using electronic means to convene the General Assembly and publish the annual report. In addition, resolutions of the General Assembly can also be passed by means of circular, which was previously only permitted for resolutions of the Board of Directors. Furthermore, the General Assembly can be held at several conference locations simultaneously or even abroad, whereby the latter must be provided for in the articles of association. Finally, shareholders who are not present on site can exercise their rights electronically. A General Assembly can be held without a conference venue using only electronic means ("virtual General Assembly"), although the latter requires a basis in the articles of association. The Board of Directors is responsible for preparing and holding the General Assembly. The Board must ensure that the exercise of shareholders' rights is not made more difficult by, for example, the choice of conference venue. Additionally, the Board must ensure that when using electronic means, the identity of the participants is clear, the votes in the meeting are transmitted directly, every participant can submit motions and participate in the discussion and the voting results cannot be falsified.
Content of the articles of association
The new legislations provide for various changes related to the provisions to be included in the articles of association. While some new institutions, such as the creation of a capital band, the possibility of holding a virtual General Assembly or holding the General Assembly abroad, must be anchored in the articles of association, other provisions that were previously mandatory in the articles of association, such as the convening of the General Assembly and the voting rights of shareholders, or the naming of the bodies for administration and audit no longer have to be included in the articles of association, since these regulations now result directly from the law. Likewise, the (intended) acquisition of assets during the establishment or capital increase no longer constitutes a qualified fact, with the result that it does not have to be mentioned in the articles of association, nor does an audited founder's report have to be drawn up, and it consequently does not entail publication in the Commercial Register.
Swiss companies can use these and further innovations from 1 January 2023. The new legislations create flexibility for Swiss companies and should be of particular interest to internationally active companies and companies with an international shareholder base and Board of Directors. It is therefore worth checking the articles of association for legal conformity after the new provisions have come into force and to introduce any desired modernizations. Should the articles of association not comply with the law, they must be amended within a two-year period after the new company law has come into force, i.e. by the end of 2024.
The legal advisors of KENDRIS AG are at your disposal to review the company documents such as articles of association and regulations, to adapt such documents and to advise you on questions relating to company law.