Delegation of management by the board of directors and competence of the general meeting

Facts

Company X. SA, headquartered in E., was established in 2007 with the purpose of acquiring, selling and managing investments in the form of shareholdings in companies from the Commonwealth of Independent States and the Baltic States. The share capital of X. is held 33.76% by company Y. AG and 54.40% by Z. AG and its subsidiary Z.A. Limited.

In 2007, X. concluded a discretionary management contract ("Investment Management Agreement") with Z.A. Limited, authorizing it to carry out all transactions within the investment objectives of X. without further approval. In 2010, the minority shareholder Y. requested that the general meeting of X. adopt a statutory provision imposing the same independence criteria on the investment manager as those applicable to the auditors.

The board of directors of X. refused to include this proposal on the agenda, considering that it fell within its exclusive competence in matters of organization and appointment of persons in charge of management. Seized by Y., the court ordered the board of directors to submit this amendment to the articles of association to the vote of the general meeting.

Considerations

The Federal Tribunal dismissed X.'s appeal. The notion of "management" within the meaning of Art. 716 para. 2 CO concerns the internal relationship between the company and its manager. The board of directors of X. has validly delegated the management of the business to Z.A. Limited in accordance with Art. 716b CO.

Although the doctrine is divided, the Federal Tribunal considers that the general meeting may impose certain…