“AGM freezing”

“AGM freezing”: reconvening a hybrid or virtual Annual General Meeting

What must be done according to the new Swiss Corporate law if technical problems arise during a hybrid or virtual AGM? Dr. iur. Felix Horber, President of the Nimbus Advisory Board, explains the legal situation in this specialized article.

According to the new Swiss Corporate law, joint-stock companies can conduct their Annual General Meetings (AGMs) also in a hybrid or purely virtual form. This enables shareholders who do not attend the AGM physically to exercise their right of participation electronically, an option that requires the use of the appropriate technology. But what if technical issues occur during a hybrid or virtual AGM?

The new corporate law rather briefly states the following (see Art. 701 f OR): “If technical problems occur during the virtual general meeting which lead to a meeting that cannot be conducted properly, it must be repeated. However, decisions taken before the technical problems occurred remain valid.”

In a concrete case, this means that the Board of Directors needs to interrupt the AGM in order for the technical problems to be fixed and the AGM to be continued. If the problem can’t be solved within a reasonable time the AGM will have to be suspended and a new date must be defined for reconvening the AGM. The Board of Directors is responsible for setting a date that enables most shareholders to attend. As a preventive measure, the date for the second meeting may be communicated on the company’s homepage, together with the convening of the AGM.

If the items on the agenda remain unchanged and the implementation form of the meeting is the same as the one chosen for the suspended meeting, the convening of the repeated AGM does not need to meet the 20 days deadline. This is explained clearly on page 560 of the Message on the new Corporate Law. However, a new invitation to the repeated AGM must be sent out, but the agenda items already decided on do not need to be listed again. The instructions on voting rights that were already dealt to the independent voting proxy stay valid for the remaining agenda items during the reconvened AGM. Legally speaking, this second meeting is not considered as a new AGM, but as a resumed meeting that was temporarily “frozen” until the date of resumption (“AGM freezing”). The minutes only need to be kept once.

However, the legal situation is different in cases where the agenda is changed after the AGM’s suspension, either by amending or adding items, or if the reconvened meeting is carried out physically. The replication is then not considered as a continuation of the same meeting, but as a rescheduling under different conditions. This is why this form of repetition requires the formal convocating regulations to be (re)observed. Instructions for voting rights must again be obtained, and the rescheduled AGM must be minuted separately.

Dr. iur. Felix Horber, President of the Advisory Board, Nimbus AG