Shareholders' Rights & Shareholder Activism 2025

1. Types of Company, Share Classes and Shareholdings

1.1 Types of Company

The main (and most common) types of companies that can be formed in Switzerland are:

• the stock corporation (Aktiengesellschaft, AG); and
• the limited liability company (LLC) (Gesellschaft mit beschränkter Haftung, GmbH).

However, the stock corporation is much more com­mon than the LLC.

Both company types enjoy limited liability to the effect that only the company's assets are liable for com­pany debts (ie, not the private assets of the respective shareholder(s)); therefore, shareholders do not lose their private assets in the event of bankruptcy.

Shares of stock corporations can be publicly listed, whereas quota shares of LLCs cannot be traded pub­licly.

1.2 Types of Company Used by Foreign Investors

Foreign investors typically use stock corporations or LLCs. While a stock corporation essentially consists of a board of directors that is responsible for the over­all strategy of the corporation, and of a management to which the board of directors delegates the daily business, the governance of an LLC is usually simpler. Therefore, international group companies often use LLCs for their Swiss subsidiaries. The transferability of shares of a stock corporation is usually less restricted than that for those of an LLC.

Shareholders of a stock corporation are not publicly known (except when they hold a participation of at least 3% in a publicly listed company). Quota-holders of LLCs are registered in the commercial register.

1.3 Types or Classes of Shares and General Shareholders' Rights

Rights

The rights attached to shares of a stock corporation or quota shares of an LLC are set out in the Swiss Code of Obligations (CO) and in the articles of association of the respective company.

Stock Corporation

In a non-listed Swiss stock corporation, it is most common to issue registered shares. These can be cer­tificated. Non-listed companies may only issue bearer shares if they are issued as intermediated securities. Publicly listed stock corporations can issue bearer shares.

Both share types must have a nominal value that is greater than zero. In addition, different classes of shares, such as super-voting or preference shares and participation and dividend rights certificates, can be introduced. Usually, the voting rights and financial rights attached to a share are in proportion to the total nominal value of the shares belonging to the respec­tive shareholder. Every shareholder must have at least one vote.

If, however, super-voting shares are introduced, the right to vote is determined by the number of shares belonging to each shareholder – regardless of the total nominal value each shareholder holds. This means that each share confers one vote. The nominal value of the super-voting shares may not be lower than one-tenth of the nominal value of the other (common) shares. Super-voting shares allow shareholders to remain in control regarding voting rights while holding a comparatively small amount of capital. Super-vot­ing shares are quite common in Switzerland but have been criticised in the context of listed companies.

Preference shares, on the other hand, enjoy preferen­tial rights vis-à-vis the other (common) shares that are expressly conferred on them by the articles of asso­ciation of the respective company, and may relate to:

• dividend payments;
• the share of the liquidation proceeds; or
• subscription rights in the event that new shares are issued.

Participation certificates only confer financial rights; they do not confer voting rights.

Dividend rights certificates, which must not have a nominal value, entitle their holders only to a share of the disposable profit or the proceeds of liquidation, or to subscribe to new shares.

LLC

In a Swiss LLC, only registered quota shares can be issued. These can be certificated, and their par value must also be greater than zero. The LLC can issue different types of quota shares as well (see above). However, participation certificates are not permitted. In comparison to a stock corporation, quota shares cannot be listed on a stock exchange in Switzerland or abroad.

1.4 Variation of Shareholders' Rights

The main shareholders' rights are:

• the right to vote at the shareholders' meeting;
• the entitlement to receive a share of the profit and liquidation proceeds of the company; and
• the subscription right in the event of the issuance of new shares.

These shareholder rights can be limited by amend­ing the articles of association of the company (eg, by introducing super-voting or preference shares – see 1.3 Types or Classes of Shares and General Share­holders' Rights) or by resolution of the shareholders' meeting.

1.5 Minimum Share Capital Requirements

Stock Corporation

The share capital of a stock corporation must amount to at least CHF100,000. At the time of incorporation, at least 20% of the nominal value of each share must be paid up, and in all cases capital contributions must in total amount to a minimum of CHF50,000.

There is no upper limit for the share capital. The share capital can be paid in by cash or contributions in kind (such as real property or machines), or offset with a claim. The nominal value of a share must be greater than zero. It is permitted to denominate the share capital in euros, US dollars, British pounds sterling or Japanese yen – provided that the respective curren­cy is the functional currency of the business and the reporting currency used in the financial statements.

LLC

The quota capital of an LLC must amount to at least CHF20,000. It can also be paid in by cash or contribu­tions in kind, or offset with a claim. However, the quota capital must be paid up to 100%. There is no upper limit for the quota capital. As a special characteristic of an LLC, the quota-holders must be entered in the commercial register by name, along with their number of quotas and the nominal value of their participation.

