III. Organization
A The Shareholders Meeting (see endnote 25)
Article 6 - Authorities
The Shareholders Meeting is the supreme corporate body of the Corporation. It has the following non-transferable powers:
Article 7 - Meetings
The ordinary Shareholders Meeting shall be held annually within six months (see endnote 33) after the close of the business year.
Extraordinary Shareholders Meetings shall be called as often as necessary, in particular, in all cases required by law.
Extraordinary Shareholders Meetings shall be convened by the Board of Directors within 20 days (see endnote 34) if shareholders representing at least ten percent of the share capital request such meeting in writing, setting forth the items to be discussed and the proposals to be decided upon.
Article 8 - Convening, Universal Meeting
Shareholders Meetings shall be convened by the Board of Directors and, if need be, by the Auditors. The liquidators shall also be entitled to convene a Shareholders Meeting.
The convening of the Shareholders Meeting shall take place by mail (see endnote 35) to the shareholders (see endnote 36) and usufructuaries (see endnote 37) at least twenty days prior to the day of the Meeting (see endnote 38). The convening letter shall state the day, time and place of the Meeting, the agenda, the proposals of the Board of Directors and the proposal of the shareholders who have requested the Shareholders Meeting or that an item (see endnote 39) be included on the agenda (see endnote 40).
Subject to the provisions concerning the Universal Shareholders Meeting, no resolutions can be passed regarding matters which have not been announced in this manner (see endnote 41), except regarding the proposals to convene an extraordinary Shareholders Meeting or to carry out a special audit. Discussions not followed by resolutions or proposals regarding items on the agenda do not need to be announced in advance.
The owners, usufructuaries or representatives of all the shares may, if no objection is raised, hold a Shareholders Meeting without observing the formal requirements for the convening of the Shareholders Meeting (Universal Shareholders Meeting). As long as the owners or representatives of all the shares are present, all subjects falling within the scope of business of the Shareholders Meeting may be validly discussed and decided upon at such meeting.
The annual business report and the Auditors' report must be submitted for examination by the shareholders at the registered office of the Corporation (see endnote 42) at least twenty days prior to the date of the ordinary Shareholders Meeting. Reference to such submission and to the shareholders' right to request the conveying of these documents to them (see endnote 43) shall be included in the invitation to the Shareholders Meeting.
Article 9 - Chair, Minutes
The Shareholders Meeting shall be chaired by the Chairman, or, in his absence, by another member of the Board of Directors or by another Chairman elected for that day by the Shareholders Meeting. The Chairman designates a Secretary for the minutes as well as for counting the votes who need not be shareholders.
The Board of Directors is responsible for the keeping of the minutes (see endnote 44), which are to be signed by the Chairman and by the Secretary.
Article 10 - Resolutions
Each share entitles to one vote (see endnote 45).
}Each shareholder may be represented at the Shareholders Meeting by another shareholder (see endnote 46) who is authorized by a written power of attorney (see endnote 47).
The Shareholders Meeting shall pass its resolutions and carry out its elections with an absolute (see endnote 48) majority of the share votes represented (see endnote 49), to the extent that neither the law (see endnote 50) nor the Articles of Association (see endnote 51) provide otherwise.
If an election cannot be completed upon the first ballot, there shall be a second ballot at which the relative majority shall decide (see endnote 52).
The Chairman shall have no casting vote (see endnote 53).
Elections and votes shall take place openly provided that neither the Chairman nor one (see endnote 54) of the shareholders requests a secret ballot.
Article 11 - Quorums
A resolution of the Shareholders Meeting passed by at least two thirds of the represented share votes and the absolute majority of the represented shares par value is required for (see endnote 55):
ENDNOTES
25 In the case of one hundred percent control within a group of companies or of the so-called "One Man Corporation", the regulations in Articles of Association regarding the shareholders meeting can be considerably shortened. In such cases, usually, the following provisions may be left out: art. 5 para. 2-4, art. 7 para. 3, art. 8 para. 3, 4 sentence 2 and para. 5 sentence 2, art. 10 para. 2-6 and art. 11. Cf. also footnote 15.
26 The nomination of corporate bodies ranking beneath the Board of Directors (general direction, direction, general management, group management etc.) is exclusively of the authority of the Board of Directors (see art. 14 sec. 4 of the Articles of Association as well as art. 716a para. 1 sec. 2 and 4, art. 716b para. 1 as well as art. 721 CO).
