The long-awaited changes begin in January 2023, says Claudio Fanger, business unit director, and Jurgen Borgt, managing director, Intertrust Switzerland. But in the meantime, there’s plenty that firms can do to take full advantage of the legal amendments.
Swiss corporate law reforms come into effect on 1 January 2023 and will ensure Switzerland remains a preferred jurisdiction thanks to its investor-friendly environment. The long-awaited changes, which have been widely welcomed, will ensure Switzerland remains an attractive place to do business.
The key changes will give corporations more flexibility – and help enshrine in law practices adopted during the Covid-19 pandemic as a means of allowing businesses to operate during lockdown.
The most notable changes are the flexibility to have share capital denominated in foreign currencies and the option to hold virtual shareholders’ meetings. However, entities will need to check their own articles of association to see whether these need to be amended, too.
It may be that companies need to change their corporate documents to take advantage of the forthcoming legal changes. This would need to be raised in advance at the company’s general assembly (GM) after discussion by the board of directors.
What makes the new Swiss corporate law reforms so flexible?
The reforms provide greater flexibility in how share capital is issued. They also strengthen and modernise rules around corporate governance, shareholder rights, company meetings and the steps that need to be taken should directors detect the company is in danger of becoming insolvent.
There will be a grace period of two years from January 2023, so companies have time to consider and digest the new rules. However, they may need to agree internally on changes over the coming months to profit fully and in good time from the legal amendments to Swiss corporate law.
One helpful amendment is the ability to issue share capital in foreign currencies. This means that the stated share capital is neither flattered nor negatively impacted by currency movements. It, therefore, provides a more accurate and appropriate reflection of company share capital.
Previously, under Swiss law, companies were allowed to provide financial accounts in a foreign currency or in Swiss francs but they had to hold share capital in Swiss francs only.
To qualify under the new changes, the share capital at the time of incorporation must correspond to the equivalent of at least CHF 100,000.
Accounts must be prepared in the chosen currency. Only Swiss francs, British pounds, euros, US dollars and Japanese yen – the most commonly used – are acceptable for issuing share capital.
For entities that want to use this option, the currency needs to be chosen as of the start of the company’s financial year. This decision needs to be ratified by shareholders at the general assembly.
For tax purposes, profit or loss at year-end needs to be shown as an equivalent of Swiss francs.
Another legal change concerns the nominal value of a share, which now must be greater than zero but does not need to be the equivalent of one centime, as was previously the case.
Swiss corporate law changes provide greater flexibility for shareholders
During the pandemic, companies were allowed to hold virtual AGMs. This has now become confirmed as a legal option. This means, provided that the articles of association have foreseen this option, that the general assembly can be convened and held virtually. General resolutions can be voted on electronically and shareholders can register their vote or exercise their rights online.
In addition, the Swiss corporate law changes mean that not all attendees have to be in the same location – the general assembly can be held virtually in different jurisdictions.
Do I need to take action as a result of the Swiss corporate law changes?
Many entities have clauses in their articles of association that do not comply with the new changes to Swiss corporate law. They will need to change these within two years of the law coming into effect in January 2023.
However, they may wish to make use of the new flexibility earlier, in which case they must include these new legal options within their articles of association in advance.
This is because under Swiss law, an entity would need to hold an extraordinary shareholder meeting to change the articles of association, which companies may wish to do before the start of their financial year.
How Intertrust Group can help you in Switzerland
Our team in Switzerland includes experts who specialise in corporate services and are dedicated to servicing multinational, private equity and fund clients. We can help corporate clients looking to expand into this exciting economy with a full suite of services.
In Switzerland, our multilingual teams in Geneva, Zug and Zurich can help manage structures for companies, partnerships, foundations and trusts on a global and national basis.
We provide services that ensure compliance with the requirements of local and global laws and regulations.
Why Intertrust Group?
- Intertrust Group is a publicly listed company with more than 70 years’ experience in providing world-class trust and corporate services to clients around the world.
- Our 4,000 professionals work together across 30 jurisdictions to offer an undisputed global reach, deep local knowledge and an extensive international network to help clients achieve their strategic goals.
- Intertrust Group provides a wide range of financial and administrative services to clients operating and investing in the international business environment. We help companies to expand globally, offering support with restructuring, outsourcing and further developments.
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