Many boards assume that independent proxies only matter for listed companies. In practice, non-listed Swiss corporations may also need one, for example in virtual general meetings or when representation rights are restricted. This article explains when an independent proxy is required, the legal framework under Swiss corporate law and how boards of directors should address voting representation at general meetings.
Introduction
The general meeting is the central governing body of a Swiss corporation. This is where shareholders exercise their voting rights and decide on fundamental matters concerning the company. Many boards of directors assume that the independent proxy is only relevant for listed companies.
However, this assumption is too simplistic. Even non-listed corporations may need to appoint an independent proxy, for example depending on the format of the general meeting or due to specific provisions in the articles of association.
For boards of directors and shareholders, it is therefore important to understand when such representation must be provided, what alternatives exist and what role the board of directors plays in organising voting representation.
Table of contents
- What is an independent proxy?
- Requirement for listed companies
- Situation for non-listed corporations
- When an independent proxy may nevertheless be required
- Decision of the board of directors
- Independence requirements
- Conclusion
What is an independent proxy?
An independent proxy is a person or organisation that exercises the voting rights of shareholders at the general meeting when those shareholders do not attend in person.
The proxy acts on the basis of powers of attorney and voting instructions issued by shareholders. The key element is independence from the company and its governing bodies.
The institution of the independent proxy is regulated in the Swiss Code of Obligations (Art. 689c–689d CO).
In practice, this role is often performed by lawyers, fiduciary service providers or specialised corporate governance service providers.
Requirement for listed companies
For listed companies, the appointment of an independent proxy is mandatory.
The general meeting elects the independent proxy for a term of office (Art. 689c CO). Shareholders may give voting instructions to the proxy in advance of the general meeting so that their votes are taken into account even if they do not attend in person.
This ensures that shareholders can exercise their voting rights independently of the company.
Situation for non-listed corporations
For non-listed corporations, there is generally no mandatory requirement to appoint an independent proxy.
The law provides for several forms of voting representation.
Representation by other shareholders or third parties
Shareholders may generally exercise their voting rights through a representative (Art. 689 CO).
This person does not necessarily have to be a shareholder unless the articles of association provide otherwise. Shareholders may, for example, appoint a business partner, a lawyer or another trusted person.
Representation by corporate bodies
In many companies, votes are exercised by so-called corporate representatives, such as members of the board of directors or members of the executive management (Art. 689c CO).
Shareholders may issue specific voting instructions to such representatives.
Custodian representation
If shares are held with a bank, the financial institution may also act as a representative (Art. 689d CO).
In such cases the bank exercises the voting rights on behalf of the shareholder, typically based on instructions provided by the shareholder.
When an independent proxy may nevertheless be required
Even in non-listed corporations, situations may arise in which an independent proxy must be provided.
Virtual general meeting
If a general meeting is held entirely in virtual form, an independent proxy must generally be appointed unless the articles of association provide otherwise (Art. 701d CO).
This ensures that shareholders can exercise their voting rights even if they do not participate in the electronic meeting themselves.
Restrictions on representation
If the articles of association provide that shareholders may only be represented by other shareholders, any shareholder may request that an independent proxy also be made available (Art. 689d para. 2 CO).
This rule prevents shareholders from effectively being excluded from participation in the general meeting.
General meeting held abroad
If the general meeting is held abroad, non-listed corporations may waive the appointment of an independent proxy provided that all shareholders agree (Art. 701b CO).
Decision of the board of directors
If there is no legal obligation, the board of directors may decide whether an independent proxy should be appointed.
Many companies voluntarily choose this option. Reasons may include easier organisation of the general meeting, neutral voting representation in companies with a larger shareholder base, or generally stronger corporate governance.
Particularly in companies with multiple investors or a growing number of shareholders, the appointment of an independent proxy is increasingly considered good practice.
Independence requirements
The independent proxy may be either a natural person or a legal entity.
The decisive factor is that no conflicts of interest exist and that the proxy can perform the role independently of the company (Art. 689c CO).
In practice, law firms, fiduciary firms or specialised corporate governance providers often assume this role. In general meetings conducted using the Konsento application, Konsento itself can also be appointed as independent proxy.
Conclusion
For non-listed Swiss corporations, there is generally no mandatory requirement to appoint an independent proxy. Nevertheless, situations may arise – for example in virtual general meetings or where representation is restricted – in which such representation becomes necessary.
Boards of directors should therefore carefully review the articles of association and the organisation of the general meeting. Transparent and clearly regulated voting representation contributes significantly to effective corporate governance.
From a technical perspective, these processes can also be implemented efficiently. In the Konsento general meeting tool, shareholders are automatically loaded as participants from the share register. Their representatives can easily be assigned via drag-and-drop or by entering an email address. Representatives can also be explicitly designated as independent proxies. This information is visible to shareholders in the general meeting interface and enables them to make an informed choice of proxy.
During the general meeting itself, the status of the representation is also reflected in the system: the independence of a proxy appears both in the overview of represented votes (Art. 702 para. 2 no. 2 CO), in the voting results and in the automatically generated minutes.
If desired, Konsento can also assume the role of independent proxy at general meetings – provided that the legal independence requirements are fulfilled.
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