27 The Articles of Association can provide that the Shareholders Meeting also elects the chairman of the Board of Directors. However, no other function may be decided upon by the Shareholders Meeting (cf. hereunder footnote 61).
28 As well as, if appropriate, the group auditor.
29 As well as, if appropriate, the consolidated accounts (see art. 663e CO).
30 The Shareholders Meeting may only approve the yearly accounts and decide upon the allocation of the profits shown in the balance sheet if a written auditor's report is at hand (art. 729c CO).
31 As well as, if appropriate, bonus payments to members of the Board of Directors, cf. hereunder footnote 78.
32 Although the Board of Directors is entrusted under art. 716a para. 1 CO with certain essential tasks which are irrevocable and non-transferable, it may continue to submit resolutions of particular importance to the Shareholders Meeting. In such a case the vote of the Shareholders Meeting only has a consultative value; the authority to decide and the liability remains with the Board of Directors. It is not admissible to grant the Shareholders Meeting further authorities in the Articles of Association which are imperatively entrusted to the Board of Directors by law.
33 The Articles of Association may shorten this recommended period but may not lengthen it.
34 Depending on the circumstances and in particular in the case of public corporations proportionally longer.
35 The Board of Directors remains free to send the invitations by registered mail; this is recommended when there is tension between the shareholders.
36 The auditor is also as a rule to be invited to the ordinary Shareholders Meeting; the Shareholders Meeting may however decide to do without its presence by way of a unanimous resolution (art. 729c para. 3 CO).
37 In the case of bearer shares, by publication in the Swiss Official Journal of Commerce.
38 This period may not be shortened. In order to clarify issues, the following can be foreseen: "The day of dispatch is relevant; such day as well as that of the Shareholders Meeting are not to be counted."
39 The legal inferior limit of one Mio. francs (art. 699 para. 3 CO) can be lowered by the Articles of Association in order to better protect the minority shareholders.
40 It can be foreseen that further to the proposal of shareholders to include items in the agenda counterproposals of shareholders regarding previously existing (routine) items must be made known, to the extent that they are received in time by the Board of Directors.
41 In order to avoid contestation risks, the description of each item to be discussed must be clear enough for the shareholders to recognize what awaits them. Proposals to amend the Articles of Association are to include the proposed amended wording entirely. The Board of Directors may explain and justify its proposals.
42 Under the new law, submission at the branch offices, if any, is no longer required (see art. 696 para. 1 CO).
43 See art. 696 para. 1 CO. It may be recommended to directly attach the documents to the invitation letter.
44 As appropriate, information regarding the required content of the minutes pursuant to art. 702 para. 2 CO. See footnote 77.
45 In the case of shares with different par values, this provision leads to shares with privileged voting rights. This determination of the voting rights pursuant to the number of shares does not apply in the cases of art. 693 para. 3 CO. Should all the shares have the same par value or should no priveleged voting rights be desired despite various par values, then the provision should read as follows: "the shareholders exercise their voting rights proportionally to the par value of the shares belonging to them (cf. art. 692 para. 1 and 626 sec. 5 CO)".
To the extent that articles of association of public companies foresee a percentage clause (see sec. 1 of footnote 17), it is recommended to include a vote limitation clause such as the following:
"When exercising voting rights, no one shareholder may, with his own shares and the shares he represents, directly or indirectly accumulate more than [three] percent of the entire share capital.
Legal entities and communities which are bound by capital or voting power, by consolidated management or in another similar manner, are deemed as one shareholder with respect to voting.
The voting right limitation does not apply to votes by corporate bodies representing shareholders (art. 689c CO), to independent representatives (art. 689c CO) or to representatives of deposited shares (art. 689 d CO)."
46 Or, as the case may be, representation by a person who need not be a shareholder.
47 If need be completed for clarity purposes by: "Single owner enterprises, entities with and without legal personality may be represented by persons empowered to act on their behalf, married persons may be represented by their spouses, and pupils by their guardians even if such representatives are not shareholders." "Corporate bodies acting as representatives, independent voting rights representatives pursuant to art. 689c CO as well as deposited rights representatives pursuant to art. 689d need not be shareholders."
48 In other words, half of all the represented share votes plus one share vote; for example (300:2) + 1 = 151 share votes.
49 The reference to the represented (and not simply the cast) share votes corresponds to the regulations of the law in art. 703 CO. The consequence is that non cast votes have the same effect as negative votes. Contrarily, the reference to cast (and not represented) share votes causes non cast votes not to be taken into consideration and an absolute majority to be reached more easily.
