Recent decisions by the Swiss Federal Supreme Court have clarified an important aspect of Swiss corporate governance: directors’ mandates automatically lapse if an ordinary shareholders’ meeting is not held within six months after the end of the financial year.
This ruling reinforces the need for companies to carefully monitor their corporate calendars, especially when it comes to re-electing board members and approving annual accounts.
A Strict Six-Month Deadline Under Swiss Law
Under Swiss company law, every company must hold its ordinary shareholders’ meeting within six months after the financial year closes. The Supreme Court has confirmed that this timeline will be strictly enforced. If no meeting takes place within that period to (re)elect directors, their mandates automatically expire. There is no tacit renewal or implied extension of office.
This interpretation may also apply to limited liability companies (GmbHs) if their articles of association specify that board members are elected by shareholder resolution.
The Risk of “Until the Next Meeting” Clauses
Many articles of association still use the standard wording: “One year, until the next ordinary shareholders’ meeting.”
Courts increasingly interpret this strictly, concluding that a director’s term ends six months after the financial year, even if the next meeting has not yet taken place.
This creates uncertainty for companies that fail to hold their meeting on time.
Flexibility Through Longer Terms
For private stock companies (AGs), Swiss law allows more flexibility: articles of association may set a term of up to six years, with three years being the common standard. Defining a longer term can help reduce the risk of mandates expiring too early — but mandates must still be renewed once the agreed period ends.
What Happens When a Mandate Lapses
Once a director’s mandate has expired, the former board no longer has authority to convene a shareholders’ meeting. Any resolutions taken at a meeting called by former directors are void.
In such cases, the situation can only be remedied by:
- a universal shareholders’ meeting (where all shareholders are present),
- the auditor, if one has been appointed, or
- a court order authorizing the meeting.
Practical Steps to Stay Compliant
To avoid unnecessary legal risk, companies should:
- Schedule their ordinary shareholders’ meetings within six months of the year-end
- Hold an extraordinary meeting to reconfirm directors if the ordinary meeting must be delayed
- Review and update the articles of association to ensure flexibility in directors’ terms
- Keep compliance timing in mind when approving dividends, since delays can expose the board to additional liability.
Key Takeaway
The Supreme Court’s clarification underscores that timing is governance. Missing the six-month deadline can automatically end directors’ mandates and invalidate decisions, an outcome that can be avoided through proactive planning and clear documentation.
At Trustmoore, our Corporate Services team in Switzerland helps clients stay fully compliant with Swiss company law, ensuring that governance structures remain valid, effective, and future-proof.
