SWITZERLAND Law and Practice Contributed by: Alexander Vogel, Marc Baumberger and Selina Bruderer, MLL Legal
Board of Directors Besides the shareholders’ meeting, the governance at board level is of importance. To strike the envisaged balance between the JV parties, the number of board representatives (each having one vote), the designa - tion of the chairperson (potentially accompanied by a casting vote) and the quorum requirements for board resolutions are key factors. Often, certain important matters require an enhanced quorum or even unani - mous resolutions. Furthermore, JV companies encounter distinct gov - ernance challenges compared to public companies. While public companies may prioritise the prevention of self-dealing, the primary objective of a JV is to strike a balance between the goals of the JV itself and the individual objectives of its partners. This equilibrium may pose difficulties, especially when the JV’s found - ers have representatives on the board of directors who advocate for the founders’ interests. To address this, the implementation of independent committees and codes of conduct could help align and equalise the interests involved. Moreover, specialised committees can prove beneficial, particularly for JVs operating in the technology or manufacturing sectors, enabling them to focus on technical matters and efficiently resolve disputes pertaining to such issues. Once the corporate JV meets the minimum capital requirements and has sufficient assets to cover its share capital and statutory reserves, the JV parties have the flexibility to finance the venture with debt. Decisions to strike the right balance between equity and debt financing, as well as the determination of interest rates, are often influenced by tax considera - tions. In scenarios where a thriving JV company evolves into a corporate group, it gains the ability to internally self- finance through strategic cash management. Such cash management involves the efficient utilisation and optimisation of funds owned by the group. Within the corporate group, specific companies may enjoy sig - nificant profitability and possess cash surpluses, while others may encounter liquidity challenges. Through cash pooling mechanisms, surplus funds from cer - 6.3 Funding Corporate JV
matters require a majority vote with two-thirds of the present voting rights and the majority of the present nominal value of shares. Those important matters include: • an amendment of the corporation’s purpose; • the consolidation of shares, unless the consent of all the shareholders concerned is required; • a capital increase subscribed from own capital, by contribution in kind or by setting-off claims, and the granting of special privileges; • the creation of conditional contingent share capi - tal, reserve capital or a capital band (authorised capital); • the conversion of participation certificates into shares; • any restriction on the transferability of shares; • limitations on or cancellation of subscription rights; • the introduction of preferential voting shares; • a change of currency of share capital; • the introduction of a casting vote for the chairper - son at the shareholders’ meeting; • provision of the articles of association on holding the general meeting abroad; • the delisting of the equity securities of the corpora - tion; • merger, demerger, transformation or dissolution; • the relocation of the registered seat; • the introduction of an arbitration clause in the arti - cles of association; and • dispensing with the designation of an independ - ent voting representative for conducting a virtual general meeting in the case of companies whose shares are not listed on a stock exchange. In the interest of safeguarding the JV parties, the JV agreement may also incorporate provisions that ensure shareholders’ meetings are appropriately con - stituted only when all shareholders (ie, JV parties) are present. In addition, specific decisions deemed to be of critical importance (eg, dividend, liquidation, merg - er or changes to the capital structure) might require an elevated quorum, as stipulated in the agreement. The introduction of preferred voting shares is another option, but this is less common in Switzerland; gener - ally, each share has one vote.
170 CHAMBERS.COM
Powered by FlippingBook