What is Minority shareholder rights?

Minority shareholder rights refer to the legal protections and entitlements afforded to shareholders who own a minority stake in a company, meaning less than 50% of the company’s shares. While minority shareholders do not have the same level of control as majority shareholders, they are still entitled to certain rights under corporate law. In Switzerland, these rights are designed to protect the interests of smaller investors and ensure fair treatment, transparency, and accountability within the company.

Key Features of Minority Shareholder Rights

  • Voting Rights: While minority shareholders typically do not control the company’s decisions, they retain voting rights in general shareholder meetings (AGM or EGM). These rights may include voting on major corporate decisions, such as mergers, acquisitions, or changes to the company’s articles of association.
  • Right to Information: Minority shareholders have the right to receive timely and accurate information about the company’s performance, financial statements, and significant developments. This ensures transparency and allows them to make informed decisions regarding their investments.
  • Protection from Oppressive Practices: In cases where the majority shareholders act in a way that is unfair or detrimental to the interests of minority shareholders, such as by excluding them from decision-making or unfairly diluting their shareholding, minority shareholders have the right to challenge these actions.
  • Dividends: Minority shareholders are entitled to receive their fair share of dividends based on the number of shares they own, provided the company declares dividends. These rights must be respected and are subject to the company’s financial performance and distribution policies.

Minority Shareholder Rights in Switzerland

In Switzerland, minority shareholder rights are governed by the Swiss Code of Obligations, which outlines the general principles of corporate governance, shareholder rights, and protections. Swiss law aims to balance the rights of minority shareholders with the control of majority shareholders, offering legal recourse if their rights are infringed upon.

  • Right to Call a Shareholder Meeting: Minority shareholders holding at least 10% of the voting shares have the right to request a general meeting or special shareholder meeting to discuss specific matters or propose resolutions. This right ensures that minority shareholders can raise concerns and influence corporate decisions when necessary.
  • Protection Against Abuse: Swiss law provides safeguards against abuse by majority shareholders, such as oppressive conduct or unfair treatment. Minority shareholders can seek legal remedies if they believe that the majority shareholders are acting in a way that violates their rights or interests.
  • Appraisal Rights: In some cases, minority shareholders may have appraisal rights, allowing them to demand a fair price for their shares if the company is involved in a merger, acquisition, or sale that affects their ownership. This ensures that minority shareholders are compensated fairly in the event of a significant corporate change.
  • Class Action Lawsuits: If the rights of minority shareholders are violated, they may be able to bring a class action lawsuit on behalf of other affected shareholders. This provides an avenue for collective action when individual claims may be too small to pursue independently.

Minority shareholder rights in Switzerland are designed to protect the interests of smaller investors and ensure a fair and transparent corporate environment. While majority shareholders hold significant influence, these legal protections give minority shareholders the ability to participate in decision-making processes, challenge unfair actions, and secure compensation if their rights are infringed upon. These rights promote balanced governance and accountability, supporting investor confidence in Swiss businesses.