What makes a legally compliant general meeting legally compliant?
The Annual General Meeting is the supreme body of the stock corporation and the forum in which shareholders exercise their membership rights. It makes the most important and fundamental decisions. The Swiss Code of Obligations (CO) lists 9 non-transferable powers of the General Meeting for non-listed stock corporations and 13 non-transferable powers for listed stock corporations, i.e. powers that cannot be delegated to the Board of Directors, the Executive Board or the auditors. The AGM is composed of the participating shareholders or their representatives.
The convocation, agenda, organisation and follow-up of the Annual General Meeting are regulated in detail by the Swiss Code of Obligations and the respective company statutes. A general meeting is only legally compliant if these rules are adhered to. Resolutions passed in the course of a general meeting that has not been convened or conducted in accordance with the law are contestable or invalid.
Various legal and statutory requirements for the AGM
The exact legal and statutory requirements for a general meeting depend not only on the company's articles of association but also on the type of meeting - physical, virtual, hybrid, universal, written on paper or electronic - or the items on the agenda. It would go beyond the scope of this blog to go into all the individual requirements. For this reason, the focus below will be on shareholder representation.
The law is based on the idea that decision-making takes place in a personal, discursive and interactive process at the Annual General Meeting. This is also referred to as the principle of immediacy. In any form of participation, the immediacy of the interaction must be such that a real-time exchange is possible. This also applies to general meetings with technical means.
Principle of immediacy and right of representation
In order to ensure that the principle of immediacy is sufficiently taken into account, the CO provides for the principle that a shareholder may be represented at the Annual General Meeting. The right to speak and ask questions may not be restricted. Furthermore, shareholders should be able to cast their vote in an informed manner based on prior critical discussions. This also and especially applies to general meetings with technical means, because not every shareholder should (yet) be expected to participate in the general meeting online. Shareholders who do not want to or cannot participate online should be represented directly at the AGM by the proxy and be able to voice their concerns through him.
Permissible restriction of the right of representation
This right is known as the shareholder's right of representation, which is regulated in detail in the Swiss Code of Obligations and is categorized as part of the shareholder's participation rights. It can only be restricted or withdrawn in the following cases expressly provided for by law:
- The Articles of Association may stipulate that representation may only be exercised by another shareholder. However, even if the Articles of Association provide for such a restriction, any shareholder may request that the Board of Directors appoint an independent proxy or a corporate proxy to whom the exercise of participation rights may be delegated.
- The Annual General Meeting may be held abroad if the Articles of Association provide for this and the Board of Directors appoints an independent proxy in the notice convening the meeting. In the case of non-listed stock corporations, the Board of Directors may waive the appointment of an independent proxy, provided that all shareholders agree to this. The consent of the shareholders is to be understood as active and explicit consent for each individual AGM, and not as a veto right that has not been exercised.
- A General Meeting may be held by electronic means without a meeting venue if the Articles of Association provide for this and the Board of Directors designates an independent proxy in the notice convening the meeting. In the case of companies whose shares are not listed on a stock exchange, the Articles of Association may provide that the appointment of an independent proxy may be waived.
Further restrictions on the right of representation are not permitted.
Conclusion
To return to the initial question of what makes a legally compliant AGM legally compliant, it can be stated with regard to the right of representation that general meetings without proxies are not legally compliant except in the cases provided for by law and regulated in the articles of association. In particular, survey tools with voting options are not suitable as AGM tools if they do not allow the shareholder to authorize at least one independent proxy. Since such survey tools have recently been increasingly advertised as "legally compliant", the board of directors of a stock corporation is well advised to check their suitability for a legally compliant general meeting.
We would be happy to show you in a personal meeting which functions of the Konsento AGM module will support you in convening, adding items to the agenda, holding and following up your legally compliant AGM. Book an appointment with our experts now!!
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