50 See art. 704 para. 1 CO.
51 The Articles of Association may still foresee that special majorities are required for certain decisions (for example for the decision mentioned hereinabove in art. 4 para. 2). Presence quorums foreseen in the Articles of Association are also admissible even though such quorums are no longer required by law. It is in any case recommended to only make use of this possibility with great caution. Indeed opposed shareholders could block the Corporation by simply not participating in the Shareholders Meeting.
52 The person who garners the most votes is elected (irrespective of the total number of votes garnered by other candidates).
53 This provision complies with the non-compulsory legal provisions. Its consequence is that in the case of a tie, no (positive) resolution can be passed. The casting vote of the chairman (and, usually therewith that of the Chairman of the Board of Directors) can still be foreseen in the Articles of Association. For the Board of Directors, the rule is the opposite one: if the Articles of Association do not mention this issue, then the Chairman has the casting vote; this can be excluded in the Articles of Association (see art. 713 para. 1 CO).
54 Or another solution, as appropriate, for example "ten percent of the shareholders"; or "the absolute majority of the represented shareholders".
55 As a possible addendum to cases in which a special majority is required by law pursuant to art. 704 para. 1 CO in order to strengthen the position of minority shareholders since the protection of the minority has been weakened by the deletion of the presence quorums previously foreseen by law. It must be borne in mind that, pursuant to art. 704 para. 2 CO, special majority provisions may only be introduced into the Articles of Association with the foreseen majority. Furthermore, such quorums in the Articles of Association can only be deleted again with the special majority foreseen therefor. Thus a danger of binding oneself exists.
56 In order to avoid that the protection granted by the transfer limitations be done away with too easily. Should there be different par values, then art. 623 para. 2 CO is to be taken into consideration.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
A The Shareholders Meeting (see endnote 25)
Article 6 - Authorities
The Shareholders Meeting is the supreme corporate body of the Corporation. It has the following non-transferable powers:
- 1.to adopt and amend the Articles of Association;
- 2.to elect and recall the members of the Board of Directors (see endnotes 26,27) and the Auditors (see endnote 28);
- 3.to approve the annual report and the annual accounts (see endnote 29) as well as to pass resolutions regarding the allocation of profits as shown on the balance sheet (see endnote 30), in particular to determine the dividends (see endnote 31);
- 4.to grant discharge to the members of the Board of Directors;
- 5.to pass resolutions regarding issues which are reserved to the Shareholders Meeting by law or by the Articles of Association or which are presented to it by the Board of Directors ( see endnote 32).
Article 7 - Meetings
The ordinary Shareholders Meeting shall be held annually within six months (see endnote 33) after the close of the business year.
Extraordinary Shareholders Meetings shall be called as often as necessary, in particular, in all cases required by law.
Extraordinary Shareholders Meetings shall be convened by the Board of Directors within 20 days (see endnote 34) if shareholders representing at least ten percent of the share capital request such meeting in writing, setting forth the items to be discussed and the proposals to be decided upon.
Article 8 - Convening, Universal Meeting
Shareholders Meetings shall be convened by the Board of Directors and, if need be, by the Auditors. The liquidators shall also be entitled to convene a Shareholders Meeting.
The convening of the Shareholders Meeting shall take place by mail (see endnote 35) to the shareholders (see endnote 36) and usufructuaries (see endnote 37) at least twenty days prior to the day of the Meeting (see endnote 38). The convening letter shall state the day, time and place of the Meeting, the agenda, the proposals of the Board of Directors and the proposal of the shareholders who have requested the Shareholders Meeting or that an item (see endnote 39) be included on the agenda (see endnote 40).
Subject to the provisions concerning the Universal Shareholders Meeting, no resolutions can be passed regarding matters which have not been announced in this manner (see endnote 41), except regarding the proposals to convene an extraordinary Shareholders Meeting or to carry out a special audit. Discussions not followed by resolutions or proposals regarding items on the agenda do not need to be announced in advance.
The owners, usufructuaries or representatives of all the shares may, if no objection is raised, hold a Shareholders Meeting without observing the formal requirements for the convening of the Shareholders Meeting (Universal Shareholders Meeting). As long as the owners or representatives of all the shares are present, all subjects falling within the scope of business of the Shareholders Meeting may be validly discussed and decided upon at such meeting.
