One aim of the draft legislation is to improve corporate governance. Specifically, it lends greater weight to the position of shareholders as the company's owners. It sets out rights to information more clearly, and creates a right to written information in the case of privately held companies. Furthermore, the bill lowers the thresholds for exercising a variety of shareholder rights, such as calling a general meeting, and improves the legal framework for actions to reclaim unjustified payments.
In the future, the members of the board of directors will have to stand for election by the annual general meeting each year. This will permit shareholders to show what they think of the board's performance and the payments that its members have received. The revised law also creates a shareholder's right to information about the compensation paid to the top managers of privately-held joint-stock companies. Unlike public companies, these corporations are not obliged to disclose such payments in the notes to their financial statements.
Banks' voting rights originating from the securities they hold in safekeeping, as well as the possibility of shareholder representation by an officer of the company, have been abolished. In the future, proxies will have to be independent persons.
More flexible capital structures
A second area of revision concerns the rules on capital structures, which will be made more flexible to give companies greater scope. By adopting a "capital band", the annual general meeting will be able to authorize the board of directors to increase or reduce share capital as it wishes within a given bandwidth. The statutory minimum par value for shares will also be abolished, allowing companies to split their shares as they wish. Furthermore, in the case of listed non-voting stock, the present rules restricting non-voting capital to twice the level of share capital will cease to apply. By contrast, in response to criticism at the committee hearing stage, the Federal Council has decided not to abolish bearer shares.
Modernization of the annual general meeting
The draft legislation creates a legal foundation for the use of electronic means of communication in preparing and staging of the annual general meeting. This will allow costs to be reduced and active shareholder participation to be encouraged. The new law also provides for an annual general meeting to be held at several venues simultaneously, or abroad. An exclusively electronic or virtual AGM can be held if all shareholders agree.
Comprehensive revision of accounting legislation
Finally, the bill replaces Switzerland's outdated accounting legislation, creating standard rules for all forms of company. Requirements will nonetheless differ depending on the economic significance of the company in question. The general provisions reflect current bookkeeping and accounting practices at a well-run SME, while large companies and groups of companies are subject to stricter rules. Under certain circumstances, in the interests of the capital market or to protect persons with minority holdings, closing statements will have to be drawn up according to a set of private rules to give a true and fair presentation of the company's actual financial circumstances.
The new accounting legislation will not impact on taxes. Although accounting entries that are not recognized for tax purposes must still be disclosed, companies may decide themselves whether to state only the total in the notes to the annual financial statements, or to include the figure in the statements themselves.
Last modification 21.12.2007