Spotlight on the new provisions in operation – Work in progress
Retrospective Change of Currency –Impermissible Retroactive Effect in the Case of a Change to a Date Prior to 1.1.2023
According to the dispatch adopted by the Federal Council regarding company law, a change of the share capital into a foreign currency is permissible on a pro- or retrospective basis. However, the requirements of Art. 621 para. 3 CO must be met.
Is it possible to change retrospectively even if the cut-off date of the relevant financial year is on a date prior to that of when the new company law came into force (1.1.2023)?
The Commercial Registry does not register this change. Reason: A change of the currency to a date before 1 January 2023, would mean that the new law would have a retroactive effect, and thus, invalidate the previous company law for the relevant period. In this regard – unlike, for example, the rules on gender quotas of the board of directors and on transparency in commodity companies (cf. Art. 4 and Art. 7 Transitional Provisions to the New Companies Act of 19 June 2020) – they said that the necessary legal basis is missing. The Commercial Registry have drawn parallels to analogous questions that arose in 2008 and 2013 about the rules on audit waivers and the revised accounting law. Furthermore, they seem to raise the question if the requirements for retroactive effect are complied with according to Supreme Court decisions, such as good cause and compliance with the principle of proportionality.
The question of whether there is in fact an impermissible retroactive effect is open to considerable debate, because:
- the retroactive effect would be limited within a reasonable time framework;
- the voluntary conversion of the currency to a financial year beginning before 1 January 2023, would neither affect any legitimate interests nor lead to objectionable inequalities;
- the prohibition of retroactivity is a protective norm; however, it is not clear who the Commercial Registry intend to protect with its rejection. A company which voluntarily changes the currency of its share capital cannot be in need of protection; certainly not if its functional currency is the same as the target currency (which is a legal requirement of a change of currency);
- if the fact discussed herein has a legally relevant retroactive effect at all, then it would be a “non-genuine” retroactive effect (unechte Rückwirkung). Such retroactivity cannot be objected to, at least as long as it does not interfere with vested rights. No one can seriously claim this fact.
However, we see neither good reasons nor do we consider it proportionate to argue with the Commercial Registry in this respect.
This is to be accepted: a conversion of the share capital into a foreign currency to a date before 1.1.2023 is not possible. After all: the passage of time will fix it.