Citation:
Abstract:
Shareholder decision-making is growing more and more important in Swiss public corporations, not least since the federal ballot initiative “Against Fat Cats” has been approved by the people in spring 2013. As a governance instrument, however, shareholder decision-making is ineffective in about half of all Swiss public companies, which have a controlling shareholder. This could be changed through an instrument which is well-known in many parts of the world, including the U.S.: a “Majority of the Minority” rule (MoM rule), according to which shareholder resolutions require the consent of a majority of all shareholders represented plus of also a majority of the minority shareholders. In contrast to existing MoM rules, the proposed Swiss MoM rule should apply to all shareholder resolutions and be a mere default instead of having mandatory character. For the MoM rule to be effective as a default, a couple of additional safeguards are necessary.
In addition to making the case for a general MoM default and setting out the necessary safeguards in detail, the article provides an overview of selected MoM rules from around the world, with a particular focus on Israel’s elaborate system of MoM rules. It is also shown that a MoM rule is a more effective way of protecting minority interests in shareholder decision-making than the traditional instruments used in Swiss corporate law, namely supermajorities and ignoring voting preferences attached to certain shares.