Posts in "Corporate Law"

Corporate Law

Swiss Data Protection Act Compared to General Data Protection Regulation (GDPR) of the EU

May 18, 2022 Comments Off lexpro read

The new Data Protection Act (DPA) of Switzerland has been passed in the Swiss Federal Parliament on the 25th of September 2020 and is expected to step in to force this year in the summer.

What will the new Swiss law on data protection bring and how will it apply with the GDPR?

More regulation?

One of the main changes with the new law is new obligations to maintain:

Records of the processing activities of personal data;
Reporting losses of data and other security breaches to the “FDPIC” – Federal Data Protection and Information Commissioner;
“DPIA” – Data Protection Impact Assessments;

The above-mentioned was basically copied from the GDPR and will result in heavier loads of work for the companies in Switzerland who will have to adapt to these new changes.

However, the basics of data processing have not been changed all that much. Private companies in general, will not have to do many changes in the way they process personal data. The Swiss principle (legal grounds) by which the processing of personal data is permissible and justification remains the same.

This means the Swiss Data Processing act although is made to comply with GDPR, in a way it is still different.

When it comes to providing consent Swiss DPA is less restrictive than GDPR

Unlike GDPR, Swiss DPA does not oblige the Data Processor to inform the subjects about the possibility to withdraw their consent about the processing of their personal data. Also, a combination of multiple consents is possible according to the DPA. The reasons for justifying the activities of data processing, in general, have remained the same.

The new principle “Privacy by Design” which was explicitly included in the new Swiss DPA is not actually new, it has always existed in the Swiss data protection law. As a matter of fact, “Privacy by Default” is the single new provision in the new Swiss DPA which refers to cases where an online service provides, is obliged to provide settings for data protection as an integral part of the services.

New Swiss DPA does not require data protection officers (DPOs)

Even though the new Swiss law on data mentions “Data protection advisors” which basically are Data Protection Officers (DPOs), Swiss companies have no obligation to employ one, unlike EU states.

In reality, if larger companies wish to remain compliant and implement the new laws in a proper manner, they will have to appoint DPOs as this field requires a lot of expertise and knowledge of data protection regulations. Some large corporations have implemented whole new sectors to address this issue and to be able to comply and avoid being fined for failing to do so.

There is a restriction on the Right to information

The rights of the subjects under this new law have also been defined more clearly and a bit extended.

“The right to be forgotten” which comes from GDPR has already been implemented in the old DPA and will remain in the new one as well. Also, the principle for data processing to be allowed as long as necessary remains in force.

“The right to data portability” however, is quite a new concept introduced in the new Swiss DPA that entails the option for subjects to be able to request their personal data stored with providers of online or other services to be transferred.

Agreements for data processing

Companies will have to draft contracts with third parties who will have access to the personal data they possess of their employees, clients, subcontractors, and others.

Privacy policy declarations are now mandatory

With the new DPA, companies will be obliged to provide mandatory information on connection to the personal data they process. Such information mainly is provided on their websites which should appear when a person opens the link to the site. As an example, these policies will have to provide information of which data is collected from the subjects, legal grounds of collecting such data, the contact information of the Data protection officer (if appointed), exports of personal data, and reasons to do so.

The new DPA will bring more severe fines, but with the exception

Previously the FDPIC could only issue recommendations to data controllers and processors who did not comply with DPA. However, with the new DPA, this governing body will be able to issue direct orders, so instead of an advisory role, the FDPIC will have the role of an enforcement body.

Also, the new DPA provides fines for the controllers and processors who will fail in compliance up to CHF 250.000 which in comparison to the fine amounts provided under GDPR is insignificant. The body responsible for issuing fines is awarded to the Cantonal law enforcement authorities, who do not have expertise in data protection.

What should companies do to comply with the new regulation?

First, they need to revise their statements on data processing and protection and check if they comply with the new law, make the required changes or create new ones where they didn’t exist in the first place.

