General Meeting in Switzerland: The Essentials
What is a General Meeting? It is the most important governing body of a Swiss stock corporation (Aktiengesellschaft). The General Meeting makes the most fundamental decisions that significantly influence the direction and management of the company. Shareholders or their representatives participate to vote on key matters.
Types of General Meetings
In Switzerland, there are three main types of General Meetings (GMs), each with different functions and requirements:
- Ordinary General Meeting:
Usually convened by the board of directors, this meeting is typically held once a year in September and must take place within six months after the end of the financial year (Art. 699 para. 2 Swiss Code of Obligations – CO). Common agenda items include the approval of the annual financial statements, the discharge of the board, and decisions on dividend distributions. - Extraordinary General Meeting:
Called when urgent decisions are needed that cannot wait until the next ordinary GM. It may be convened by the board of directors or the statutory auditors (Art. 699 para. 1 CO). In addition, shareholders holding at least 10% of the share capital may request a meeting (Art. 699 para. 3 CO). If the board fails to act, the court can order the meeting to be held (Art. 699 para. 4 CO). - Universal Meeting:
This special type of meeting is governed by Art. 701 CO. It can be held without a formal invitation and without a fixed agenda, provided all shareholders are present and give their consent. This allows for flexible and swift decision-making in exceptional cases.
Convocation and Agenda Setting
Unless otherwise provided in the articles of association, the invitation to the ordinary General Meeting must be sent no later than 20 days before the meeting. The invitation must include the agenda items and the proposals of the board of directors (Art. 700 para. 1 Swiss Code of Obligations).
Shareholders who hold shares with a nominal value of more than CHF 1 million or at least 10% of the total share capital have the right to request the inclusion of items on the agenda (Art. 699 para. 3 CO). These provisions ensure that all relevant matters are addressed and that the interests of shareholders are duly considered.
Participation and Voting Rights
All shareholders or their representatives, as well as guests invited by the meeting chair, are entitled to attend. Shareholders may exercise their voting rights personally or be represented by other shareholders, third parties (if provided for in the articles of association), corporate representatives, independent proxy holders, or custodian representatives (Art. 689 para. 2 CO, Art. 689c CO). Voting representation is granted by issuing a power of attorney. These options for proxy voting ensure that shareholders who are not personally present can still exercise their rights.
Duties of the General Meeting
The General Meeting has specific duties that may neither be delegated to nor assumed by other corporate bodies.
Key responsibilities include:
- Amendment of the Articles of Association: Any changes to the articles, which set out the fundamental rules of the company, can only be decided by the General Meeting (Art. 698 para. 2 Swiss Code of Obligations).
- Election of the Board of Directors and the Auditors: The members of the board, who are responsible for the company’s strategic direction, as well as the auditors who review the annual financial statements, are elected by the General Meeting (Art. 698 para. 2 CO).
- Approval of the Annual Financial Statements and Decision on the Allocation of Profit: The General Meeting approves the financial statements and decides on the appropriation of retained earnings, such as the distribution of dividends to shareholders (Art. 698 para. 2 CO).
These duties are central to the oversight and governance of the company and cannot be delegated. This ensures that shareholders maintain direct influence over fundamental corporate matters.
Right to Submit Proposals and Resolution Process
Shareholders have the right to submit proposals on items listed on the agenda (Art. 700 para. 2 CO). The board of directors is also required to submit its own proposals on the agenda items. Resolutions are generally passed by a majority of the votes represented (Art. 703 CO).
Minutes must be kept during the General Meeting, and resolutions concerning amendments to the articles of association must be officially notarized (Art. 702 paras. 2 and 3 CO).
Challenging and Nullifying Resolutions
Resolutions that violate the law or the company’s articles of association may be challenged in court by shareholders (Art. 706 Swiss Code of Obligations). In severe cases, where fundamental legal provisions are breached, resolutions may even be declared null and void – meaning they are considered invalid from the outset (Art. 706b CO).
Certain resolutions of the General Meeting must be registered in the commercial register, such as resolutions on ordinary capital increases. If a resolution is defective, a registration block (Handelsregistersperre) can be imposed. This protects shareholders and the public from invalid or legally questionable decisions.
Virtual General Meeting
The possibility of holding a virtual General Meeting in Switzerland was introduced through an amendment to the Swiss Code of Obligations (CO). A virtual General Meeting allows shareholders to participate via electronic means without being physically present.
According to Art. 701d CO, a General Meeting may be held entirely virtually and without a physical meeting location, provided that the company’s articles of association permit this.
Art. 701e CO stipulates that the board of directors must regulate the use of electronic tools and ensure that:
- Participant identity can be verified,
- Voting is transmitted in real time,
- Every participant can submit motions and take part in discussions,
- The voting results remain unaltered.
If technical issues arise during the meeting (Art. 701f CO) that prevent its proper conduct, the meeting must be repeated. However, resolutions passed before the technical disruption remain valid.
In Switzerland, virtual General Meetings are not yet widely used. Nevertheless, they represent a modern alternative to physical meetings and allow shareholder participation regardless of geographic location. Especially in situations where physical meetings are difficult to organize – or when many shareholders reside abroad – a virtual General Meeting offers an efficient alternative. It is considered a likely format for future shareholder meetings in Switzerland
Conclusion
The General Meeting is a key instrument for shareholders in Switzerland. It ensures that fundamental decisions are made by the owners of the company – the shareholders themselves. Clear legal provisions and rights, such as the right to submit motions and the ability to challenge resolutions, guarantee transparent and responsible corporate governance.
The introduction of the virtual General Meeting further facilitates and flexibilizes shareholder participation, aligning with the modern demands of a globalized and digital world.
