Thomas GretherGone are the days when general meetings in Switzerland could only be held purely physically. Thanks to recent legislation, companies no longer cancel their general meetings in times of pandemics and home offices. AGMs in Switzerland can now be held digitally. Whereas previously they could only be held physically, they can now also be held hybrid and virtually! Companies can now also hold their AGMs in the presence of their shareholders.
Attending the general meeting via livestream
Live streaming is used for hybrid or purely digital general meetings. Interactions between shareholders, interested parties and management can then be carried out easily via live chat. With the help of practical solutions, voting on individual topics can also be implemented in real time. In the following sections, we provide you with relevant information about the digital annual general meeting and highlight the advantages and disadvantages. Furthermore, we present blockchain as an adequate solution approach to increase IT security for virtual general meetings.
Virtual general meeting with daura
When it comes to developing technologies for conducting digital general meetings, blockchain startup daura is at the forefront. Daura is a digital share platform based in Switzerland. The innovative company is based in Zurich. Sygnum CEO Mathias Imbach, for example, is also a member of the board of directors. With the blockchain technology developed by daura, digital general meetings can be handled via the platform. “Proxies can be named, authorized and instructed,” explains daura CEO Peter Schnürer in a webinar. It is also possible to exercise shareholders’ rights virtually during the AGM, he adds. “You can influence the passing of resolutions through your own motions,” Schnürer says
Advantages of a virtual AGM
Daura offers the following options for the virtual AGM:
- Capture a company’s management on the daura platform.
- Detailed user profiles of shareholders and interested parties.
- Send automated invitations by e-mail.
- Digitize voting rights management, determine voting rights.
- Determine digital proxies.
- Conduct individual real-time voting, instant display of results.
- More comprehensive logging and encryption of data in the blockchain.
Digital general meetings also allow proxies to be named, authorized and instructed.
Peter Schnürer, CEO of blockchain company daura.
Ideal with international shareholders
Digital general meetings are ideal for companies with an international audience whose participants cannot always be present directly. The costs of holding general meetings can also be reduced to a minimum. However, the blockchain company daura also deals with important topics within the areas of financing and investment. Capital increases as well as share bonds between share holders and the company are also possible. In this way, the share ledger can be digitized and always kept up to date.
Hacker attacks jeopardize general meetings
Participation in digital general meetings as well as online voting procedures requires doubtless and secure identification. The data of shareholders, the company, interested parties and the voting results must be protected against unauthorized hacker attacks. If unauthorized interference occurs during the General Meeting, the voting results can be challenged by means of a voting rights action
Falsification of voting results
This is why there is a risk of falsification through cyber attacks, particularly in the case of digital voting processes. Such attacks can affect both the proper conduct of digital AGMs and the voting results themselves. The corresponding security measures must therefore always be kept up to date with the latest technology. And in particular with regard to the legitimation of all electronic participants in the AGM
Data theft by hackers
Potential data theft also poses a threat to digital general meetings. A recent report by Swisscom shows some frightening results in the area of Swiss data security. More than one million Swiss Internet users were de facto affected by identity theft online, it said. In addition, the “long time span between data theft and its detection is downright fatal,” according to Swisscom. Hacker attacks on investors’ user accounts therefore pose a particularly great danger.
Number of hacker attacks in Switzerland in 2020
In conjunction with cybercrime, Switzerland is currently particularly affected in the area of white-collar crime. Enclosed is an overview of the number of cybercrime offenses throughout Switzerland:
Type of fraud | Number of crimes |
Cyber fraud | 16 395 |
Money and package mules | 1690 |
Entry into data systems (hacking) | 789 |
Phishing | 642 |
Malware | 437 |
Blockchain protects the digital AGM
Blockchain technology can help keep a digital AGM secure. The blockchain is a decentralized database. Transaction data can be stored in a decentralized database – secure and inaccessible to unauthorized persons. Users’ data can be lined up in blocks. Each block has a hash by which it refers to the previous block. Subsequent block changes are therefore impossible. The blockchain also secures documents and certificates at universities or payments in favor of animal welfare. Supply chains, for example to combat blood diamonds, can also be mapped.
Voting results can be verified
Participants in a digital general assembly are only authorized to take part in votes using a private key. At the same time, you as the voter can also verify your individual voting results yourself. This enables you to see whether your individual results are actually included in the final result or whether errors have occurred in the meantime. Hacker attacks can thus be virtually ruled out. The underlying information is then not stored on a single server. It is practically available on many different computers at the same time.
Switzerland: Emergency law enables digital AGMs
The new Swiss stock corporation law for virtual general meetings is primarily a matter of emergency law. Provisional law has already allowed digital general meetings to be held on the basis of COVID-19 since 2020, and there is to be an emergency law transitional arrangement until December 31, 2021
The Federal Council now allows companies – with four days’ notice – to hold a general meeting with remote participation. The special provisions under COVID-19 Regulation 2 apply to meetings of all companies. In addition to corporations such as stock corporations and limited liability companies, these also include general and limited partnerships, associations and cooperatives. A meeting within the meaning of Art. 6a COVID-19 Ordinance also includes, for example, the delegates’ meetings of a cooperative.
Exercising rights in electronic form
A look at Art. 6a COVID-19 Ordinance 2 shows the details of the provisions: In the case of meetings of companies, the organizer may, irrespective of the expected number of participants and without observing the notice period, order that the participants may exercise their rights exclusively
- in writing or in electronic form; or
- by an independent proxy designated by the organizer.
The organizer shall decide during the period referred to in Article 12 paragraph 6. The order must be communicated in writing or published electronically no later than four days before the event.
As of 2022, the emergency transitional arrangement will then take effect by law. However, the Board itself must still be physically present on site. Below are two variants for the exercise of a virtual general meeting.
Indirect digital participation
As a shareholder, you can initially participate indirectly in virtual general meetings. This is done by means of a proxy. The proxy can then be connected digitally and can represent your share rights on your behalf. This means that you do not have to attend the general meeting yourself – either physically or digitally. And you can hire a proxy to attend the meeting on your behalf.
Direct digital participation
First, the respective company must adhere to the 20-day notice period for the scheduled general meeting. As a rule, a written invitation must also be sent for this purpose. It does not matter whether it is a physical or a digital general meeting. At the same time, the respective company should also make all annual and audit reports available to you as a participant. The reports, if any, can either be sent at your request or can be sent automatically by the respective company – together with the invitation.
Conclusion on daura, AGM and Blockchain
The Swiss blockchain company daura offers companies a specific crypto technology that can be used to conduct digital general meetings. Companies can use daura's service and conduct digital general meetings via the platform. Security against hacker attacks is provided by the blockchain. One good thing. As a potential user, you can create your own account on the daura platform. On the daura homepage, you can find all the necessary information in the "Register as an investor" section.
FAQ – Frequently Asked Questions
The blockchain prevents the falsification of voting results, data theft and influence by unauthorized persons at digital general meetings. In its construction, blockchain technology is decentralized and has a clear process. Once information or elements in the so-called “blocks” have been created, they cannot be subsequently changed by hackers.
By using novel blockchain technologies, a general assembly can be protected from attacks by hackers. One possibility is to establish user accounts for companies and shareholders, for example with the blockchain company daura. There, user and voting data can be stored using blockchain technology.
Digital general meetings can generally be held at low cost and with little effort. A virtual AGM also offers the advantage that international shareholders can participate without great effort. In addition, real-time voting results are possible and comprehensive minutes can be taken.