Next, they should identify their data processors, i.e. to whom they allow access to their own personal data, and bring contracts for data processing in place. Where these contracts already exist, they should be checked if they comply with the new regulation.

Hire Data protection advisors who have expertise in this field. Even though Swiss companies are not obliged by law to do so, this step can significantly make the complicated process of implementing the new law easier and faster.

Introducing their employees to the new regulations, especially those who will have access to personal data is probably the most important step to strengthening their data processing practices.

Finally, all companies should implement a process for identification, analysis, reporting, and handling of possible security breaches.

Corporate Law

Établir une SARL en Suisse en 2022 : exigences du droit des sociétés

April 28, 2022 Comments Off lexpro read

L’une des structures commerciales suisses les plus choisies est la Gesellschaft mit beschränkter Haftung (GmbH) ou la Société à Responsabilité Limitée (SARL), une combinaison d’une société anonyme et d’une société de personnes. La loi impose des exigences spécifiques pour réussir à créer une telle entité (art. 772-827 CO).

En Suisse, les entreprises sont régies par le droit fédéral, tel qu’il est énoncé dans le “Code des obligations”. Une entreprise peut acquérir le statut de SARL suisse sous certaines conditions qui varient d’un canton suisse à l’autre.

Les exigences, les procédures et le régime fiscal peuvent également différer en fonction de facteurs spécifiques : la forme juridique de l’entreprise et le canton où la société a été enregistrée.

Une SARL est une société commerciale dotée d’une personnalité juridique propre et d’un faible capital de départ. Elle constitue un excellent choix pour les petites et moyennes entreprises car elle est relativement facile à constituer, à gérer et à exploiter. Il y a plus de 207’000 entités SARL enregistrées en Suisse.

Informations générales

Pour être dûment constituée, une SARL doit être inscrite au registre du commerce du lieu où elle a son siège (art. 778 CO). L’acte de fondation qui crée la société doit être notariée. Les fondateurs doivent déclarer la constitution par un acte officiel, établir les statuts, convoquer l’assemblée des associés, désigner les organes de gestion (art. 777 I CO).

Il doit y avoir au moins un actionnaire, il n’y a pas de nombre maximum, et chaque actionnaire doit détenir au minimum une action. Les actions peuvent généralement être transférées librement ; un accord écrit entre les parties concernées suffit pour effectuer le transfert.

Le capital social doit s’élever à 20’000 francs suisses au moins (art. 773 CO), et il doit être apporté sous forme d’espèces ou en nature. Contrairement aux dispositions du droit antérieur régissant les SARL, il n’y a pas de limite supérieure pour le capital social. L’apport le plus bas par associé, qu’il soit en espèces ou en nature, s’élève à 100 CHF (art. 774 CO).

Responsabilité

Dans le cas d’une SARL, la société est entièrement responsable de ses dettes. Les actionnaires ne sont généralement pas responsables des dettes ou des engagements de la société, à l’exception du paiement du prix de l’action, et au cas où il y aurait une obligation d’effectuer un paiement supplémentaire ou de fournir un service auxiliaire inscrit dans les statuts.

Cette obligation est destinée à couvrir les pertes du bilan afin de permettre à la société de poursuivre son activité. Le montant total des versements complémentaires ne doit pas dépasser le double de la valeur nominale de l’action détenue par un actionnaire individuel (art. 795 CO).

Système comptable

L’un des avantages importants de la création d’une SARL en Suisse est le système fiscal attractif auquel elle sera soumise. La Suisse offre actuellement l’un des taux d’imposition les plus bas d’Europe.

Les entreprises suisses sont soumises à l’impôt leurs bénéfices imposables générés en Suisse. Les entreprises sont imposées à trois niveaux : fédéral, cantonal et communal.

