When Mandates Expire
The term of office of the board of directors and the statutory auditor is essential for effective corporate governance. The Swiss Federal Supreme Court clarifies that de facto organs may not convene shareholders’ meetings and that the auditor’s term of office must be assessed differently from that of board members. The judgment therefore provides important legal certainty in practice.
Background
B. AG had a single board member (C.) and I. AG as its statutory auditor. Shareholder A., holding 45% of the shares, argued that neither the board member nor the auditor had been validly re-elected. Based on Art. 731b CO, A. requested the appointment of a custodian due to an organizational deficiency. The key issues were whether a board member may validly convene a shareholders’ meeting after the expiry of their term of office and whether the case law established in BGE 148 III 69 regarding the board’s term of office also applies by analogy to the statutory auditor.
Court Decision
The Swiss Federal Supreme Court held that a board member may no longer validly convene a shareholders’ meeting once their term of office has expired. Although a de facto organ may work towards restoring a lawful situation, it is not authorized to convene a shareholders’ meeting itself. Consequently, the resolutions adopted at the shareholders’ meeting of 31 May 2022 were declared null and void.
Regarding the statutory auditor, the Court clarified that the auditor’s term of office must be assessed differently from that of board members. Pursuant to Art. 730a para. 1 CO, the auditor’s mandate only ends upon approval of the annual financial statements by the shareholders’ meeting. If no shareholders’ meeting takes place, the auditor’s mandate is automatically extended. The Court expressly rejected any analogical application of the case law established in BGE 148 III 69 to the statutory auditor.
Implications
The judgment provides important practical clarification. While the board’s term of office automatically expires six months after the end of the financial year pursuant to Art. 699 para. 2 CO, the statutory auditor remains in office until the annual accounts are approved. This allows the auditor to continue taking steps to convene a shareholders’ meeting if necessary.
The Court also clarified that de facto organs are not entitled to convene shareholders’ meetings. This resolves a previously disputed issue and removes significant legal uncertainty in practice.
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