Revision of company law 1 january 2023

On 19 June 2020, Parliament adopted the revised company law, which will come into force on 1 January 2023. The aim of the revision was to adapt the company law to the current economic circumstances and needs. In addition, the revision also strengthened shareholder and minority rights in order to ensure the best possible implementation of the “rip-off initiative”. The following explanation focuses on the main changes that the revision of the company law will bring about and their background.

Foreign currency for share capital

The National Council’s proposal that share capital may also be denominated in foreign currency was initially controversial in parliament. The Council of States justified its rejection of the proposal with the protection of creditors. Only in the debate of 9 June 2020 did it agree to follow the National Council’s proposal. As a result, the Federal Council was instructed by parliament to draw up a catalogue of permissible foreign currencies for the share capital. Although under current law a company’s accounts can already be presented in a currency that is essential for its business activity (art. 958d para. 3 CO), this did not previously apply to share capital. As a result of the revision, share capital may now also be denominated in a currency that is material for the business activity (art. 621 para. 2 new CO), which means that capital-related aspects such as dividends, reserves and overindebtedness are also based on the corresponding foreign currency. It should be noted that the nominal value of a share must now be at least 0.01 Swiss francs, irrespective of the currency of the share capital (art. 622 para. 4 new CO).

Flexibility of AGM and BoD resolutions

Furthermore, the revision of company law is intended to ensure greater flexibility of AGM and BoD resolutions. As a result of the revision, general meetings can now also be held multilocally under certain conditions (art. 701a para. 2 new CO), virtually (art. 701d new CO) or with a general meeting venue abroad (art. 701b new CO) and resolutions can thus be passed by circular letter. Due to the revision, board resolutions can also be passed electronically, whereby the legislator does not require a signature (art. 713 para. 2 new CO). Although virtual AGM and BoD resolutions were already introduced with COVID 19 Ordinance 2 and extended with COVID 19 Ordinance 3 until the entry into force of the new company law, they require a firm basis in the law after its expiry.

Dismissal of the auditors

In addition, the revision of the company law introduces stricter regulations regarding the dismissal of the auditors. Accordingly, the general meeting of shareholders may in future only dismiss the auditors for important reasons (art. 730a para. 4 new CO), whereby the relevant reasons must be disclosed in the notes to the annual financial statements (art. 959c para. 2 item 14 new CO).

Subdivision of reserves

As a result of the revision of company law (analogous to accounting law), reserves are subdivided into statutory capital reserves, statutory and voluntary retained earnings (art. 671 ff. new CO). Voluntary profit reserves may only be formed if this is justified by the long-term prosperity of the company, taking into account the interests of all shareholders (art. 673 para. 2 new CO). Losses must be offset in the following order: First with the profit carried forward, then with the voluntary profit reserves, then with the legal profit reserve and finally with the legal capital reserve. Instead of offsetting against the legal reserves, however, a carry forward to new account is also permitted (art. 674 new CO).

Interim dividend and interim financial statements

Under the current law, the admissibility of interim dividends is highly controversial due to the lack of a legal basis. The revised company law now creates an explicit legal basis for the admissibility of interim dividends in art. 675a CO and art. 960f CO. Accordingly, the AGM may approve an interim dividend, provided (i) the requirements for the dividend distribution are met and (ii) audited interim financial statements are available. In the case of a company with an opting-out, however, no audit of the interim financial statements is required. Otherwise, an audit may be waived if all shareholders approve the distribution and the claims of creditors are not jeopardised thereby (art. 675a new CO).

Capital band

Like the National Council, the Council of States also advocated the introduction of a capital band at the beginning of the parliamentary debate. The AGM can authorise the board of directors to increase or decrease the share capital within a range (capital

This allows the AGM to authorise the BoD to increase or decrease the share capital within a range (capital band) of 50% of the share capital entered in the commercial register for a maximum of five years (art. 653s new CO). The capital band combines the previous authorised capital increase with the new possibility of an authorised capital reduction. The provisions on the authorised capital increase, on the other hand, will be repealed when the revision comes into force. It should also be noted that in the case of a capital reduction, creditor protection (debt call and audit confirmation) must be carried out for each individual capital reduction within the capital band (art. 653u para. 3 new CO).

Intended acquisition of assets

The revision of company law also entails certain simplifications in the formation of companies and any capital increases. This includes, for example, the (intended) acquisition of assets from shareholders or persons closely associated with them, which is currently still defined as an element of a qualified formation or capital increase (art. 628 para. 2 CO). In practice, the (intended) acquisition of assets often leads to ambiguities, as the assessment of whether a certain acquisition qualifies as an (intended) acquisition of assets often proves to be difficult. This is to change as a result of the revision, in that the (intended) acquisition of assets no longer constitutes a qualified fact. However, in the case of a mixed contribution in kind and acquisition in kind, which is to be distinguished therefrom, the acquisition in kind component and the corresponding consideration of the company will continue to be subject to the publicity of the articles of association and the register (art. 634 para. 4 new CO).

Restructuring

The Federal Council’s aim was also to create incentives for companies to take any restructuring measures at an early stage by means of various new provisions under company law. This includes, for example, the duty of the board of directors to monitor solvency and initiate restructuring measures in the event of impending insolvency. The law already provided for a duty of the board of directors to act if the company is overindebted or if there is a corresponding concern. The revision also clearly defines the conditions under which notification of the bankruptcy court can be omitted in the event of over-indebtedness of the company (cf. art. 725b para. 4 new CO).