1.6 Minimum Number of Shareholders

When incorporating a stock corporation or an LLC, at least one shareholder/quota-holder is required. This can either be a natural person or a legal entity. Shareholders/quota-holders are not obliged to reside in Switzerland. However, at least one representative of the company must have residence in Switzerland.

1.7 Shareholders' Agreements/Joint Venture Agreements

Shareholders' agreements (SHAs) and joint venture agreements (JVAs) are commonly used in privately held companies in Switzerland. SHAs, in particular, protect minority shareholders and grant them contrac­tual rights that they would not otherwise have due to their minority shareholding.

In listed companies, relationship agreements may be entered into between anchor shareholders and the company.

1.8 Typical Provisions in Shareholders' Agreements/Joint Venture Agreements

SHAs

Typical provisions of SHAs concern, inter alia:

• transfer restrictions and provisions regarding change of control or exit events, in which case pre-emptive rights, tag-along or drag-along rights, and put or call options are foreseen;
• the composition of the board of directors and the management;
• specific decisions of the board of directors or the shareholders' meeting that require qualified majorities or the consent of a specific shareholder or board representative, or that are subject to a certain veto right;
• dividend policy; and
• future financing and anti-dilution protection.

SHAs can only be enforced against the parties to the agreement. They do not need to be disclosed to the public and usually contain confidentiality provisions.

JVAs

Typical provisions of JVAs are very similar to those of SHAs – in essence, JVAs govern the rights and duties of different shareholders with regard to a certain com­pany. However, JVAs usually contain additional provi­sions on how the business of the joint venture com­pany shall be conducted.

2. Shareholders' Meetings and Resolutions

2.1 Types of Meeting, Notice and Calling a Meeting

The following refers exclusively to stock corporations.

The shareholders' meeting is the supreme governing body of a Swiss stock corporation. Annual general meetings (AGMs) must be held within six months from the end of the company's financial year. The AGM is usually convened by the company's board of directors at least 20 days before the respective meeting, and the notice period cannot be shortened. However, if all shareholders are present (so-called universal meet­ing), the notice period of 20 days can be waived.

The main agenda items to be resolved on at an AGM are:

• approval of the annual financial statements;
• allocation of the balance sheet profits;
• granting discharge to the members of the board of directors; and
• (re-)electing the members of the board of directors and the statutory auditor.

An extraordinary general meeting (EGM) can be held if there is a need, or upon written request of a share­holder reaching a certain threshold (5% of the share capital or voting rights in a listed company; 10% of the share capital or voting rights in a non-listed company).

2.2 Notice of Shareholders' Meetings

Notice of a shareholders' meeting (ie, AGM or EGM) must be given to the shareholders at least 20 days before the respective meeting. This convocation peri­od can only be omitted if the shareholders' meeting is held as a universal meeting of all shareholders or by way of circular resolution (see 2.1 Types of Meeting, Notice and Calling a Meeting).

The invitation to the shareholders must include:

• the agenda items of the forthcoming shareholders' meeting; and
• the motions of the board of directors regarding each agenda item (including a short explanation of the motions if the company is publicly listed).

2.3 Procedure and Criteria for Calling a General Meeting

Shareholders' meetings are usually convened by the board of directors or, where necessary, by the external auditors of the respective company. Liquidators and representatives of bond creditors of the company may also call for a shareholders' meeting.

In addition, shareholders of non-listed companies rep­resenting 10% (in listed companies, the threshold is 5%) of the share capital or of the votes can request that a shareholders' meeting be convened. Such shareholders' request must be made in writing to the company's board of directors, stating the agenda items and the respective motions. A brief explanation can be added by the shareholders, which must then be included in the notice convening the shareholders' meeting. If the board of directors fails to grant such a request within a reasonable time, at the most within 60 days, the requesting shareholders may ask the court to order that the meeting be convened.

2.4 Information and Documents Relating to the Meeting

Each shareholder has the right to receive notice of a shareholders' meeting. Every shareholder is given access to the annual report and the audit reports of the company at least 20 days before the AGM. Also, every shareholder is entitled to ask questions during a shareholders' meeting.

Shareholders of non-listed companies represent­ing 5% of the capital or of the votes hold the right to inspect the company's books and records, to the extent this is necessary to exercise their rights prop­erly and provided that no trade secrets or other com­pany interests warranting protection are put at risk.

Shareholders of non-listed companies representing 10% of the capital or votes also have the right to receive requested information on company matters outside the shareholders' meeting in writing from the board of directors. The board of directors is obliged to provide the information in so far as it is required for the proper exercise of shareholders' rights, and provided no trade secrets or other company interests warranting protection are put at risk. Any refusal of the board of directors must be justified in writing. The requesting shareholders can challenge such decision of the board of directors in court within 30 days.

