No tacit extension of a board mandate

Does a Board mandate continue to be extended without re-election by the General Meeting?
Does a Board mandate continue to be extended without re-election by the General Meeting?

The general meeting elects the board of directors and the auditors (cf. art. 698 para. 2 item 2 CO). This is a non-transferable and inalienable right of the general meeting.

The ordinary general meeting is then held annually within six months after the end of the business year. The Federal Supreme Court had long left open the question of whether the board mandate ends if the board of directors is not re-elected. In the decision BGer 4A_496/2021 of 3 December 2021, the Federal Supreme Court put an end to the doctrinal dispute and ruled as follows:

“The term of office of the board of directors ends with the expiry of the sixth month after the end of the relevant financial year if no general meeting of shareholders has been held pursuant to Art. 699 para. 2 CO or if the election of the board of directors has not been put on the agenda.” (E.3.5).

Author

Diana Krasnic

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