En Suisse, le taux de l’impôt fédéral direct sur le revenu des sociétés est fixé à un taux fixe de 8,5 %. Toutefois, étant donné que les paiements d’impôts déductibles sont autorisés, le taux de l’impôt fédéral sur le revenu peut être abaissé à 7,8 %. Pour l’émission d’actions d’une valeur supérieure à 250’000 CHF, un droit d’apport de 1% sera prélevé.

En outre, si la société holding détient 20% du capital social d’une autre société, elle peut également bénéficier d’un taux d’imposition réduit sur les sociétés au niveau fédéral.

En plus de l’impôt fédéral direct sur le revenu des sociétés, chaque canton a sa propre loi fiscale et prélève des impôts cantonaux et communaux sur le revenu et le capital des sociétés à des taux différents. En règle générale, le taux d’imposition effectif combiné se situe entre 12 % et 24 % pour les sociétés soumises à l’impôt ordinaire, en fonction de la résidence de la société en Suisse.

Les SARL qui dépassent deux des seuils mentionnés ci-dessous pendant deux années fiscales consécutives seront soumises à un contrôle ordinaire (art. 727 CO) :

Un bilan de plus de 20 millions de CHF
Un chiffre d’affaires supérieur à CHF 40 millions
Nombre d’employés : 250

Les entreprises publiques et les entreprises qui ont l’obligation d’établir des comptes consolidés doivent également procéder à un contrôle ordinaire.

Selon le droit suisse, une SARL doit faire appel à un réviseur agréé par l’Etat pour un contrôle restreint (art. 727a I CO). Toutefois, les entités qui emploient jusqu’à dix personnes à plein temps en moyenne annuelle peuvent être dispensées de procéder à un contrôle externe annuel. (art. 727a II CO).

L’assemblée des actionnaires

L’assemblée des associés représente le noyau de la SARL. Les compétences de l’assemblée des associés sont les suivantes

Adopter et modifier les statuts ;
nommer ou révoquer les gérants ;
approuver le compte de résultat annuel et le bilan et la distribution des dividendes ;
décider de l’utilisation des bénéfices
voter la décharge de responsabilité des administrateurs ;
réviser la gestion.

Retrait, transmission

La cession d’un apport en capital dans une SARL doit être confirmée par écrit (art. 785 CO). En outre, elle doit être accompagnée de l’approbation de l’assemblée des associés. Pour que la cession soit définitive, il faut qu’au moins deux tiers des associés y consentent (art. 786 et 808b I. n°4 CO).

La cession du patrimoine ou de l’activité d’une SARL est encadrée par les dispositions de la loi sur la fusion (art. 181 IV CO). En cas de transfert des rapports de travail, l’art. 333 CO est applicable.

La raison sociale choisie peut être conservée pour une durée illimitée. En cas de société de personnes, le changement d’associés n’a pas d’incidence sur la raison sociale (art. 954 CO).

En conclusion

Une société à responsabilité limitée (SARL) ou une société à responsabilité limitée (Sàrl) suisse présente de nombreux avantages tels que le régime fiscal, l’environnement favorable aux affaires et la situation géographique. Ces avantages clés ont fait de la SARL suisse un véhicule d’entreprise populaire pour les propriétaires d’entreprises locaux et étrangers.

Nos avocats sont à votre disposition pour toute question relative à la SARL.

Corporate Law

What do Swiss Businesses Need to Know About the New Data Protection Act?

April 21, 2022 Comments Off lexpro read

As a result of the new Swiss Federal Act on Data Protection (“FADP”), major aspects of the processing of personal data will be altered beginning in 2022. On September 1, 2023, firms will be required to adhere to stronger regulations, and they will need to adjust their current standards and data protection declarations to meet those requirements.

What does the new FADP entail, exactly?

