Company & Commercial, Switzerland updates
Enforcing board members' information rights
Badertscher Attorneys at Law- Switzerland
- 25 March 2019
The Federal Supreme Court recently considered – for the first time – whether board members' rights to information, inspection and insight can also be asserted on an appeal basis. The court also commented on the type of procedure applicable in such cases. This decision should be taken into account by board members who lack evidence or knowledge of important or necessary information, particularly if it relates to the organisation of or disputed relationships within the board of directors.
Shareholders' agreements for closely held companies under Swiss law
Badertscher Attorneys at Law- Switzerland
- 13 November 2017
Shareholders of closely held companies often mutually agree on additional contractual rights and duties. However, the company itself cannot be a contract party to a separate shareholders' agreement. Apart from that legal restriction, such shareholders' agreements usually benefit from the contractual freedom of the parties. A recent Federal Court decision confirmed that such agreements may be recharacterised as abusive or contrary to the principle of good faith.
Interpretation of company articles in Sika takeover battle
Badertscher Attorneys at Law- Switzerland
- 22 May 2017
A recent Zug Cantonal Court decision sheds light on the way that Swiss company articles of association must be interpreted under Swiss company law in cases in which they are not only applicable internally among a few shareholders, but also have an effect on third parties. The decision confirms that the observation of merely the letter and not the spirit of company articles by a company board or majority company shareholders in a general meeting can even amount to an abuse of law.
New Federal Court decision on business judgement rule
Badertscher Attorneys at Law- Switzerland
- 05 September 2016
A recent Swiss Federal Court decision clarified the circumstances under which the personal liability of board members or managers of a Swiss company for their business decisions and omissions can be reduced by applying the so-called 'business judgement' rule or, if the related prerequisites are not met in a particular case, based on other grounds.
Defects in company organisation caused by deadlock
Badertscher Attorneys at Law- Switzerland
- 07 March 2016
The Federal Supreme Court recently clarified how to deal with defects in company organisation caused by deadlock between two equal shareholders. For the first time the court has confirmed that courts are authorised to order a share auction in such cases. However, it is strongly recommended that such a harsh outcome be avoided by installing suitable measures to solve conflicts from the outset.
New anti-money laundering rules affect bearer shares in Swiss companies
Badertscher Attorneys at Law- Switzerland
- 12 October 2015
On July 1 2015 a new regime for bearer shares in Swiss companies was enacted, introducing new legal obligations for company boards and shareholders and severe penalties for cases of non-compliance. To achieve transparency the Code of Obligations established a general duty for all owners of bearer shares in non-listed Swiss companies to disclose their ownership, identity and address to the company within one month of their acquisition.
Clawback risks increase for board benefits of privately held Swiss companies
Badertscher Attorneys at Law- Switzerland
- 05 May 2015
The Federal Supreme Court recently clarified exactly when board members and their close associates and affiliates must return benefits received from a Swiss company because they are manifestly disproportionate to the value of their related performance and the company's overall economic situation.
Group cash-pooling limitations – new Federal Supreme Court guidance
Badertscher Attorneys at Law- Switzerland
- 26 January 2015
The Federal Supreme Court recently decided an appeal against a Zurich Commercial Court decision. The Federal Court clarified company law issues in relation to intra-group loans and cash-pooling systems.The decision limits the amount of free reserves which can be paid out as dividends for as long as loan advancements to other group companies exist which are not at arm's length within the Swiss company.
New limitations on cash pooling?
Badertscher Attorneys at Law- Switzerland
- 22 September 2014
A recent Zurich Commercial Court decision risks jeopardising the use of cash pooling by setting overly onerous standards for the characterisation of an intra-group payment in the cash pool as a legally permitted intra-group loan. Many existing cash pools involving Swiss group companies would violate Swiss law, and the legality of a large amount of dividends already paid by such group companies to their holding companies would be questionable.
'Fat cat' initiative revisited – government implements ordinance
Badertscher Attorneys at Law- Switzerland
- 27 January 2014
Following Switzerland's vote in favour of an initiative against excessive salaries for board members, the federal government has recently adopted the respective implementing ordinance. Swiss listed companies must start early to implement all changes to their articles, regulations, employment contracts and annual general meeting voting procedures, as these decisions fundamentally affect the rights of their shareholders.
