Hybrid and virtual general meetings under the Swiss company law as a task of IT law
Digitalization is also being driven forward by the revision of the company law. The legislator has finally clarified the conduct of virtual general meetings (AGM). Until now, it has been controversial whether this is permissible. In addition to the classic on-site variant of the AGM (Physical participation at a single meeting location or at multiple meeting locations), hybrid and virtual AGM, as well as decisions by circulation in writing, are now permitted as well.
The implementation of these novelties requires IT-legal know-how. As an experienced IT law firm for digitalization projects, we provide comprehensive support to Boards of Directors in the selection, introduction and implementation of solutions and processes for hybrid or virtual AGM.
The following applies to all four variants: It is the implementation that counts. The exact execution or the permissible technologies do not have to be defined in the articles of association (see below for more information on some of the routine adjustments to the articles of association).
The Board of Directors must now take action. They should define in detail the use of electronic means within the scope of virtual participation, e.g., by drawing up appropriate regulations or guidelines for their execution. The law stipulates that the Board of Directors needs to choose an approach and a technical solution that verifies the identity of the participants, directly transmits the votes and voting results, allows proposals and discussion, and documents the voting results in an immutable manner.
If technical problems occur during the AGM that prevents it from being carried out properly, the AGM must be repeated in whole or in part.
Testing, preparation and technical support: The Board of Directors is well-advised to prepare the process diligently, test the chosen technology in advance, and ensure technical support during the meeting if it lacks the technical knowledge. In general, for attentive participation, it will be impossible to take care of the technological process during the AGM as well. Hence, administrative and technical support during the AGMN is highly recommended.
To choose the solution: The law is formulated in a technology-neutral manner. Everything from a telephone conference to a complex software solution is conceivable. The choice of solution largely depends on the number of shareholders. With only a few shareholders, a less complicated solution is sufficient. However, if there are dozens of shareholders, more than a simple team meeting will be needed to have an orderly meeting.
Presence or Power of attorney: During the implementation process, the general requirements under company law must continue to be complied with. It is essential to consider, for example, participation by proxy or the correct recording of the shareholders (or voting rights) present for the entire duration of the AGM. Especially with a virtual solution, it will be much more often that a shareholder leaves the virtual meeting voluntarily or involuntarily (e.g., in the event of connection issues). As a result, attendance and quorums may change at any time.
IT-Security and data protection: In addition, IT security and data protection issues must also be considered during implementation. For example, consider the recording of a virtual general meeting held as a video conference.
Concerning the statutory requirements (a routine under corporation law) the following:
- In the case of a virtual AGM, the meeting is conducted exclusively with electronic resources. In this case, an additional provision in the Articles of Association is necessary, which allows for a virtual AGM. Unless explicitly excluded in the Articles of Association, an independent proxy must also be appointed.
- The hybrid AGM continues to have a physical meeting place, but shareholders are given the opportunity to participate virtually and exercise their rights by electronic means. If the physical meeting place is to be abroad, a supplementary provision in the articles of association is necessary. Otherwise, no approving provision of the Articles of Association is required for the holding of the hybrid AGM.
- The hybrid AGM must be distinguished from an AGM with multiple venues. In the case of the AGM with multiple venues, only physical venues are defined; there is only a transmission between the venues. In this case, a special statutory provision is only required if none of the meeting venues is located in Switzerland, but all of them are to be located abroad.
- AGM resolutions by written decisions (circulation) are also admissible. These can be drawn up in writing or electronically unless a shareholder requests oral discussion. Hence, all shareholders must agree with the procedure. Thus, by requesting an oral discussion, a resolution in written form can be prevented at any time. In practice, circulation is only a good solution for uncontested decisions.
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