Decision of the Board of Directors of an insolvent public limited company to transfer all assets to an acquiring company

Facts

Kammgarnspinnerei Interlaken AG, equally owned by Pent Holding Ltd. (COOP group) and EMS-Chemie Holding AG, had been experiencing significant financial difficulties for several years. In August 1983, faced with a situation of proven over-indebtedness, the Board of Directors decided to transfer all of the company's assets to a new company, Inkami AG, and to place Kammgarnspinnerei Interlaken AG into bankruptcy with the remaining liabilities. This decision was approved by the Extraordinary General Meeting of 17 August 1983, to which the representatives of the minority shareholder Schmid AG Gattikon had not been invited.

Schmid AG Gattikon subsequently contested the validity of the decisions taken by the Board of Directors and the General Meeting, arguing that they exceeded the powers of representation provided for in Art. 718 para. 1 CO.

Considerations

The FSCA considers that when a company is on the verge of bankruptcy and its corporate purpose can no longer be achieved, the company's governing bodies can no longer adhere exclusively to the limitation of powers of representation provided for in Art. 718 para. 1 CO. In such exceptional circumstances, it is justified to appropriately extend the powers of representation of the Board of Directors in order to allow the taking of urgent measures to safeguard the interests of employees, creditors and the public, such as the transfer of all assets to an acquiring company.

Although the sale of all the company's assets is in principle not covered by the powers of…