It is again the time of year when companies hold their annual general assembly. According to the law, Swiss companies are required to hold their general assembly within six months after conclusion of the business year. As with so many other things, however, the outbreak of COVID-19 has put a stop to this. The present article is intended to serve as a basis for decision-making and as a checklist for board of directors to decide whether and in what form their general assembly will be held. A checklist is necessary to ensure that all requirements for a valid general assembly are fulfilled at the time of COVID-19.
I. Requirements according to applicable law (before COVID-19 Ordinance 2)
To date it was clear that the general assembly was to be held physically. Shareholders' participation rights must be exercised at the general assembly and resolutions require the physical presence of shareholders, their personal representatives or the independent proxy.
Also accepted in the doctrine was the admissibility of the multilocal general assembly. The multilocal general assembly is a normal general assembly, which, however, takes place in two or more places at the same time. This is done by means of video and audio transmission of the votes, thus ensuring the physical presence of the shareholders, who can choose the location.
By offering the possibility to participate via internet, this type of general meeting heads one step further. This is still a so-called ""attended general assembly, in which absent shareholders or their representatives have the opportunity to participate by electronic means. The general assemlby can be followed online in real time via video and audio transmission. This still allows shareholders to choose freely between physical and electronic participation, as the general assembly is actually taking place. This format is also already considered acceptable by the doctrine under current law. However, it is important that all relevant requirements are met. In particular, shareholders who are physically present and those who participate electronically must always be able to interact with each other at eye level during the general assembly, i.e. simultaneously and without delay.
II. Requirements according to COVID-19 Ordinance 2
1. In general terms
In accordance with the Covid-19 Ordinance 2 and its amendment of 16 March 2020, it is prohibited to hold public or private events with more than five people. Article 6a of the Ordinance provides a special provision for general assemblies, which allows shareholders to exercise their rights complying with these regulations.
It is still possible to hold a physical general assembly, but only with a permit from the competent cantonal authority. In addition, the organiser (in the case of a company limited by shares, this is the board of directors) must submit a protective concept and the hygiene regulations must be fulfilled.
The organiser may order that shareholders may only exercise their rights in writing or in electronic form or through an independent proxy appointed by the organiser. The right of the shareholder to physically attend the meeting is therefore temporarily restricted by the order of the board of directors. This also applies to items on the agenda that requiring notarization. The order must be communicated in writing or published electronically at least four days before the general assembly (art. 6a COVID-19 Ordinance 2). In Accordance with applicable law, COVID-19 Ordinance 2 requires that shareholders be invited in the form prescribed in the articles of association no later than 20 days before the general assembly and that the agenda items and motions be announced (art. 626 no. 5 and art. 700 para. 1 CO). In the event of a digital general assembly, it must be ensured that each participant is identified and is able speak at the general assembly, hear the votes of other participants and exercise his or her rights, in particular the right to vote. The requirement for the picture has been waived. However, voting by email is not possible.
Proxies and instructions to the independent proxy can be issued electronically. The general assembly must still take place on a certain date, at a certain time and in a certain place. A postponement of the general assembly is possible, even if this does result in the general assembly not being held within six months of the closing of the business year (non-binding deadline). In the event that the deadline is exceeded, the meeting becomes neither invalid nor can the resolutions passed be challenged.
2. Differences to revision of Swiss company law
The special regulation for general assemblies of companies under COVID-19 Ordinance 2 was designed in accordance with the revision of Swiss company law. However, the following differences exist: For a virtual general assembly according to the Swiss corporate law revision, a statutory basis is required. This basis is not necessary according to COVID-19 Ordinance 2. Furthermore, in contrast to the Swiss corporate law revision, no independent proxy must be appointed. Nevertheless, if an independent proxy has been appointed, shareholders may be obliged to have their rights exercised by the independent proxy. The appointment of the independent proxy, if one has not already been appointed, is the responsibility of the organiser.
3. Scope of the special provisions under COVID-19 Ordinance 2
This ordinance applies to general assemblies of all companies (companies limited by shares, limited liability companies, general and limited partnerships, cooperatives and associations). The regulation is also applicable to storey owner's meetings, as its provisions refer to the law on associations.
With regard to the limited liability company, resolutions of the shareholders' meeting can also be made in writing in accordance with art. 805 para. 4 CO, provided that no shareholder requests an oral consultation.
In the case of associations, general meetings of members do not necessarily have to take place physically. If unanimity is obtained, written consent to an application is possible. If there is a corresponding statutory basis, a written majority decision (ballot) is also permissible.
In the case of cooperatives with more than 300 members or where the majority of members are cooperatives itself, the articles of association may stipulate that the competences of the general assembly may be exercised in whole or in part by means of a written vote (ballot) by the members of the cooperative. The right of representation is limited depending on the size of the cooperative. According to the COVID-19 Ordinance 2 it is possible to exercise the rights in writing or in electronic form. These possibilities apply regardless of whether a ballot is not stipulated in the articles of association or would not be permitted by law. In addition, written or electronic voting is also possible for the assembly of delegates of a cooperative.
III. Holding virtual general assembly meetings via the daura platform
The daura platform enables Swiss company limited by shares (AG) to keep their share register automatically and digitally as well as to issue new digital shares and participation certificates through capital increases. This digitises the processing of capital increases and, above all, gives unlisted companies access to a broad range of investors via the daura platform. In addition, digitally supported share transfers, i.e. the use of assignment declarations generated automatically via the platform, simplify share accounting for the Board of Directors. Due to the Corona crisis, the digitalization of corporate law processes has received a real boost. In order to support these developments and to implement the opportunities provided by the Covid-19 regulation 2, daura is developing a new tool that enables the holding of and participation in virtual general meetings while exercising voting rights. After registering on the daura platform, shareholders receive a digital voting card in the form of a token. This enables shareholders to exercise their voting rights in real time for resolutions at virtual general meetings or to issue instructions to an independent proxy appointed by the board of directors. daura plans to launch the new tool on the market as early as the summer.
