Innovative Approaches to AGMs: The Role of Legal Tech
Annual General Meetings (AGMs) are critical events in the corporate calendar, serving as the primary forum for shareholders to exercise their rights and influence company management. In Switzerland, AGMs are subject to stringent regulations under the Swiss Code of Obligations. This post explores the essentials of AGMs in Switzerland, emphasizing the legal framework and the transformative impact of technology.
The Legal Backbone of AGMs
Timing and Compliance
In Switzerland, AGMs must occur within six months after the end of the fiscal year, as mandated by Article 699, paragraph 2 of the Swiss Code of Obligations. Rescheduling is possible but must be communicated to shareholders with ample notice and a valid reason, maintaining the six-month deadline. Furthermore, failing to comply can result in legal actions by shareholders holding at least 10% of the share capital, potentially leading to penalties likewise court-ordered meetings, fines, and reputational damage.
Calling the AGM
AGMs can be convened by the board of directors, external auditors, liquidators, or bond creditor representatives. Additionally, shareholders representing at least 10% of the share capital can request an AGM. Notices must be issued at least 20 days before the meeting, detailing agenda items and motions from both the board and requesting shareholders.
The Digital Shift: Virtual and Hybrid AGMs
Embracing Technology
The latest Swiss corporate law reforms, effective from January 1, 2023, allow for virtual-only AGMs if the company’s articles of association permit it. This digital leap ensures that shareholders can participate remotely, voting and engaging in real-time discussions from anywhere in the world. Hybrid meetings, blending physical presence and virtual participation, offer even greater flexibility and inclusivity.
Ensuring Participation and Security
To facilitate electronic participation, companies must ensure that the technology used for virtual AGMs supports real-time voting and interaction. It must also guarantee the identity of participants and the integrity of the voting process, thereby preventing fraud and ensuring that all shareholder voices are heard.
Financial Statements and Audits: Ensuring Transparency
Preparing Financial Statements
Financial transparency is a cornerstone of AGMs. Companies must prepare comprehensive financial statements, including a balance sheet, income statement, and notes. These documents must be approved by the board before being presented to shareholders for approval at the AGM.
Audit Requirements
Swiss law distinguishes between ordinary audits and limited statutory examinations. Economically significant companies undergo ordinary audits, which include a thorough examination of financial statements and internal controls. Smaller companies may opt for a limited statutory examination, which is less extensive but still ensures compliance with Swiss law. Companies with fewer than ten full-time employees can opt out of the audit requirement entirely, provided all shareholders agree.
Voting Rights and Proxies
Exercising Voting Rights
Each share typically grants one vote, ensuring proportional representation. Shareholders vote on critical issues such as approving financial statements, electing board members, and significant corporate actions. Special provisions allow shareholders to demand investigations into irregularities, promoting transparency and accountability.
Proxy Voting
Shareholders can appoint proxies to vote on their behalf. For listed companies, an independent proxy must be appointed, ensuring that shareholder voting rights are preserved even if they cannot attend the AGM. This proxy must follow the voting instructions given by the shareholders, maintaining the democratic process.
The Future of AGMs: A Tech-Driven Approach
As technology continues to evolve, the landscape of AGMs in Switzerland is set to become even more dynamic. Virtual and hybrid meetings are likely to become the norm, driven by the need for flexibility and the benefits of digital participation. Companies must stay ahead of these trends, ensuring their AGM processes are both legally compliant and technologically advanced.
Conclusion
Annual General Meetings in Switzerland are not just statutory obligations but vital platforms for shareholder engagement and corporate governance. By leveraging technology and adhering to strict legal frameworks, companies can ensure their AGMs are efficient, transparent, and inclusive. This legal-tech synergy is essential for navigating the complexities of modern corporate governance and maintaining shareholder trust.
Understanding these aspects is crucial for both companies and shareholders to navigate the complexities of AGMs effectively, ensuring that these meetings fulfill their critical role in corporate governance.
Utilize Klea’s wealth of AGM expertise to navigate the intricacies of these crucial gatherings, both domestically and internationally. Explore our comprehensive blog post about Romania titled “Ready For The AGM In Romania? Your Ultimate Checklist!” for tailored insights. We believe these resources will enhance your governance endeavors.
