SWITZERLAND Law and Practice Contributed by: Mariel Hoch, Dominic Leu and Fabienne Perlini-Frehner, Bär & Karrer
director’s and/or executive manager’s fiduciary duties, the shareholder can sue the director and/or executive manager who has breached their fiduciary duties and request indemnification of the damage. The share- holder must prove: • the damage suffered by the company or the share- holder; • the breach of the director’s fiduciary duties; • the causal link between the breach of fiduciary duties and the damage; and • that the breach is the result of the wilful action or Shareholders can challenge shareholders’ resolutions that violate the law or the articles of association that affect the entire company. Derivative actions might be brought by sharehold- ers if the directors, the executive management or the auditors breached their fiduciary duties, and if, as a consequence thereof, the company suffers a damage (and the shareholder therefore suffers an indirect dam- age). See also 10.2 Remedies Against the Directors . negligence of the director. 10.3 Derivative Actions 11. Shareholder Activism 11.1 Legal and Regulatory Provisions The primary sources of law and regulations relating to shareholder activism are the CO and the Finan- cial Market Infrastructure Act (FinMIA) as well as the respective ordinances. Legal and regulatory tools available to shareholder activists include the shareholder’s right to: • vote; • request information (which is often used to increase pressure on the target company prior to a shareholders’ meeting) and inspect documents; • propose motions and counter-motions at share- holders’ meetings; • request a special audit or a special expert commit- tee to investigate certain facts and behaviours of the management or the board of directors; or
• file an action for liability against members of the board and/or executive management. Further, any shareholder has the right to demand that certain agenda items be tabled at a shareholders’ meeting, or to request that an extraordinary share- holders’ meeting be convened, in each case provided that such shareholder represents a certain amount of voting rights or capital in the target company (see 2.3 Procedure and Criteria for Calling a General Meeting and elsewhere). 11.2 Aims of Shareholder Activism Activist shareholders typically aim at giving all sup- porting shareholders a voice at the table of the board of directors. Shareholder activists typically focus on the following topics: • corporate governance (such as board representa- tion, changes to the articles of association, and executive compensation); • change of the company’s strategy; • ESG; • financial performance; and • M&A. 11.3 Shareholder Activist Strategies Shareholder activists usually start by building a rel- atively small stake of shares in the target company to avoid triggering the disclosure obligations of the FinMIA, especially the first threshold of 3%. Usually, a shareholder activist will make private contact with the executive management or board of directors of the target company to discuss its ideas and demands before increasing its stake. If these private negotia- tions fail, the shareholder activist may launch a public campaign, stating its key requests towards the target company with the aim of obtaining other sharehold- ers’ support. Because shareholders of Swiss compa- nies do not have a right to access the share register, the only way of reaching out to other shareholders holding less than 3% is through publicity, such as a website. The publication of the key requests is likely to attract new investors and thus lead to an increase in the share price. Shareholders of the target company may start to support the shareholder activist, who may subsequently be able to negotiate an attractive com- promise with the board of directors, following public
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