Your articles of association need to be adapted

Analyzes

Your articles of association need to be adapted - are you ready?

The new stock corporation law brings changes. It has been in force since 1 January 2023 and the transition period will soon end.

What does this mean for you?

From 1 January 2025, all articles of association that have not been amended will lose their validity. Invalid provisions can create legal uncertainties. Without up-to-date articles of association, companies risk complaints from the commercial register and possible conflicts with shareholders.

Do you have to change your articles of association now?

Not necessarily - but it is advisable. Provisions that contradict the new law will automatically become invalid on 31 December 2024 and the statutory provisions will take their place. Nevertheless, such provisions could become problematic at a later date, particularly if they are overlooked in the event of future changes, e.g. a change of company or registered office, and the commercial register raises objections as a result.

The adaptation provides clarity and gives you back control. So you can continue to operate safely in the future.

The most common adaptations you should know about:

- Shareholder rights

The new share law strengthens shareholders' rights. Previously, shareholders only had certain rights depending on their capital share. These included the right to information and inspection, the right to initiate a special audit and the right to convene a general meeting. Now it is not only the capital that counts, but also the number of votes. This gives smaller shareholders more influence.

- Access to the audit report before the AGM

The new stock corporation law also allows the annual report and audit report to be made available electronically 20 days before the Annual General Meeting, which means that they do not have to be physically displayed at the company's registered office.

If this is still prescribed in the current Articles of Association, an adjustment is advisable.

- Board elections

Since the new law came into force, board members must also be elected individually, unless the articles of association expressly provide for a group election. Non-listed companies that wish to continue to elect their board members in globo must now stipulate this in their articles of association.

- Unwanted delegation of management

Furthermore, an amendment to the Articles of Association may be necessary if the shareholders wish to prevent the Board of Directors from delegating management to individual members or third parties.

Under the old law, such a delegation had to be authorised in the articles of association. Under the new law, this is no longer required, but must be expressly prohibited if a delegation is undesirable.

- Intended acquisition of assets

The regulations on the intended acquisition of assets have been deleted. Previously, a company wishing to acquire assets from a shareholder had to record this in the articles of association and enter it in the commercial register.

This provision has now been cancelled, meaning that the corresponding provisions in the Articles of Association should be deleted and the entries in the commercial register deleted.

Further reasons for adjustment

In addition to the aforementioned cases in which an amendment to the Articles of Association is required, the new stock corporate law also offers new possibilities that must first be enshrined in the Articles of Association. This applies in particular to shareholder rights and the Annual General Meeting.

- Currency of the share capital

In the context of the share capital, the new share law offers new possibilities. Companies can now manage their capital in a foreign currency relevant to their business activities, such as EUR, USD, GBP or JPY.

As with all amendments to the Articles of Association, a corresponding change must be approved by the General Meeting and set out in the Articles of Association.

- Minimum par value of the shares

The new law also allows nominal share values of less than one cent as long as the nominal value is greater than zero. This also requires an amendment to the Articles of Association if this is to be utilised.

- On-site or virtual? - The new forms of general meetings

The new stock corporation law enables various forms of general meetings. For example, it can now be held without a venue and purely virtually.

At an in-person-meeting, shareholders can also exercise their rights electronically without being present in person. In addition, the Annual General Meeting can be held at several locations simultaneously, abroad or by circular letter.

However, a purely virtual meeting or a meeting venue abroad requires a corresponding basis in the articles of association. It is also advisable to specify further details in the articles of association or regulations.

- Authorised capital replaced by capital band

If a company has introduced authorised capital before 1 January 2023, it can still use it until the expiry of the corresponding deadline.

This period is determined by the Articles of Association and is a maximum of two years. If the company requires additional room for manoeuvre for capital changes, the introduction of a capital band is recommended, which requires an amendment to the Articles of Association.

The easiest way to implement this

All amendments to the Articles of Association must be made by a publicly notarised resolution of the General Meeting. As a rule, a simple majority of the votes represented is sufficient.

However, a qualified majority is required for certain important changes. The new Articles of Association must then be submitted to the commercial register.

Simple and cost-effective customisation with Konsento

As explained above, it is necessary to amend the articles of association in order to avoid contradictions with current law and to avoid complicating subsequent applications to the commercial register. For stock corporations with more than one shareholder, up-to-date articles of association create clear conditions and eliminate legal risks. Nevertheless, up-to-date articles of association are not a differentiating feature that provides a stock corporation with measurable added value. The Swiss LegalTech company KONSENTO has therefore developed a simple, digital process together with the law and notary firm KAISER ODERMATT & PARTNER that enables public limited companies to revise their articles of association quickly, efficiently and cost-effectively. Learn more Find out more about this attractive offer here..

The amendment of the articles of association is necessary to avoid contradictions with current law. This makes subsequent entries in the commercial register smoother. For public limited companies with several shareholders, updated articles of association also ensure clarity and reduce legal risks.

However, current articles of association alone do not offer any measurable advantage for the AG. This is why KONSENTO has developed a digital process together with the law firm KAISER ODERMATT & PARTNER. This enables companies to amend their articles of association easily, quickly and cost-effectively.