What is Shareholder resolution?
A shareholder resolution is a formal proposal put forward by a shareholder or group of shareholders to be voted on at a shareholder meeting. Shareholder resolutions can address a wide range of corporate matters, including changes in company policy, governance, management, or the approval of significant transactions. These resolutions provide shareholders with a direct mechanism for influencing the direction and decisions of the company in which they hold shares. In Switzerland, shareholder resolutions are an essential part of corporate governance, allowing shareholders to express their views and exercise their voting rights.
Key Features of a Shareholder Resolution
- Proposal and Voting Process: A shareholder resolution is typically submitted to the company for consideration at an annual general meeting (AGM) or a special general meeting (SGM). The resolution is usually voted on by shareholders, and approval typically requires a certain percentage of votes, such as a simple majority or, in some cases, a supermajority for more significant decisions.
- Types of Resolutions: Shareholder resolutions can take various forms, including:
- Ordinary Resolutions: These resolutions are typically passed with a simple majority of votes and are used for routine corporate matters, such as approving the annual financial statements or appointing directors.
- Special Resolutions: These require a higher threshold of approval (usually a two-thirds majority) and are used for more significant decisions, such as amending the articles of association or approving mergers or acquisitions.
- Non-Binding Resolutions: While some resolutions are binding, others may be non-binding, meaning that they are advisory and do not require the company to act on them. These are often used for matters like corporate social responsibility or environmental policies.
- Shareholder Rights: Shareholder resolutions empower shareholders by giving them a formal way to propose and vote on changes to the company’s governance, strategy, or operations. In some jurisdictions, shareholders may also propose resolutions on specific issues such as executive compensation or board composition.
- Notice and Documentation: Shareholder resolutions must be submitted to the company according to legal or corporate governance requirements, with sufficient notice provided to all shareholders. The company must distribute information about the resolution, allowing shareholders to make informed decisions before voting.
Shareholder Resolutions in Switzerland
In Switzerland, shareholder resolutions are governed by the Swiss Code of Obligations (CO), which provides the legal framework for corporate governance. The resolution process ensures that shareholders can participate in key decisions and have a say in the company’s direction. Swiss companies, particularly public limited companies (AG), are required to follow certain procedures when dealing with shareholder resolutions.
- Legal Framework and Requirements: The Swiss Code of Obligations outlines the legal procedures for holding shareholder meetings and voting on resolutions. Shareholder resolutions in Switzerland must comply with the company’s articles of association and any applicable shareholder agreements. The CO specifies the notice period for calling shareholder meetings and how resolutions must be submitted, discussed, and voted on.
- Shareholder Rights and Participation: In Switzerland, shareholders holding at least 10% of the voting rights can call for an extraordinary general meeting (EGM) to discuss and vote on shareholder resolutions. This ensures that even minority shareholders have the opportunity to propose changes to the company.
- Voting Thresholds: The Swiss Code of Obligations typically requires a simple majority (more than 50% of the votes cast) for ordinary resolutions, while special resolutions (for more significant changes) may require a supermajority, often two-thirds of the votes. Specific thresholds can vary depending on the company’s articles of association.
- Types of Issues for Shareholder Resolutions: In Switzerland, shareholder resolutions can cover a wide range of issues, including:
- Changes to the company’s articles of association or bylaws.
- Approval of mergers, acquisitions, or asset sales.
- Appointment or removal of directors or auditors.
- Approval of executive compensation or stock option plans.
- Approval of financial statements or dividend distributions.
Shareholder resolutions in Switzerland are an essential part of corporate governance, giving shareholders a direct voice in the company’s strategic decisions and ensuring that the company is accountable to its owners. By participating in the resolution process, shareholders help ensure that the company operates transparently, adheres to governance best practices, and aligns its actions with the interests of its stakeholders.