Private Equity Minority Investments - Universität St.Gallen

Part Two: Legal Framework and Toolscertain resolutions to a minority requirement serves the protection ofminority shareholders and can help achieve a more balanced distribution ofvoting power, where both minority and controlling shareholders have anactive voice. It is not evident why Swiss lawmakers would want to prohibitsuch a minority protection arrangement, particularly if introduced with thesupport of the majority. No other opinion can follow from the defaultmajority principle which, in corporate law, is not intended to ensure abalance of interests in the sense of a democratic majority opinion, but topreserve the functionality of the firm. 956 Rather than impairing decisionmaking at the general meeting, minority thresholds help facilitate theapproval of certain resolutions. As a result, unless the law providesotherwise, PEMIs may indeed negotiate for active voice by providing forminority thresholds in the articles of association with respect to certainresolutions.Qualified majority thresholds are introduced by the general meeting bysetting the resolution threshold (to be observed by the general meeting)higher than provided by law; that is, higher than the absolute majority forordinary resolutions and higher than the qualified majority for importantresolutions 957 . 958 However, legal scholars continue to debate the extent towhich statutory resolution thresholds can be increased. For this discussionand an assessment, see Section IV.D.3.3.4.6.Shareholders’ unanimous consent presents the highest possible increase ofthe resolution threshold conceivable in the articles of association. If legalscholars have voiced reservations regarding inordinate increases in thequalified majority threshold, then the introduction of a provision in thearticles of association requiring unanimous consent for passing certaindecisions of the general meeting is subject to even more fierce debate. Forthis discussion, see Section IV.D.3.3.4.6.Calculation basis. Aside from changing the statutory resolution threshold,shareholders may also change the statutory calculation basis. To increasethe requirements for decision making, the shareholders may declare allvotes outstanding as the voting rule instead of all votes represented at thegeneral meeting. In such case, the votes held by the PEMI not attending thegeneral meeting count as no votes for any resolution. To facilitate decisionmaking with respect to ordinary general meeting decisions, the votes cast or956See FN 746.957Decisions listed in CO 704 I.958See Section IV.D.3.1.2.3.158