It’s important, first and foremost, that the Data Protection Act be updated to reflect the rapidly evolving technical and social environment (such as the rise of big data, social media, and the Internet of Things), as follows: The goal is to increase the capacity of the individual to make decisions on their own data. It will also be updated to comply with European privacy laws: Swiss data protection standards must be upheld for data transfers between Switzerland and the EU to continue to be uncomplicated in the future, according to the goal of this law.

Is there a reason why the revision is so crucial?

For Swiss businesses, if the EU Commission no longer acknowledged that Switzerland’s level of privacy is adequate, the interchange of data with EU businesses would become more complex, placing them at a competitive disadvantage.

How soon will the new FADP come into force?

As of September 1, 2023, both the new FADP and a related Ordinance to the FADP will come into effect simultaneously.

When will businesses be required to comply with the new data protection laws?

The updated FADP came into effect on January 1, 2014.

What are the relevant transition periods?

In the revised FADP, there are no transition periods for new members. The consequences for failing to comply with FADP requirements by this deadline are as follows:

The amended FADP gives the FDPIC more authority to enforce it. On its initiative, or after being notified, it may open an investigation into an organization and, in cases of violations of data protection laws, drastic mandate steps such as adjusting or suspending data processing or even removing files entirely if necessary.

Additional civil law remedies are available to data subjects under the updated FADP. As part of a series of reforms to the Civil Procedure Code, judicial procedures must be free of charge.

In the worst-case situation, how much can a corporation anticipate to pay in penalties for breaking the updated FADP?

Private people may be penalized up to CHF 250,000 if they intentionally infringe the new FADP, such as violations of responsibilities to disclose information, collaborate, or exercise duties of care. There is a maximum punishment of up to CHF 50,000 that may be imposed on corporations if it is impossible to identify the culprits, and no fine of more than CHF 50,000 can be imposed on such individuals.

The GDPR, on the other hand, does not penalize people but imposes far larger penalties on corporations.

What are the most important changes?

When it comes to data protection, the FADP now only protects the data of individuals, as opposed to the data belonging to organizations, as was previously the case.

Genetic and biometric data are now considered highly sensitive.

Improved transparency: Businesses are now required to disclose information in greater detail than previously. Not only is it necessary to notify individuals about the gathering of highly sensitive data, but it is also necessary to do so when data is gathered from third parties, such as public databases or publicly available sources. In addition to revealing the data controller’s name and contact information, it is necessary to reveal the aim of the processing, the recipients or groups of recipients, and, if the data is exported, the country to which it will be sent. The updated FADP is much tougher than the GDPR in this regard.

Companies must retain a list of processing activities with the necessary information, although they are no longer needed to keep a list of data acquisitions. List of processing operations. It is recommended to connect these directories effectively, especially if the same program or database is used for many data processing tasks. The Federal Council may make exceptions for enterprises with fewer than 250 workers. As of right now, there is no official word on when the new regulation will be put into effect.

An adequate assessment of the data processing on personal or basic rights of the data subjects is now required by law for all companies. Data protection impact assessments are now mandatory for all companies. This must be recorded, and it must be done in writing.

Profiling: Automated data processing may also be used to analyze personal features like an individual’s health, interests, behavior, and location. The new FADP additionally controls profiling. The amended FADP, in contrast to the GDPR, does not impose a general need to get permission. Only in the case of the very high-risk profile is such a requirement enforced.

Data security breaches, such as accidental or unlawful loss, deletion, destruction, alteration, or unauthorized access to personal data, must now be reported quickly to the FDPIC (within 72 hours under the GDPR)). In general, the controller is obligated to notify the data subject if doing so is essential for the data subject’s safety or if the FDPIC so requests.

Designing apps with data protection in mind from the outset means that organizations must not rely on default privacy settings to get users’ agreement for processing that isn’t strictly essential; this is known as privacy-by-design and privacy-by-default.

What exactly do the acronyms stand for?

The Swiss Data Protection Act (FADP) is an example of federal law (Federal Act on Data Protection). The new Data Protection Act is referred to as the amended FADP in the revised FADP.

