Proper drafting of the articles of association of Swiss listed companies can improve the board’s ability to resist activists with no meaningful economic exposure to the company.
One notable aspect of the Swiss corporate law reform in 2023 was the introduction of measures allowing Swiss listed companies to limit so-called “empty voting”, i.e. the exercise of voting rights by persons who do not bear the economic risk of the shares they hold. However, the new regime received little attention, probably because it seemed not too different from the existing framework, which permits listed companies to restrict nominee or “street name” registrations in their share register.
This muted reaction might also have resulted from a perception among Swiss listed companies that the determination of a shareholder’s eligibility to voting rights can only be made when the shares are first registered in the company’s share register. In this case, voting rights typically persist, even if the original conditions for their grant (like holding the shares for one’s own account or bearing their economic risk) are no longer met. Restrictions on empty voting may seem of limited value if they can only be enforced during the initial registration process and not upon occurrence of subsequent changes (such as a transfer of economic risk through equity swaps or similar arrangements).
