UBS shareholders now have six months to decide whether to file actions against the board after voting down the 2007 director liability discharge resolution.

A total of 52.8% of shareholders voted against the discharge for 2007 with 46% in support. Discharges for 2008 and 2009 managed to achieve 80% support. “We are accepting this vote and view it as a vote of resentment,” said Kaspar Villiger, re-elected UBS chairman.

Dominique Biedermann, head of Ethos, the Swiss shareholder body said that “The current board of the UBS has made itself accomplices to former board members by denying to file a civil lawsuit against former board members”. While the issue has been discussed by the board, Villinger said that he did not agree with its decision to not to file a lawsuit against former board members unless new evidence or analysis comes to light.

Peter V. Kunz

Speaking to Swiss on-line journal, swissinfo.ch, Peter V. Kunz, a professor of economic law at Bern University said that although Wednesday’s unprecedented vote against the discharge was more symbolic than legal, "the primary legal obligation for the board now is to reconsider its decision of December 2009 not to file a lawsuit. I think Wednesday’s resolution by the shareholders gives the board a legal obligation to do that."

UBS was taking a a gamble byincluding the 2007 discharge on this year's agenda - it could have waited until all outstanding investigations had been completed. The Swiss parliament has yet to decide how thoroughly to review the events that led to the bank’s fall from grace.

Proving criminal or civil liability against executives in Switzerland is neither cheap nor easy. Three years ago, an attempt by the Zurich canton to prosecute former bosses of the failed airline Swissair ended without a single conviction and a SFr5 million ($4.66 million) bill.

The defeated resolution was intended to absolve the board of blame for their role in losses that amounted to some $50 billion (SFr54 billion). This, combined with the bank's further reputation damage caused by the US tax evasion probe, may well make the case attractive for potential litigants.

Despite a clean sweep of the board, there is clearly on-going shareholder concern about UBS’ stewardship. The non-binding say on pay, although passed, received a highly vocal 45% vote against a pay and bonus system which was changed without shareholder consultation, as had previously been agreed by the board.

Some shareholders may feel that the only solution for a board with an apparently tin ear is to up the decibel level. But, as Villiger said after the meeting: "Experience shows that such trials last a minimum of 10 years, cost millions of francs, keep a company in the headlines for years, lead to paralysis within the company, and in the end turn out to be much ado about nothing. All this is not in the interest of the company or its shareholders."

The last word may belong to Kunz however. "Switzerland is similar to Japan, nothing happens usually. The company talks to the the big shareholders and that's it. This is the beginning of shareholder activism," he predicted.

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