Shareholders of listed companies do not have the aforementioned information rights – they are already entitled to receive more information due to the fact that the company is listed. In particular, listed com­panies must disclose all information that might affect the share price (so-called ad hoc publicity). Moreover, listed companies must provide, inter alia:

• a half-year report;
• a non-financial report;
• a compensation report; and
• a corporate governance report.

2.5 Format of Meeting

Shareholders' meetings can be held in the form of:

• a physical meeting;
• a hybrid meeting (physical meeting with remote participants who exercise their voting rights elec­tronically); or
• an entirely virtual meeting, if the articles of associa­tion of the company so allow.

However, if electronic means are used, the board of directors must ensure that:

• the identities of the participants are established;
• the oral contributions are directly transmitted;
• each participant can table motions and participate in the debate; and
• the result of the vote cannot be falsified.

Entirely virtual shareholders' meetings require a basis in the company's articles of association. Also, if no shareholder requests an oral debate, resolutions can be passed in writing (on paper or by electronic means – eg, email).

Physical shareholders' meetings outside Switzerland are possible if the articles of association provide for such meetings.

2.6 Quorum, Voting Requirements and Proposal of Resolutions

Whether the required majority is reached is typically decided based on the shares that are represented at the shareholders' meeting. This means that no quo­rum is required to hold a shareholders' meeting if the articles of association do not provide otherwise.

2.7 Types of Resolutions and Thresholds

Shareholders' resolutions can be passed at a physi­cal, virtual or hybrid (ie, physical with remote partici­pants) shareholders' meeting. In addition, a circular resolution (on paper or by electronic means – eg, email) is possible provided no shareholder requests an oral debate.

The articles of association of the company must explicitly provide for the possibility of holding a virtual shareholders' meeting. In listed companies, certain proxy advisers recommend voting against the intro­duction of the possibility of holding virtual sharehold­ers' meetings.

The board of directors must decide whether remote participants are entitled to exercise their rights elec­tronically – ie, whether a hybrid shareholders' meeting is possible.

2.8 Shareholder Approval

The CO contains a list of resolutions that must be decided by the shareholders' meeting. The list com­prises the following inalienable powers:

• determining and amending the articles of associa­tion;
• electing the members of the board of directors and the external auditors;
• approving the management report and the consoli­dated accounts;
• approving the annual accounts and passing resolu­tions on the allocation of the disposable profit, and in particular setting the dividends and the shares of profits paid to board members;
• determining the interim dividends and approving the interim accounts required therefor;
• passing resolutions on repaying the statutory capi­tal reserve;
• discharging the members of the board of directors;
• delisting the equity securities of the company; and
• passing resolutions concerning matters reserved to the shareholders' meeting by law or by the articles of association.

The shareholders' meeting of a stock corporation whose shares are publicly listed has the following additional inalienable powers:

• electing the chair of the board of directors;
• electing the members of the remuneration commit­tee;
• electing the independent voting representatives; and
• voting on the remuneration of the board of direc­tors, the executive board and the board of advis­ers.

The aforementioned resolutions require a majority of the voting rights that are represented at the sharehold­ers' meeting.

The following resolutions require a supermajority – ie, the affirmative vote of two-thirds of the represented voting rights and a majority of the represented share capital:

• changes in the company's purpose;
• merging of shares, unless the consent of all affected shareholders is required;
• capital increases from the company's own equity, with contribution in kind, by way of set-off or grant­ing special privileges;
• restrictions or cancellations of subscription rights;
• creation of contingent share capital or capital bands;
• conversion of participation certificates into shares;
• restrictions on the transferability of registered shares;
• introduction of shares with preferential voting rights;
• changing the share capital currency;
• introduction of a casting vote of the shareholders' meeting chairperson;
• amending the articles of association to allow physi­cal shareholders' meetings outside Switzerland;
• delisting;
• relocation of the company's seat;
• introduction of arbitration clauses in the articles of association;
• waiver to appoint an independent proxy for virtual shareholders' meetings; and
• dissolution of the company.

2.9 Voting Requirements

The delegation of voting rights to custodian banks is not permitted for companies whose shares are listed on a stock exchange. The shareholders' meeting must appoint an independent proxy to represent sharehold­ers.

Shareholders of privately held companies can del­egate their voting rights to a proxy at will, unless the articles of association restrict or prohibit this, by stat­ing, for example, that a shareholder may only be rep­resented by another shareholder at the shareholders' meeting. If the articles of association contain such a provision, the board of directors must, at the request of a shareholder, designate an independent proxy to represent shareholders or a voting representative for a corporate body who can be instructed to exercise the participation rights.

The board of directors must ensure that the share­holders are able to instruct the proxy on any motion relating to tabled agenda items and provide them with general instructions on unannounced motions.

The voting at the shareholders' meeting can be con­ducted by show of hands or by electronic poll vote.

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Originally Published by Chambers And Partners

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.