The annual business report and the Auditors' report must be submitted for examination by the shareholders at the registered office of the Corporation (see endnote 42) at least twenty days prior to the date of the ordinary Shareholders Meeting. Reference to such submission and to the shareholders' right to request the conveying of these documents to them (see endnote 43) shall be included in the invitation to the Shareholders Meeting.
Article 9 - Chair, Minutes
The Shareholders Meeting shall be chaired by the Chairman, or, in his absence, by another member of the Board of Directors or by another Chairman elected for that day by the Shareholders Meeting. The Chairman designates a Secretary for the minutes as well as for counting the votes who need not be shareholders.
The Board of Directors is responsible for the keeping of the minutes (see endnote 44), which are to be signed by the Chairman and by the Secretary.
Article 10 - Resolutions
Each share entitles to one vote (see endnote 45).
}Each shareholder may be represented at the Shareholders Meeting by another shareholder (see endnote 46) who is authorized by a written power of attorney (see endnote 47).
The Shareholders Meeting shall pass its resolutions and carry out its elections with an absolute (see endnote 48) majority of the share votes represented (see endnote 49), to the extent that neither the law (see endnote 50) nor the Articles of Association (see endnote 51) provide otherwise.
If an election cannot be completed upon the first ballot, there shall be a second ballot at which the relative majority shall decide (see endnote 52).
The Chairman shall have no casting vote (see endnote 53).
Elections and votes shall take place openly provided that neither the Chairman nor one (see endnote 54) of the shareholders requests a secret ballot.
Article 11 - Quorums
A resolution of the Shareholders Meeting passed by at least two thirds of the represented share votes and the absolute majority of the represented shares par value is required for (see endnote 55):
- 1.the cases listed in art. 704 para. 1 CO;
- 2.the alleviating or withdrawal of limitations upon the transfer of registered shares;
- 3.the conversion of registered shares into bearer shares (see endnote 56);
- 4.the dissolution of the Corporation followed by liquidation.
ENDNOTES
25 In the case of one hundred percent control within a group of companies or of the so-called "One Man Corporation", the regulations in Articles of Association regarding the shareholders meeting can be considerably shortened. In such cases, usually, the following provisions may be left out: art. 5 para. 2-4, art. 7 para. 3, art. 8 para. 3, 4 sentence 2 and para. 5 sentence 2, art. 10 para. 2-6 and art. 11. Cf. also footnote 15.
26 The nomination of corporate bodies ranking beneath the Board of Directors (general direction, direction, general management, group management etc.) is exclusively of the authority of the Board of Directors (see art. 14 sec. 4 of the Articles of Association as well as art. 716a para. 1 sec. 2 and 4, art. 716b para. 1 as well as art. 721 CO).
27 The Articles of Association can provide that the Shareholders Meeting also elects the chairman of the Board of Directors. However, no other function may be decided upon by the Shareholders Meeting (cf. hereunder footnote 61).
28 As well as, if appropriate, the group auditor.
29 As well as, if appropriate, the consolidated accounts (see art. 663e CO).
30 The Shareholders Meeting may only approve the yearly accounts and decide upon the allocation of the profits shown in the balance sheet if a written auditor's report is at hand (art. 729c CO).
31 As well as, if appropriate, bonus payments to members of the Board of Directors, cf. hereunder footnote 78.
32 Although the Board of Directors is entrusted under art. 716a para. 1 CO with certain essential tasks which are irrevocable and non-transferable, it may continue to submit resolutions of particular importance to the Shareholders Meeting. In such a case the vote of the Shareholders Meeting only has a consultative value; the authority to decide and the liability remains with the Board of Directors. It is not admissible to grant the Shareholders Meeting further authorities in the Articles of Association which are imperatively entrusted to the Board of Directors by law.
33 The Articles of Association may shorten this recommended period but may not lengthen it.
34 Depending on the circumstances and in particular in the case of public corporations proportionally longer.
35 The Board of Directors remains free to send the invitations by registered mail; this is recommended when there is tension between the shareholders.
36 The auditor is also as a rule to be invited to the ordinary Shareholders Meeting; the Shareholders Meeting may however decide to do without its presence by way of a unanimous resolution (art. 729c para. 3 CO).
37 In the case of bearer shares, by publication in the Swiss Official Journal of Commerce.
38 This period may not be shortened. In order to clarify issues, the following can be foreseen: "The day of dispatch is relevant; such day as well as that of the Shareholders Meeting are not to be counted."
39 The legal inferior limit of one Mio. francs (art. 699 para. 3 CO) can be lowered by the Articles of Association in order to better protect the minority shareholders.
