New company law from 1.1.2023: Necessary adaptation of the articles of association

What?

Much has already been written about this: On 1 January 2023, the revision of company law will come into force. Although the revision is called the “big one”, it will not bring fundamental changes for existing SMEs.

However, some welcome additional options will only become effective if they are inserted into the articles of association. Then, many companies have very long articles of association that largely refer to the legal text. With the change of the legal text to 1 January 2023, a discrepancy between the legal text and the text of the articles of association will arise in these articles of association, so that questions will arise as to what should now apply.

So What:

It is mandatory to amend the Articles of Association if any of the following options are to be used:

• Share split or reduction of the nominal share value to below CHF 0.01, use of a foreign currency instead of Swiss Francs for the share capital
• Introduction of a capital band, e.g. as a replacement after the discontinuation of the authorised share capital
• holding virtual (purely electronic) or hybrid (combination of presence and transmission) general meetings
• casting vote by the chairman in the event of a tie in votes at the general meeting of shareholders
• election of the members of the Board of Directors not individually, but “en bloc
• special provisions in case of vacancies in the Presidency of the Board of Directors
• exclusion of the power of the board of directors to delegate the management of the company to individual members or third parties in organisational regulations
• introduction of an arbitration clause (cf. the last post from ….).

The legislator does not want to force any company to adapt its articles of association to the new wording of the law. Therefore, it has introduced a transitional period of two years during which all “old” provisions of the articles of association remain valid. After the expiry of the transitional period, the statutory provisions take precedence over the articles of association. If the articles of association are still not revised, their content is obsolete in some essential parts, which can lead to misunderstandings.

However, a company can decide to amend the articles of association before the end of 2024 and thus apply the new law, because the new regulations make perfect sense. This concerns, for example, the new regulation of some shareholder rights (the rules for listed companies are not considered):

• New right to information outside the general meeting of shareholders, if at least 10% of the share capital or votes request such information.
• Right to inspect business records without the consent of the general meeting or the board of directors (if at least 5% of the share capital or votes so request)
• Right to convene a general meeting by at least 10% of the share capital or votes (instead of 10% of the share capital or shares with a par value of CHF 1 million)
• Right to place items on the agenda and to propose motions at the general meeting of shareholders by 5% of the share capital or votes
• Special investigation if requested by 10% of the share capital or votes (instead of 10% of the share capital or shares with a par value of CHF 2 million)
• Action for dissolution of the company by at least 10% of the share capital or votes (instead of just 10% of the capital).

Do What:

I recommend that every company review its articles of association at the beginning of next year and introduce the new options such as virtual general meetings. All the other adjustments can already be made in the same go (and at the same cost).

I am not a fan of long articles of association: What is in the code does not have to be included in the articles. This has the advantage that the statutes do not have to be amended every time the law is changed. Also, in the case of different versions of the text, there are no difficulties of interpretation and no differences of opinion as to which should take precedence (articles or law). I therefore always recommend using so-called “short articles”, which only have the absolutely necessary content.