Private Equity Minority Investments - Universität St.Gallen

Part Two: Legal Framework and Toolspart of the ongoing major revision of corporate law, 463 the Swiss FederalCouncil has proposed expanding the statutory requirements on theminimum contents of the organizational regulations including provisions oncorporations’ internal organization and board committees, executivemanagement rules including positions and respective tasks, reportingmodalities, and critical matters that require the board of directors’approval. 464 Generally, the contents of corporations’ organizationalregulations reflect the countless variations of organizing corporateactivity. 465 The board of directors must determine the precise content inview of the individual characteristic of the firm. 4662.5 LimitationsThe organizational regulations must neither infringe upon the generalprinciples of law 467 and mandatory statutory provisions nor the articles ofassociation. 468463In the near future, Swiss companies will face several changes as part of the ongoing majorrevision of company and accounting legislation. On 21 December 2007, the Swiss FederalCouncil published the first Draft Legislation and report on the revision of company andaccounting legislation in the Swiss Code of Obligations. The aim: to enhance shareholders’position as the company’s owners and improve corporate governance, in particular, toestablish more flexible rules on capital structures, modernize the rules on the generalmeeting, and replace outdated accounting legislation. The popular initiative against ‘fat cat’salaries (gegen die Abzockerei) concerning excessive management compensation inexchange-listed companies led the Swiss Federal Council to extend its first draft legislationand to release a respective report on 5 December 2008. Both the revision of company andaccounting legislation is debated in both the Council of States and the National Council. On11 June 2009, the Council of States adopted resolutions concerning the Federal Council’sDraft Legislation. Aspects related to the initiative against fat-cat salaries were dealt with firstand the Committee for Legal Affairs of the Council of States submitted an indirectcounterproposal to the initiative against fat-cat salaries on 25 October 2010 to the Council ofStates. Given the uncertain outcome of the law’s revision in relation to the voice-relatedissues, only selective remarks on the forthcoming legislation are made in this dissertation. Inthe following, reference is made to the Draft Code of Obligations (D-CO), Draft Legislation,or Draft Law, which relates to the draft provisions of the Swiss Code of Obligations asadopted by the Swiss Federal Council in December 2007 and December 2008. Moreover,deviating resolutions as proposed by the Committee for Legal Affairs of the Council of Statesare referred to where relevant.464D-CO 716c II.465On the possible contents, see MÜLLER/LIPP/PLÜSS, p. 66; BÖCKLI/HUGUENIN/DESSEMONTET,p. 79 et seq.; FORSTMOSER/MEIER-HAYOZ/NOBEL, § 11, N 7 et seqq.466For example, in small corporations the board of directors is seldom subdivided incommittees; depending on the shareholder structure, quorum and/or qualified majority voterequirements may be advisable. See MÜLLER/LIPP/PLÜSS, p. 664.467See FN 433.468See ROTH PELLANDA, p. 98, N 183.86