40 It can be foreseen that further to the proposal of shareholders to include items in the agenda counterproposals of shareholders regarding previously existing (routine) items must be made known, to the extent that they are received in time by the Board of Directors.
41 In order to avoid contestation risks, the description of each item to be discussed must be clear enough for the shareholders to recognize what awaits them. Proposals to amend the Articles of Association are to include the proposed amended wording entirely. The Board of Directors may explain and justify its proposals.
42 Under the new law, submission at the branch offices, if any, is no longer required (see art. 696 para. 1 CO).
43 See art. 696 para. 1 CO. It may be recommended to directly attach the documents to the invitation letter.
44 As appropriate, information regarding the required content of the minutes pursuant to art. 702 para. 2 CO. See footnote 77.
45 In the case of shares with different par values, this provision leads to shares with privileged voting rights. This determination of the voting rights pursuant to the number of shares does not apply in the cases of art. 693 para. 3 CO. Should all the shares have the same par value or should no priveleged voting rights be desired despite various par values, then the provision should read as follows: "the shareholders exercise their voting rights proportionally to the par value of the shares belonging to them (cf. art. 692 para. 1 and 626 sec. 5 CO)".
To the extent that articles of association of public companies foresee a percentage clause (see sec. 1 of footnote 17), it is recommended to include a vote limitation clause such as the following:
"When exercising voting rights, no one shareholder may, with his own shares and the shares he represents, directly or indirectly accumulate more than [three] percent of the entire share capital.
Legal entities and communities which are bound by capital or voting power, by consolidated management or in another similar manner, are deemed as one shareholder with respect to voting.
The voting right limitation does not apply to votes by corporate bodies representing shareholders (art. 689c CO), to independent representatives (art. 689c CO) or to representatives of deposited shares (art. 689 d CO)."
46 Or, as the case may be, representation by a person who need not be a shareholder.
47 If need be completed for clarity purposes by: "Single owner enterprises, entities with and without legal personality may be represented by persons empowered to act on their behalf, married persons may be represented by their spouses, and pupils by their guardians even if such representatives are not shareholders." "Corporate bodies acting as representatives, independent voting rights representatives pursuant to art. 689c CO as well as deposited rights representatives pursuant to art. 689d need not be shareholders."
48 In other words, half of all the represented share votes plus one share vote; for example (300:2) + 1 = 151 share votes.
49 The reference to the represented (and not simply the cast) share votes corresponds to the regulations of the law in art. 703 CO. The consequence is that non cast votes have the same effect as negative votes. Contrarily, the reference to cast (and not represented) share votes causes non cast votes not to be taken into consideration and an absolute majority to be reached more easily.
50 See art. 704 para. 1 CO.
51 The Articles of Association may still foresee that special majorities are required for certain decisions (for example for the decision mentioned hereinabove in art. 4 para. 2). Presence quorums foreseen in the Articles of Association are also admissible even though such quorums are no longer required by law. It is in any case recommended to only make use of this possibility with great caution. Indeed opposed shareholders could block the Corporation by simply not participating in the Shareholders Meeting.
52 The person who garners the most votes is elected (irrespective of the total number of votes garnered by other candidates).
53 This provision complies with the non-compulsory legal provisions. Its consequence is that in the case of a tie, no (positive) resolution can be passed. The casting vote of the chairman (and, usually therewith that of the Chairman of the Board of Directors) can still be foreseen in the Articles of Association. For the Board of Directors, the rule is the opposite one: if the Articles of Association do not mention this issue, then the Chairman has the casting vote; this can be excluded in the Articles of Association (see art. 713 para. 1 CO).
54 Or another solution, as appropriate, for example "ten percent of the shareholders"; or "the absolute majority of the represented shareholders".
55 As a possible addendum to cases in which a special majority is required by law pursuant to art. 704 para. 1 CO in order to strengthen the position of minority shareholders since the protection of the minority has been weakened by the deletion of the presence quorums previously foreseen by law. It must be borne in mind that, pursuant to art. 704 para. 2 CO, special majority provisions may only be introduced into the Articles of Association with the foreseen majority. Furthermore, such quorums in the Articles of Association can only be deleted again with the special majority foreseen therefor. Thus a danger of binding oneself exists.
56 In order to avoid that the protection granted by the transfer limitations be done away with too easily. Should there be different par values, then art. 623 para. 2 CO is to be taken into consideration.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
