The World Health Organization (WHO) has classified the outbreak of the coronavirus (COVID-19) as a pandemic. Particularly in Europe the number of new infections is increasing daily. As government measures to stem the spread become increasingly strict, our clients are confronted daily with various legal issues in connection with COVID-19.
Below we provide an initial legal assessment of common questions arising from corporate situations. Emphasis is placed on the convening and holding of general meetings. With the limitation to gatherings of no more than five persons, the Ordinance of 16 March 2020 has gained in importance.
As of 16 March 2020, the Federal Council has amended the Ordinance on Measures to Combat COVID-19 (Ordinance). Certain provisions therein are relevant and also applicable for companies. In particular Article 6a para. 1 of the Ordinance states:
"In the case of meetings of companies, the organiser may order that the participants may exclusively exercise their rights, regardless of the expected number of participants and without observing the invitation deadline:
a. in writing or in electronic form; or
b. by an independent proxy appointed by the organiser."
These measures are in place at least until 19 April 2020 and apply to all meetings and events that companies usually hold (e.g. general meetings of shareholders, board meetings, management meetings, company events with employees and clients.) In particular general meetings of corporations (AG/SA) and limited liability companies (GmbH / Sàrl) are, however, subject to stricter legal and statutory requirements. Based on the Ordinance and in contrary to the general principle according to the Swiss Code of Obligations, also general meetings of corporations (AG/SA) can be held in writing. This is required, in particular because larger gatherings are prohibited.
Below a selection of answers to frequently asked questions of our clients with respect to the upcoming ordinary general meetings (OGMs).
If invitations to the general meeting have not been made yet, a postponement of the date is in principle still possible. Even though the convocation period of 6 months is required by law, it is a regulatory period and there are no actual sanctions for non-compliance.
A letter should be sent to all shareholders informing them about the new legal provisions which have entered into force due to the extraordinary situation according to the Ordinance and a notice should be posted on the website. If the articles of association state that a notification to shareholders are made via the Swiss Official Gazette of Commerce (SOGC), an additional announcement should be made in the SOGC.
Shareholders should be notified immediately about the legal changes which have been implemented. Ideally, the meetings should be postponed. Alternatively, and if it can be ensured that all participants are notified in due time, all participants should be informed about their right to vote electronically or in writing. In this case we advise the use of voting forms, in accordance with the Ordinance. Another possibility is to appoint an independent proxy who will exercise the respective shareholder’s rights. We advise using a written power of attorney, signed by each shareholder with concrete voting instructions.
Non-adherence with the above measures can justify punishment with a fine or, theoretically, a prison sentence up to three-years. The Ordinance does not provide for a minimum penalty, so minor cases may be sanctioned by a fine.