Standard form contract available online constitutes valid prorogation of jurisdiction
Badertscher Attorneys at Law- Switzerland
- 21 October 2013
The Federal Supreme Court recently clarified that the Lugano Convention offers the possibility to choose Switzerland as a neutral jurisdiction for companies domiciled in any of its member states, even if the companies are not domiciled in Switzerland. The court also clarified that standard form contracts available only by fax are insufficient, but contracts available only online are sufficient to fulfil the conditions of the convention
Personal liability of board members for abusive lawsuits
Badertscher Attorneys at Law- Switzerland
- 10 June 2013
In the wake of a recent Supreme Court case, diligent board members of Swiss companies would be well advised to minimise their personal liability before launching lawsuits on behalf of their company by seeking legal advice on the related personal liability risk. The consultation should not be limited to a mere assessment of legal issues, but should also include whether a claim on behalf of the company has merit.
Voters say yes to 'fat cat' initiative
Badertscher Attorneys at Law- Switzerland
- 08 April 2013
Switzerland recently voted in favour of an initiative against excessive salaries for board members and executives. New transparency rules and a rigid regime on a binding say on the pay of board members and executives must be enacted. Once enacted, shareholders must vote annually on the aggregate compensation for the board, advisory board and executive management.
Admissibility of law firms under legal form of corporate bodies
Badertscher Attorneys at Law- Switzerland
- 26 November 2012
The Federal Court recently considered whether non-incorporated law firms are permitted to adopt the legal form of a company limited by shares. The court held that it is the organisational structure of a law firm which is decisive, not its legal form. A law firm constituted as a company limited by shares is admissible, provided that it is fully controlled by its attorneys, thereby granting it institutional independence.
Preparing for the new accounting law
Badertscher Attorneys at Law- Switzerland
- 20 August 2012
On January 1 2013 a new accounting and auditing law will enter into force in Switzerland. The new law establishes uniform requirements for all kinds of business, irrespective of their form of incorporation, by introducing the 'same size, same rules' principle. Unlike under certain international reporting standards, consolidated financial statements will usually be required only if the size of a business exceeds certain thresholds.
Unlawful refusal to place an item on the agenda for a general meeting
Badertscher Attorneys at Law- Switzerland
- 01 June 2012
The Supreme Court recently commented for the first time on the prerequisites under which a board of directors is obliged to place an item requested by a shareholder on the agenda for a general meeting. The court further dealt with the question of whether a company's articles of association may impose certain restrictions on a board's competence to delegate the management of the company's affairs to third parties.
Federal Act Against Unfair Competition: revised rule protects consumers
Badertscher Attorneys at Law- Switzerland
- 28 May 2012
The partial revision of the Federal Act Against Unfair Competition attempts to revive Article 8, particularly by removing the element of deception. Article 8 will clearly influence the drafting and use of general conditions of contract in future, although only to the extent that consumer contracts in the mass-market sector are concerned. Sellers and suppliers should consider reviewing any general contractual conditions in use in this sector.
Supreme Court rules on creditors' rights of inspection
Badertscher Attorneys at Law- Switzerland
- 12 March 2012
A creditor which requires access to the annual accounts and auditor's report of a stock corporation must prove both its position as a creditor and a legitimate interest. Recently, the Supreme Court reconfirmed the existing practice in both doctrine and jurisdiction, and took the opportunity to specify in more detail the criteria to find an interest warranting protection pursuant to the Code of Obligations.
Code of Obligations: organisational defects
Badertscher Attorneys at Law- Switzerland
- 12 December 2011
Article 731(b) of the Code of Obligations entered into force on January 1 2008. It provides that when a company lacks the required corporate body or if the composition of one of these corporate bodies does not comply with the law, any shareholder, creditor or the commercial registrar may request the court to take the required measures. Article 731(b) of the code is applicable to companies limited by shares, to limited liability companies and to cooperative companies.
Limitation periods in sales and service contracts
Badertscher Attorneys at Law- Switzerland
- 13 June 2011
The Federal Convention is in the process of revising the regulatory regime in relation to statutory limitations. The revision of the respective legislation will extend the existing one-year period to two or even five years and coordinate the various statutes of limitations. This update examines the key aims of the planned revision.
