What are the rights of minority shareholders in a Swiss public limited company

Swiss company law is based on the majority principle. However, minority shareholders also have rights that cannot be taken away from them against their will.

The limited company can be founded by one or more persons, whereby the share capital must be at least CHF 100,000. When starting a business, it is not uncommon for a 51% majority to face a 49% minority. Even a small share difference has a significant impact on the legal control of the company.

Organization of the joint stock company

The general meeting is AG’s supreme body. All shareholders are entitled to attend the general meeting and to vote on the proposals made. The general meeting is responsible for establishing and amending the articles of association. It approves the financial statements and decides how the profits are to be used. In addition, the shareholders appoint the board of directors and, if necessary, elect an auditor.

The Board of Directors consists of one or more members who may also be shareholders. He has the overall supervision of the management and represents AG externally.

The Board of Directors convenes the Annual General Meeting at least once a year. Additional extraordinary meetings can be held as needed.

Shareholders representing at least 10% of the share capital or having a shareholding of at least DKK 1 million. CHF, may also convene a general meeting.

Decisions are made according to the majority principle

A simple majority is usually sufficient for both shareholder and board decisions. The law requires only a two-thirds majority for some decisions. A qualified majority is required, for example, for a change of purpose, transfer of registered office or liquidation of the company. A qualified majority is also required for decisions on a conditional or authorized capital increase or future capital volume. However, a simple majority is sufficient for the election and de-election of board members, an ordinary capital increase or a decision on the use of profits.

The Board of Directors also makes decisions in accordance with the majority principle, unless otherwise provided in the Articles of Association or the Articles of Association, and minority shareholders are in principle not entitled to representation on the Board of Directors.

A shareholding of just over 50% is therefore sufficient to control the AG as far as possible.

How are minority shareholders protected?

All shareholders have an inalienable right to AG’s search for profit and the right to participate in the company’s profits in proportion to their share.

Minority shareholders are also protected against dilution of their shares by being entitled to a subscription right in relation to their previous possession when new shares are issued. The subscription right may be restricted or withdrawn for important reasons. This requires a qualified majority of the general meeting.

However, the subscription right only gives the right to subscribe for new shares at the stated price. Minority shareholders are not protected from the fact that they can not or do not want to participate in a capital increase.

In addition to property rights, shareholders also have certain information and control rights, and the principle of equal treatment protects them from unjustified disadvantages.

If a general meeting resolution violates the rights of the shareholders, such a decision can be challenged in court and reversed by each individual shareholder. Injured shareholders may also sue members of the Board of Directors who are in breach of their duties and make claims for damages.

In addition to the aforementioned legal protection rights, it is also recommended that shareholders with significant minority interests contractually stipulate certain additional rights in relation to majority shareholders. It can be additional information and co-determination rights or monetary claims.

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