The ordinance of the Federal Council pertaining to the FADP is known as OFADP. It includes all of the specifics for putting the plan into action. An updated law has yet to be published in full. On June 23, 2021, the Federal Council issued the proposed ordinance for public comment.

The General Data Protection Regulation (GDPR) of April 27, 2016, is the European Union’s law. Since May 25, 2018, it has been immediately applicable to all European Union member states. Even though this is a European rule, specific constraints apply to Swiss businesses when implementing it.

What remains unchanged?

Because of this, the amended FADP does not fundamentally alter the way data is handled in the same way as GDPR does. As in the past, and in contrast to the GDPR, private firms are not obliged to get permission or other justification for processing personal data, provided:

Compliance with data protection and privacy laws is ensured by the use of open data processing principles such as accordance with the information duties, the connection to a specified purpose, proportionality, and the protection of personal data.
No objections have been raised by the individual whose data is being processed.
Furthermore, no highly sensitive personal data (intended for use by third parties) is shared.

Only the processing of especially sensitive personal data and the use of high-risk profiling necessitates obtaining the user’s explicit permission.

Do foreign companies also need to comply with the new law?

Does the new FADP follow the “effects doctrine” when it comes to the geographic area of application? Yes. If you’re a foreign company operating in the Swiss market or if your data processing influences the Swiss market, the GDPR applies to you as well.

If they frequently handle a considerable amount of personal data in Switzerland in connection with product or service offerings or monitor the behavior and if the processing represents a high risk for data subjects, enterprises with foreign offices must appoint a representative in Switzerland.

The FADP, on the other hand, mandates the appointment of a data protection officer for all Swiss enterprises that handle the personal data of EU citizens. Regardless of the level of threat.

Which companies are at a higher risk of breaching the new FADP?

Among them are organizations that handle a large quantity or especially sensitive personal data, conduct profiling, manage webshops or produce automated individual judgments, or transmit personal data overseas (outside the EU).

How much time will it take for business owners to implement the full overhaul of the FADP?

A company’s level of effort will depend on whether or not its operations make it a target of the new advances and how well it has already adapted. GDPR-compliant companies will need to make little or no changes. Companies that solely do business in Switzerland, on the other hand, should immediately begin a gap analysis.

Is it now mandatory for every business to have a data protection advisor on staff?

According to GDPR, a data protection adviser is not required, but several advantages do so. This adviser serves as the primary point of contact for workers, customers, and government agencies when it comes to data security problems. For high-risk data protection impact assessments, obligatory consultation of the FDPIC is not necessary if a data protection expert is engaged.

Does every company now have to appoint or hire a data protection advisor?

Whether or whether a corporation has a legal department or a data protection officer who meets the requirements of the old FADP is a factor to consider. In the absence of that, we highly urge getting outside assistance.”

What will a business have to do starting in 2022 to comply with the new data protection regulations?

Personalize online and promotional and commercial agreements’ privacy policies by reviewing and modifying them.
Organize and revise internal procedures for data processing
Set up a computer system for processing data.
Implement a mechanism that guarantees that data subject rights are processed promptly (e.g., requests for information or deletion)

When there is a data breach, notify affected parties

If you’re using new, high-risk processing technologies or processing highly sensitive data on a large scale, you should do a data protection impact assessment beforehand.

Third-party contracts for data processing should be examined. A notification obligation should be included in the case of a data breach or when data is transferred to subcontractors. Specifically, Data security must also be maintained by the responsible party.

As soon as it is no longer important to handle personal data, make sure it is deleted or anonymized.

To guarantee that personal data is only released in countries with proper protection, specify which countries will get the data. Storage on foreign systems is likewise affected by this rule (cloud). A comparable list is published by the Federal Council (previously the FDPIC). However, data may still be sent to countries that aren’t included on this list that can’t export data.

