On March 21, 2023, APIASwiss and Mazars co-hosted an event on the impact of the new SA law on the good governance of SMEs.
The goal: to review the significant changes in the board of directors and more specifically in the reinforced responsibilities of the directors.
Legal changes: new law on corporations
Modernization:
In order to simplify the meetings, the GAs can now be held virtually or on another territory. Many documents can be transmitted electronically.
Strengthening shareholders’ rights :
At present, when the shareholder or shareholders collectively hold at least 10% of the share capital or votes, and even for unlisted companies, they can at any time :
- Request information
- Calling a General Meeting
- Propose and place an item on the agenda
- Request a special review of specific facts by an independent third party
However, the revocation of the auditors can only be done for good reason.
Entitlement to interim dividends:
Interim dividends may be distributed under the following conditions:
- Interim accounts
- Verification by the auditors (exception: the company is subject to an opting-out where all shareholders approve the interim dividend and the execution of the claims is not jeopardized)
- Duty of care of the Board of Directors according to Art. 717 CO
- Compliance with the provisions on the payment of dividends
- Decision of the GA
The ability of the Board of Directors to freely increase or decrease the share capital within the following fluctuation margins:
Administrator, a role to be taken even more seriously
What is the role of the Board of Directors?
Seven non-transferable and inalienable tasks (art. 716a CO)
- Senior Management of the company
- Determination of the company’s organization
- Management of accounting, financial control and financial planning
- Appointment and dismissal of management and representation reports
- Supervision of the company’s management, with a view to compliance with laws, statutes, regulations and directives
- Drafting of the management reports as well as the preparation of the general assembly and the implementation of its decisions
- Reporting to the judge of any case of overindebtedness
What are the responsibilities and risks?
The directors are jointly and severally liable and each member may be sued for the full amount of the loss. In case of criminal or negligent action, the Management (Board of Directors and Management) may be made liable, involving the personal assets of the persons concerned.
Why a role to take even more seriously?
While the means of governance are facilitated by the authorization to hold General Assembly meetins by videoconference or in other territories, the responsibility of the members of the board of directors is strengthened overall by the new provisions. This is particularly true in situations where there is a loss of capital or, for the first time, in a situation where the company is at risk of becoming insolvent (the new concept of “solvency”), where the Board of Directors must now act with “speed”.
This means that, before accepting a position on a Board of Directors, it is better to know what you are getting into –> Alternative: it is better to do it with full knowledge of the facts. Because even if you resign, you can be worried if bad decisions were made.
It is therefore important to have complementary people to diversify the skills within the Board. In addition, each member of the Board of Directors must take his or her role seriously. To come prepared to the meetings, to participate in the improvement of the functioning of the Board of Directors if the organization does not allow to make decisions easily.
Governance is also a matter of common sense. You need the right people, mutual trust, the right information and enough experience.
At APIA Swiss, our mission is to promote the beneficial role of independent directors. We are convinced that outsiders, who are not tied to the capital, bring stability and an unbiased view during critical phases or transitions like the one we are currently experiencing.
We are at your disposal to discuss this further.
APIA Swiss Team