STAIGER informs about selected legislative revisions and new regulations that entered into effect in January 2023:
- New revised stock Corporation Law
- Innovations in Tax Law
- Other selected legislative revisions
New revised stock corporation law - new opportunities for corporate entities
On June 19, 2020, Swiss Parliament approved the revision of stock corporation law, which now entered into force on January 1, 2023. The goal of the comprehensive revision was to modernize stock corporation and accounting law and to adapt it to current economic needs. Companies have two years to adapt their Articles of Association and regulations to the new provisions. If the necessary adjustments are not made within this timeframe, the provisions of the Articles of Association or regulations that are not in compliance with the new law will automatically become invalid after expiry of the deadline. The following comments and explanations shall high-light the new options available to companies as a result of the newly applicable law, which will require amendment of the Articles of Association.
Share capital in foreign currency and capital band
The newly applicable company law allows existing and newly established companies to declare their share capital in the foreign currency that is essential for their business activities. If a foreign currency is applied, the accounting and financial reporting must also reflect the same foreign currency. Consequently, the nominal value of the shares no longer needs to be denominated in Swiss Francs and can now be reduced to less than the previous minimum required (CHF 0.01) as long as it is greater than zero.
A further innovation is the introduction of a so-called "capital band": this enables the company's General Meeting to authorize the Board of Directors to increase or reduce the share capital entered in the Commercial Register for a maximum period of five years within a certain bandwidth, but not exceeding +/- 50% of the registered share capital, without having to go through the formal procedure of a capital increase or reduction, as was previously the case.
If a capital band is to be introduced or a change in the currency of the share capital is to be made, this must be approved by the General Meeting and the Articles of Association must be amended accordingly.
A qualified majority is required for a resolution on the capital band. The nominal amount of the upper and lower limit of the capital band must be quantified and included in the Articles of Association. The General Meeting of shareholders also has the possibility to set out restrictions, as well as requirements and conditions in connection with the aforementioned authorization of the Board of Directors. The Articles of Association must be amended accordingly if the capital band ceases to exist due to the expiry of a deadline or a separate resolution of the General Meeting on an ordinary capital increase, capital reduction or a change of currency.
A change of currency at the beginning of a financial year must also be approved by the General Meeting by qualified majority. Such change of currency may be resolved retroactively to the beginning of the current financial year or prospectively to the beginning of the following financial year. The Articles of Association must be amended accordingly. The Board of Directors is responsible for the implementation and carries out the necessary conversions and specifies the conversion rate applied. The following requirements must be met for the amendment of the Articles of Association:
- The currency chosen is the foreign currency that is essential to the company's business;
- the accounting and financial reporting is conducted in the same currency;
- the share capital in foreign currency is equivalent to at least CHF 100,000.
Interim dividend
The revised stock corporation law further creates an explicit legal basis for the payment of so-called interim dividends. The company's Articles of Association must expressly provide for such possibility. The resolution of the General Meeting of Shareholders to pay an interim dividend is based on audited interim financial statements. This audit requirement does not apply if the entirety of shareholders has approved the distribution or if the company has waived the obligation of a limited audit.
Arbitration clauses
Under the newly applicable law, the Articles of Association may provide for arbitration clauses applicable to disputes under company law, in favor of an arbitral tribunal with its seat in Switzerland. Unless the Articles of Association provide otherwise, the arbitration clause ins binding on the company, the company's corporate bodies, the members of the governing bodies and the shareholders.
Use of electronic means (basis for virtual general assembly)
The new law creates the possibility for the General Meeting of Shareholders to be held virtually if the Articles of Association provide so and if an independent proxy is designated. In addition, the General Meeting may now be held simultaneously at several meeting locations via electronic transmission, which also allows resolutions to be passed by circular letter. In addition, the new law provides that votes can be cast electronically at a physical General Meeting. If the company wishes to make use of the possibility of a virtual General Meeting or a meeting abroad, a corresponding basis is required in the Articles of Association, which must be adapted for such purpose.
Innovations in tax law
Amendments to the Federal Law on Direct Federal Tax (DBG) - Increase in the deduction for childcare outside the family
As of January 1, 2023, Art. 33 para. 3 DBG was amended to the effect that the proven costs for third-party care of children (who have not yet reached the age of 14) can be deducted from income up to a maximum of CHF 25,000 per child and year (instead of CHF 10,100 as before). In order to claim this deduction, the child must live in the same household as the taxpayer who provides for his or her maintenance and the costs must be directly related to the taxpayer's employment, education or incapacity to work.
Amendments to the Federal Law on Value Added Tax (VAT Act) - Relaxation of the VAT obligation for associations
The turnover limit up to which non-profit, voluntarily run sports and cultural associations as well as charitable institutions are exempt from VAT has been raised from CHF 150,000 to CHF 250,000 as of January 1, 2023, in accordance with Art. 10 Para. 2 Letter c VAT Act.
Federal Law on the Harmonization of Direct Taxes of the
Cantons and Municipalities (StHG) - Electronic Procedure
In addition to the regular procedure in writing, the cantons are
now obliged to provide for an electronic tax procedure that enables
the electronic submission of tax returns including enclo-sures.
Adjustment of the marginal amounts in the occupational pension plan
The AHV/IV pensions were adjusted to current price and salary trends as of January 1, 2023 and were therefore increased by 2.5%. This adjustment has an impact on the mandatory occupational pension plan. The coordination deduction was increased from CHF 25,095 to CHF 25,725, the entry threshold was raised from CHF 21,510 to CHF 22,050. The maximum permitted tax deduction within the scope of the restricted pension plan (pillar 3a) is now at CHF 7,056 (previously CHF 6,883) for people who are members of a 2nd pillar pension scheme, or CHF 35,280 (previously CHF 34,416) for people who are not.
Compensation for cold progression: adjustment of tariffs and deductions
To offset the consequences of cold progression, the Federal Department of Finance (FDF) has adjusted the rates and deductions for direct federal tax as of the 2023 tax year: Two-earner married couples are now be able to deduct a maximum of CHF 13,600 (previously CHF 13,400) from their taxable income. The child deduction and the support deduction were increased to CHF 6,600 each (previously CHF 6,500). Married couples in legally and factually unseparated marriages now only pay taxes from a taxable income of CHF 28,800 (previously CHF 28,300). The maximum rate is now only reached from a taxable income of CHF 912,600 (previously CHF 895,900). In addition, a maximum of CHF 3,200 (previously CHF 3,000) may now be deducted for the necessary costs of travel between home and work place.
Other selected legislative revisions
Money Laundering Act (MLA)
Under the previous law, financial intermediaries were obliged to determine the beneficial owner with the due diligence required under the circumstances. Now, financial intermediaries are required to verify the beneficial owner. Financial intermediaries must take reasonable measures to verify the identity of the beneficial owner and, in doing so, verify to a satisfactory degree that this person is indeed the beneficial owner.
There is now an obligation for financial intermediaries to periodically review client data of all business relationships and ensure it is up to date, regardless of the risk allocated. However, the periodicity, scope and nature of the review and updating of client data is based on a risk-based approach.
Income replacement regulations (EO)
The Workers' Compensation Ordinance was amended to provide that newly employed persons who adopt a child under the age of four are entitled to a two-week adoption leave compensated by the Workers' Compensation Ordinance (EO).
Originally published 10.01.2023.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
