The Virtual Shareholder Meeting Becomes a Legal Reality
With the revision of the company law passed in June 2020, the Swiss parliament gave virtual shareholder meetings a legal basis. However, Switzerland’s government is not expected to put the new law into force before 2022. That said, as the pandemic disrupted everyday life, temporary Covid-19 regulation allowed the use of remote conferencing technology to conduct shareholder meetings.
Shareholder meetings go virtual
The revised company law allows shareholder meetings to be held in multiple venues at the same time, including venues outside of Switzerland, provided participant’s statements are transmitted in real time to all meeting venues. Voting by electronic means for shareholders who are unable to attend a meeting is also permitted.
Alternatively, the general meeting can be held entirely virtually, if the company’s articles of association allow so. This includes resolutions which require notarization by a notary public, i.e., the formation of a new company, capital increases or other amendments of the articles of association.
The law does not regulate details about the technical tools that can be used, but only lays down the basic requirements. The board is responsible to verify participants’ identities and to ensure that all shareholders can actively take part in the discussion, form their opinion based on the statements of the board and the other shareholders, and cast their votes accordingly. If technical problems arise the meeting has to be adjourned and reconvened. Any decisions taken prior to problems arising remain valid.
Subject to the articles of association, it is at the board’s discretion to decide whether and how to use electronic tools to hold a shareholder meeting.
However, the venue or venues may not be chosen in such a way as to make it unnecessarily difficult for shareholders to participate. The same applies to the use of electronic means. An average tech-savvy shareholder must be able to use such tools.
The new law no longer requires a company’s annual report to be delivered to the shareholders in physical form, but it can be made available digitally. This will further simplify the convening of the annual general meeting.
The written shareholders’ resolution as an alternative
In many cases, the articles of association already allow the board to pass written resolutions outside of board meetings. The new law will enable shareholders to also pass written resolutions. This brings more flexibility, especially for companies with few shareholders.
The written vote must be made on paper or in electronic form. However, each shareholder reserves the right to request an oral consultation.
If decisions are not taken unanimously, the board has to ensure that all shareholders agree to the written form of the resolution. Otherwise, such resolutions may be challenged on the grounds of formal defects. To mitigate that risk, the board should inform the shareholders about their rights before written resolutions are passed.