SWITZERLAND Law and Practice Contributed by: Mariel Hoch, Dominic Leu and Fabienne Perlini-Frehner, Bär & Karrer
6. Shareholders’ Rights as Regards Directors and Auditors 6.1 Rights to Appoint and Remove Directors Shareholders can appoint or remove a director to or from the board with a resolution of the shareholders’ meeting. The proposal to elect or dismiss a director can be put on the agenda of a shareholders’ meeting by shareholders who hold the required percentage of voting rights/capital (see 2.10 Shareholders’ Rights Relating to the Business of a Meeting ). Publicly held or large privately held companies usu- ally have a nomination committee that makes recom- mendations regarding the appointment and removal of directors. However, shareholders are not obliged to follow such recommendations. If the articles of asso- ciation do not require a qualified majority, a resolu- tion regarding the election or dismissal of a director requires the majority of the voting rights that are rep- resented at the shareholders’ meeting. 6.2 Challenging a Decision Taken by Directors Shareholders can only challenge a decision of the board of directors if it is null and void. Decisions of the board of directors are null and void for the same reasons as resolutions of the shareholders’ meeting (see 2.11 Challenging a Resolution ). 6.3 Rights to Appoint and Remove Auditors Shareholders decide on the appointment or removal of the company’s auditors in the course of the share- holders’ meeting. If the articles of association do not provide for a qualified majority, a resolution regarding the election or dismissal of the auditors requires the majority of the voting rights that are represented at the shareholders’ meeting.
ly, be reduced by reducing the nominal value of the shares. The articles of association can authorise the board of directors to vary the share capital within a bandwidth (capital band) for a period not exceeding five years. 4.2 Buybacks Companies can buy back their shares if freely dis- posable equity capital is available and the aggregate nominal value of these shares does not exceed 10% of the share capital specified in the commercial regis- ter. These shares do not carry any voting rights. The shareholders’ meeting can decide that the company will buy back its shares to cancel them, thereby reduc- ing the share capital. If the acquisition of own shares is connected with a restriction on transferability or an action for dissolu- tion, the upper limit is 20% of the share capital speci- fied in the commercial register. The shares that exceed the threshold of 10% must be sold or cancelled by means of a capital reduction within two years. Swiss corporations may not use their profit as they please. Rather, 5% of the profit is allocated to the stat- utory retained earnings until these reach (together with the statutory capital reserve) 50% of the share capital that is specified in the commercial register. For hold- ing companies, the threshold is 20%. The company is only entitled to distribute dividends from disposable profit and from reserves formed for this purpose. A resolution of the shareholders’ meeting is required to distribute a dividend. It is permissible for a company to disburse interim div- idends – ie, dividends out of earnings for the current financial year – based on an interim balance sheet. 5. Dividends 5.1 Payments of Dividends
7. Corporate Governance Arrangements 7.1 Duty to Report
The CO contains no duty of the board of directors to produce a corporate governance report. However, companies listed on the SIX Swiss Exchange must provide investors with, inter alia, certain key informa- tion regarding the company’s management princi-
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