Since 1 January 2023, Swiss stock corporation law has provided for the possibility of holding the Annual General Meeting (AGM) with the help of electronic means. Even before the revision of the law, it was possible to hold a general meeting at several conference venues in parallel and to combine it with the help of a live broadcast. There now also is the possibility for individual shareholders to participate via video chat – or even for the AGM to take place completely virtually. Incidentally, this also applies to limited liability companies. In our blog post, you will learn about the opportunities and risks of conducting the AGM electronically and whether it is suitable for your company.
1. Types of implementation
Basics
The AGM is the meeting of shareholders and, so to speak, the supreme body of the company. Traditionally, it was intended as a physical meeting where shareholders could have a discussion and form an opinion on site. However, globalization and digitization led to the fact that even years before the revision of the law, AGMs took place at several conference venues at the same time and were connected by video conference. This practice was generally recognised and has now been incorporated into the law with the revision (CO 701a III).
Hybrid General Assembly
The Board of Directors can now also hold the AGM in hybrid form (OR 701c) – i.e. physically on site and online at the same time. Shareholders choose for themselves whether they appear in person or participate virtually.
Virtual General Assembly
However, the Board of Directors can now also completely dispense with a physical meeting and hold the AGM only digitally (OR 701d).
2. Obligations of the company
Discretion of the Board of Directors
The Board of Directors determines the form in which the AGM is to be held. It should be noted that the Board is only authorised to hold a virtual AGM if the company's articles of association provide for this. In addition, if only online participation is offered, the Board must assess from the perspective of the average shareholder whether he or she is able to exercise their rights to the AGM using the chosen electronic means.
Duties of the Board of Directors
OR 701e II provides for various duties of the Board of Directors in order to ensure the exercise of shareholder rights and the quality of the AGM. These include the obligation to establish the identity of the participants and to ensure that each of them can submit motions and participate in the discussion.
Technical problems
If technical problems occur during the implementation of an electronic general meeting, it must be interrupted and repeated in the worst case (OR 701f I). A repetition will take place if the technical problems are the responsibility of the company or could not be influenced by either party – e.g. in the event of a power failure. However, the shareholder participating virtually is responsible, for example, for ensuring that he or she has a stable internet connection and sufficient battery during the entire meeting.
3. Risks
Failure to conduct a general meeting in accordance with the rules can lead to resolutions passed being invalid. Technical problems or violations of the Board's special obligations – in particular ensuring that each participant can exercise his or her shareholder rights – significantly increase this risk.
If the AGM has to be repeated due to technical problems, significant additional work is caused and time is lost. So far it is not clear whether the invitation to the second (repeated) AGM must be issued again with a lead time of 20 days or not. It is therefore advisable to meet the deadline to be on the safe side. In addition to the loss of time, this can, in the worst case, lead to the company's temporary inability to act (on this topic, we recommend our blog post on Incapacity to act due to delayed general meeting).
Not to be forgotten are also hurdles in connection with resolutions that must be notarized.
4. Suitability and conclusion
Summa Summarum: The electronic AGM – be it hybrid or virtual – is an overdue modernization of stock corporation law. It creates efficiency and flexibility. However, it is not without risks and is certainly not suitable for every company: the larger and broader the shareholder base, the higher the risk of legal pitfalls in an electronic AGM. For small and medium-sized companies, electronic AGMs can significantly simplify processes; however, if there is agreement, the written resolution often does the trick. The electronic AGM is particularly attractive for tech-savvy startups – especially with a view to international investors.