Provide suitable technological and organizational safeguards to ensure the protection of sensitive data. A breach of security should be prevented at all costs. Right now, the Federal Council has not determined what the bare minimum is. Email encryption should be provided for sensitive personal data since data transfer through email is unsafe.

It’s important to ensure data portability when handled electronically, particularly when directly related to concluding or carrying out a contract comparable to the GDPR.

Notification of the FDPIC of a data protection adviser (data protection officer) appointment. The contact information for this adviser must be made public. The GDPR, on the other hand, makes it essential to notify a data protection officer.

Corporate Law

Le processus d’achat de biens immobiliers en Suisse

April 19, 2022 Comments Off lexpro read

Ce qu’il faut savoir pour acheter en Suisse

L’achat d’une maison peut parfois être une expérience stressante. Si la propriété est située dans un pays étranger, ceci peut être accentué davantage. Il peut être difficile pour les étrangers qui s’installent en Suisse de comprendre le marché immobilier suisse. Les lois sur l’acquisition de propriété par les étrangers et les réglementations hypothécaires suisses peuvent faire perdre son sang-froid à n’importe quelle acheteur. En lisant ce guide, vous trouverez des informations sur le processus et les conditions d’achat d’une propriété en Suisse, que vous soyez un étranger ou un citoyen suisse.

Le Notaire

Lorsque vous avez convenu d’acheter une maison, vous devez d’abord engager un notaire. Le notaire doit être enregistré dans le canton où se trouve la propriété afin de représenter à la fois le vendeur et l’acheteur.

Il est courant qu’un agent commercial ou un promoteur recommande un notaire efficace et maîtrisant l’anglais. Le notaire est souvent choisi en raison de sa familiarité avec les documents administratifs d’une transaction antérieure.

Le Permis étranger

La tâche la plus importante du notaire est d’obtenir le permis des acheteurs pour les non-citoyens. Dans certaines stations de ski, la commune locale refuse de fournir des permis aux étrangers pour l’achat de la propriété. À Zermatt, les étrangers doivent obtenir une autorisation pour acheter une résidence secondaire, alors qu’à Verbier, ils sont libres de le faire. Si l’étranger est citoyen d’un pays de l’UE, il peut acheter une propriété à Zermatt s’il est résident suisse. Ce n’est pas simple !

Les permis pour étrangers sont de deux sortes : généraux et spécifiques.

Un permis général “conditionnel” doit être obtenu si le projet est nouveau. Dans la plupart des cas, un permis de résidence secondaire permettrait de vendre 15 des nouveaux appartements à des étrangers sur un total de 20.

Ensuite, il faudra une autorisation spéciale pour vendre l’unité X à l’acheteur Y. Le notaire ne doit demander une autorisation particulière que si un étranger détient déjà la propriété. Les cantons fournissent les autorisations, mais la Confédération doit également les autoriser à Berne avant qu’elles puissent être mises en œuvre.

Autres documents

L’architecte doit diviser le titre de propriété en titres distincts pour chaque unité lors de la construction d’une nouvelle structure ou de la transformation d’une propriété ou d’un hôtel existant en plusieurs propriétés. Il rédigera un contrat qui précise la part des dépenses totales de l’immeuble que chaque unité doit payer et la manière dont les propriétaires et l’administrateur de l’immeuble collaboreront.

Ce document est appelé PPE dans les régions francophones et SWTE dans les régions germanophones. L’établissement et l’enregistrement de ces documents peuvent prendre des semaines, voire des mois. Dès que ces documents ont été complétés et enregistrés, le notaire peut demander le permis général et le permis particulier en même temps afin d’accélérer le processus.

Le notaire demandera une copie du passeport de l’acheteur et des informations sur le formulaire de demande de permis d’étranger.

Accord de réservation

Il se peut que l’on vous demande de signer un accord de réservation et de verser un dépôt si vous achetez une propriété à un promoteur. Vous devrez souvent payer à une agence ou à un concessionnaire, car le notaire n’est pas autorisé à percevoir un dépôt avant l’arrivée de votre permis d’étranger.

