Adaptation of the Articles of Association to the revised Stock Corporation Act
New stock corporation law: transition period expires
The revised stock corporate law came into force on 1 January 2023 and brought with it numerous changes. The transitional period for adapting to these changes ends on 31 December 2024. From 1 January 2025, provisions of the articles of association that do not comply with the new stock corporate law automatically lose their validity. It is possible that articles of association that have not been adapted to the new law may partially contradict the current law and are no longer permitted under the new law. Shareholders and board members can therefore no longer rely on their content. It is therefore advisable to amend the articles of association promptly for reasons of legal certainty.
Necessary amendments to the Articles of Association
In principle, the revision of stock corporate law was designed in such a way that companies do not have to amend their articles of association. 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 future amendments, e.g. in the event of a change of company or registered office, and the commercial register raises objections as a result.
To avoid this, the following amendments to the Articles of Association are necessary:
- Shareholder rights
Under the old law, the exercise of numerous shareholder rights such as the right to information and inspection, the right to initiate a special audit, the convening of the Annual General Meeting by shareholders or the right of shareholders to place items on the agenda and submit motions was based solely on the share capital held by them, whereas the revised stock corporate law also assigns a significant role to the number of votes they hold.
- Access to the audit report before the AGM
The new stock corporate 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 need to be physically displayed at the company's registered office. If this is still prescribed in the current articles of association, an amendment 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.
- Undesire 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 the management of the company 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 necessary, 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 regulation no longer applies, meaning that the corresponding provisions in the articles of association should be deleted and the entries in the commercial register canceled.
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 terms of 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 Annual 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.
- Authorised capital replaced by capital band
The new stock corporate law enables various forms of general meetings. For example, it can now be held without a venue and purely virtually. At a physical 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 corresponding deadline expires. This period is set out in 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.
Realisation
All these 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 amendments. The new articles of association must then be submitted to the commercial register.
Streamlined and cost-effective adaptation of the Articles of Association
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 Zug-based law and notary firm KAISER ODERMATT & PARTNER that enables stock corporations to revise their articles of association quickly, efficiently and cost-effectively. Find out more about this attractive offer here..
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