New company law from 1 January 2023: Need to adapt the organisational regulations

What?

In my article of 21.11.2022 I wrote about the adjustments that will be necessary to the articles of association of a public limited company. Today, we are talking about the little brother of the articles of association, the organisational regulations.

As before, organisational regulations are not mandatory. But if the board of directors wants to delegate part of the management to an appointed executive board (and thus reduce its own liability), it cannot avoid the organisational regulations.

N.B.:

Often – especially with start-ups – designations such as “CEO, CFO, Head of …” are used. From the point of view of company law, such designations have no meaning, especially they do not reduce the responsibility of the board of directors, if they are not correctly introduced in organisational regulations (with the tasks) and a formal delegation of tasks is made. In other words, if the board of directors appoints a “CEO” without regulating the delegation of competences in organisational regulations, it remains fully responsible for the statutory scope of duties under company law. The appointment of the “CEO” was in vain!

Apart from the appointment of an executive board and the delegation of tasks (and responsibilities) to it, the organisational regulations primarily serve to regulate the organisation of the board of directors.

The new company law does not fundamentally change this – no more than an editorial amendment to the wording of the law is needed, in order to avoid misunderstandings:

• art. 713 CO provides for simplifications for meetings of the board of directors, namely such meetings can now be held purely virtually. In addition, circular resolutions can also be passed purely electronically (e.g. e-mail, with electronic signatures, etc.). The corresponding rules in the organisational regulations should be supplemented. However, should the company wish to exclude these new possibilities (for whatever reason), this would have to be stated in the organisational regulations.
• the list of inalienable duties of the board of directors in Art. 716a CO has been extended by two duties. If the organisational regulations reflect this list of duties (or the wording of the law), then this list would also have to be supplemented. However, it would be better to do without this mere reproduction of the statutes, as is the case with the articles of association. This mere “referencing” adds not value but – on the contrary – could lead to questions of interpretation in the event of discrepancies in the respective wording.
• since the revision of the statutes will be indispensable, the conformity of the organisational regulations with the revised statutes must be checked.

Do what?

The new company law does not lead to urgent adjustments of the organisational regulations. However, the revision of the law is a good occasion to check whether they still correspond to the lived reality or the organisation of the board of directors and the executive board.