Seules les propriétés dont la surface habitable nette est inférieure à 200 mètres carrés et dont la surface totale du terrain est inférieure à 1 000 mètres carrés peuvent être vendues à des étrangers. Une “Bestätigung”, un certificat attestant que la propriété est conforme à la réglementation sur les m2, peut être exigée même si un étranger en est déjà titulaire.

Si le bien est particulièrement grand, construit de toutes pièces ou transformé en hôtel, le notaire peut également exiger que le vendeur et l’acheteur signent les plans. Les parties signeront également une description technique décrivant le niveau de finition inclus dans le prix de vente s’il s’agit d’une nouvelle construction ou d’une rénovation récente.

Le Prêt hypothécaire

Votre hypothèque doit être complétée pendant que vous attendez l’autorisation de l’étranger. Les banques suisses ont des exigences et des processus de prêt uniques, vous devez donc vérifier au préalable quelles sont les exigences particulières.

Maintenant que vous avez obtenu un prêt hypothécaire, il est temps de signer les documents. Dans certaines banques cantonales et petites banques suisses, l’emprunteur doit signer tous les documents en personne. Plusieurs banques étrangères vous permettent de signer en personne ou même en ligne, selon l’endroit où vous vous trouvez dans le monde.

L’Acte de vente

Vous avez 30 jours pour signer l’acte de vente du notaire, une fois que celui-ci a obtenu l’autorisation appropriée pour les étrangers. Le notaire doit demander un nouveau permis si l’acte de vente n’est pas signé dans ce délai. L’acheteur peut verser le dépôt et les paiements échelonnés au notaire après avoir reçu le contingent de nouvelle construction.

L’acte de vente doit être rempli en personne devant un notaire ; toutefois, les vendeurs et les acheteurs peuvent désormais signer par voie électronique plutôt qu’en personne.

La Date d’achèvement

Les parties peuvent convenir d’une date d'”achèvement”, qui peut être celle du paiement intégral par l’acheteur ou celle de l’achèvement de la propriété dans le cas d’une nouvelle construction ou d’une rénovation. Si vous achetez un bien d’occasion, il est courant que le contrat de vente stipule que le paiement du solde doit être effectué dans les 30 jours suivant sa signature.

Garanties

Le vendeur doit fournir un certificat d’électricien attestant que le système électrique a été évalué et autorisé avant de vous vendre un bien de revente de plus de 20 ans. Les vendeurs en Suisse ont des exigences et des garanties légales supplémentaires liées à la dissimulation intentionnelle de défauts.

Clés et argent

Les vendeurs et les acheteurs pensent généralement que l’affaire est “terminée” lorsque les clés sont remises à l’autre partie. Pour les acheteurs et les vendeurs non suisses, ce n’est pas toujours le cas dans le pays.

Si l’acheteur est un étranger, la Confédération (Berne) dispose de 30 jours pour faire appel à l’autorisation du canton. Ainsi, tant que le délai de 30 jours n’est pas écoulé et que le changement de propriétaire n’a pas été inscrit au registre foncier, la transaction n’est pas “terminée”. Les autorités cantonales gèrent de nombreux registres fonciers, et l’enregistrement d’un changement de propriétaire peut prendre des semaines. En Valais, le délai de traitement est actuellement de six à huit semaines.

Le vendeur acceptera souvent de remettre les clés de la propriété une fois que l’acheteur aura payé la totalité du prix, car ces deux étapes ne sont que des formalités.

Si le vendeur est étranger, il y a un délai pour recevoir l’argent d’une transaction en raison de toutes les formalités légales (si l’acheteur est étranger). Afin de garantir le paiement de tous les impôts en souffrance, le notaire retiendra 5 % des bénéfices de la vente, même après le transfert de propriété enregistré. Il libérera les derniers 5% après s’être assuré que tout a été payé.

