Changes in capital under the new company law

On 19. June 2020, Parliament adopted the reform of Swiss company law. Among many other innovations, this also changed capital increases and capital decreases. One of these changes involves the abolition of authorized capital. This is replaced by the new instrument of the capital band. The changes to ordinary and conditional capital increases are less extensive. The situation is different for capital reduction. Here, the changes are more extensive.

Ordinary capital increase

In the area of ordinary capital increases, the changes are limited. The existing practice remains the same and is codified by the revision. Furthermore, the protection against dilution is strengthened. Now, no one may be favored or disadvantaged in the case of a restriction or cancellation and in determining the issue amount. This is intended to provide shareholders and partners with even more excellent protection against dilution under the new law.

Furthermore, the implementation period of a capital increase has been extended by three months. Under the new law, the deadline is six months after the General Meeting’s resolution. The capital increase must be executed and reported for registration within this period.

Conditional capital increase

Only selective changes have also been made in the area of conditional capital increases. These include an expansion of the group of recipients as well as the possible use of conversion and option rights. According to the wording of Art. 653 nOR, in future members of the Board of Directors, shareholders and third parties may also be potential addressees of conversion and option rights. Furthermore, the exercise of conversion and option rights is simplified. This is due to the fact that the form of exercise is no longer prescribed in the new law. Under certain conditions, the company is thus free to determine the form of exercise in its Articles of Association.

Authorized capital increase

The most significant change in capital changes is the new instrument of the capital band. This replaces the previously authorized capital increase. With the introduction of the capital band, it is now possible to authorize the board of directors of a stock corporation through the articles of incorporation to change the equity capital within a specific scope (capital band) and a time window of up to five years. This can happen without the need for further resolutions by the general meeting of shareholders after the first resolution. With this new instrument, equity can be adjusted very promptly when the need arises. Thus, it is possible to carry out an authorized capital increase with a certified capital reduction. A qualified majority of the General Meeting is required to use the capital band.

Capital reduction

In the area of capital reduction, it remains the same that the reduction of capital can only be made up to the legal minimum (AG: CHF 100,000; GMBH: CHF 20,000). A significant change is the simplification of the procedure of capital reduction. Now, the public debt call no longer has to be made three times, but only once. In addition, the ordinary capital reduction and the ordinary capital increase with a maximum amount are now expressly permitted.