Revision of stock corporation law

New company law comes into force on January 1, 2023. In our blog, we will inform you in three parts about the most important innovations and changes. You can find the first and second part in the overview of our blog. In the following concluding third part, we will inform you about the possibilities of an interim dividend and the changes regarding capital loss and over-indebtedness.

Interim dividend

The revision of company law removes one of the major taboos under company law. Interim dividends, i.e. dividends on the profit of the current financial year, may now be paid out. Dividend distributions during the year were already possible under the old company law, as these were determined at an extraordinary general meeting. However, this was only possible on the results of previous years. Now, however, profits from the current financial year may also be distributed. This again requires a resolution by an Extraordinary General Meeting. Furthermore, the auditors must check that no third party creditors are harmed by the distribution. This audit obligation can be avoided if all shareholders agree or if the company voluntarily waives an audit anyway (opting out).

Capital loss and over-indebtedness

The provisions regarding half of the capital loss and over-indebtedness have undergone some important changes in the new stock corporation law. Half of the capital is lost if half of the capital and statutory reserves are no longer covered due to the losses. Over-indebtedness is when the capital and reserves are completely exhausted due to the losses. In such cases, the Board of Directors has far-reaching obligations, from proposing restructuring measures to the General Meeting to depositing the books at the court and, accordingly, discontinuing business activities. Under the old law, the assessment of these situations was mainly based on the annual financial statements prepared at the end of the financial year. However, this caused some difficulties, as the annual financial statements under commercial law often only reflect the economic situation to a limited extent and a loss of capital or over-indebtedness are only very rarely the actual reason for bankruptcy. Accordingly, the new law mentions an explicit obligation for ongoing monitoring and the assessment of these situations is now based on liquidity. The process therefore moves away from a static assessment at the end of the year to a dynamic ongoing assessment. Furthermore, in the event of a half capital loss, there is now an obligation to carry out an audit, even if an audit is voluntarily waived (opting out). Under the old law, no audit had to be carried out in such a situation if there was an opting-out.

Conclusion

The revision of company law is urgently needed to modernize the aging Swiss stock corporation law. There are exciting opportunities for Swiss companies and some administrative adjustments need to be made. In particular, articles of association, regulations and contracts must be adapted to the new law within two years, i.e. by January 1, 2025. We are happy to answer any questions you may have and look forward to supporting you with the transition.