This article provides an overview on this year’s AGM season in Switzerland. It looks back at the AGMs already held, discusses the particularities of the season and provides an outlook to the next season.
By Anna Peter (Reference: CapLaw-2022-14)
The annual general meeting (AGM) season 2022 is nearing its end. So far, the season was rather calm: most SMI-companies held their AGMs based on the COVID-19 Ordinance 3 without personal attendance of shareholders.
The Swiss Federal Council extended the term of the relevant article 27 of the COVID-19 Ordinance 3 already back in October 2021 to the end of 2022, which provided planning security for all involved players. Shareholders and proxy advisors were not entirely happy with the companies’ decisions to hold “COVID-AGMs”. When planning of the AGMs started, the prospects for large events in the Spring did not look good, so the lifting of the COVID-restrictions in early Spring 2022 just came too late for many companies.
Complaints regarding the missing opportunity for shareholders to interact with the board of directors and the management at the occasion of “COVID-AGMs” as raised by proxy advisors and in the media were this year heard more often than in the years before. Approx. two thirds of the SMI-companies explicitly offered shareholders the possibility to submit questions to the agenda items prior to the AGM, either by e-mail or via “online speaker desks” set up for this purpose, which is a significant increase compared to last year. The questions and answers got recorded in the minutes (and in the livestream, if there was any). This is obviously not a real substitute for live interaction, but it nevertheless gave – in particular smaller – shareholders the opportunity to speak up.
As regards shareholder activism, this year, Credit Suisse was in the focus. Ethos and other shareholders submitted two requests for agenda items, one on climate-related topics that included an amendment to the articles of association and one request for a special audit in connection with the “Greensill” and the “Swiss Secrets” matters. Credit Suisse’s board of directors did not support the two requests, and the AGM voted against both requests with large majorities.
Finally, worth noting is that ISS made the threat real to recommend voting against the chair of the board of directors or the chair of the governance committee (if any) in not both genders are represented on the board by at least 30%. Under Swiss law, new disclosure rules on gender representation entered into force last year, though with transition periods: As concerns the board of directors of listed companies, starting in 2026, if not both genders are represented on the board by at least 30%, the reasons for the underrepresentation and the measures taken against must be described in the company’s annual compensation report. ISS’s behaviour is remarkable – and problematic, in particular if the chair’s performance is otherwise not objectionable. It should not be on ISS to shorten transition periods set by the Swiss legislator. But it shows how the proxy advisors are pursuing their goals regardless of potentially unwanted consequences.
Looking ahead, on 1 January 2023, the new Swiss corporate law will enter into force, which will bring new options for companies on how to hold their general meetings, including the possibility to hold the general meeting abroad, hold a general meeting simultaneously at several places, have certain shareholders participate electronically, or hold the general meeting entirely virtually (to the extent the articles of association provide so). It is not to be expected that large companies will make use of all the new features introduced, in particular the possibility to hold entirely virtual general meetings, given the difficulties associated with virtual meetings that include (very) large audiences. Accordingly, unless the COVID-situation gets worse again, the hope remains that next year, “ordinary” AGMs will finally be back.
Anna Peter (anna.peter@homburger.ch)