Que faut-il savoir d’autre ?

En outre, n’oubliez pas que la date de vente enregistrée dans le registre foncier correspondra au jour de la signature de l’acte de vente, et non à la date de vente de la propriété (et non plus à la date de traitement par le registre foncier). Si vous décidez un jour de revendre le logement, ce sera une considération essentielle car, dans le canton du Valais, un vendeur étranger ne peut le faire avant d’avoir détenu le bien pendant cinq ans.

Une demande d’autorisation spéciale auprès du notaire pour vendre votre bien avant la limite des cinq ans peut être faite. En cas de faillite, de divorce ou de maladie, elle vous sera accordée, mais vous ne pourrez pas le revendre à profit.

Corporate Law

The Real Estate Purchase Process in Switzerland

April 7, 2022 Comments Off lexpro read

What you need to know about purchasing in Switzerland

Buying a home may be a stressful experience at times. If the property is located in a foreign country, this might be emphasized even more. It might be difficult for foreigners relocating to Switzerland to understand the Swiss property market. Foreign ownership laws and Swiss mortgage regulations might lead anybody to lose their cool. You may learn how to purchase property in Switzerland whether you are an expat or a Swiss citizen by reading this guide.

The Notary

When you’ve agreed to purchase a house, you’ll first need to hire a notary public. The notary must be registered in the canton where the property is located in order to represent both the seller and the buyer.

It is common for a sales agent or developer to recommend a notary who is both efficient and proficient in English as part of their service. The notary is often picked because of their familiarity with the paperwork from a prior transaction.

The Foreigner Permit

The notary’s most critical job is securing a buyer’s permission for non-citizens. In certain resorts, the local commune refuses to provide any licenses for foreigners to purchase the property. In Zermatt, foreigners must get permission to purchase a second property, whereas, in Verbier, they are free to do so. If the foreigner is a citizen of an EU country, they may be entitled to purchase property in Zermatt if they are a Swiss resident. It isn’t straightforward!

Foreigner permits come in two flavors: general and specific.

A “contingent” general permission must be obtained if the project is new. In most cases, a second-home permit would allow for 15 of the new flats to be sold to foreigners out of a possible 20.

Afterward, they’ll require special permission to sell unit X to buyer Y. The notary only has to apply for a particular permission if a foreigner already holds the property. The cantons provide the licenses, but the Federal government must also authorize them in Bern before they can be implemented.

Other Documents

The architect must split the legal title into distinct titles for each unit when building a new structure or converting an existing property or hotel into several properties. They’ll draft a contract that specifies how much of the total building’s expenses each unit is responsible for paying and how the building’s owners and administrator will collaborate.

This document is referred to as a PPE in French-speaking areas and an SWTE in German-speaking areas. It might take weeks or even months to complete and register these papers. As soon as this has been completed and registered, the notary may apply for both the general and particular permits at the same time in order to expedite the process.

The notary will want a copy of the buyer’s passport and information from them on the foreigner application form.

Agreement for Reservation

You may be asked to sign a reservation agreement and pay a deposit if you purchase a property from a developer. You’ll often have to pay to an agency or a dealer since the notary isn’t allowed to collect a deposit until your foreigner permission arrives.

Only properties less than 200 square meters in net livable area and less than 1,000 square meters in the total land area are allowed to be sold to foreigners. A “Bestatigung,” a certification that the property conforms with the m2 regulations, may be required even if a foreigner already holds it.

If the property is particularly large, built from scratch, or converted into a hotel, the notary may also require the seller and buyer to sign the drawings. The parties will also sign a technical description outlining the grade of finishing included in the selling price if the home is new construction or recently refurbished.

The Mortgage

Your mortgage should be completed while you are awaiting the foreigner’s permission. Swiss banks have unique lending requirements and processes, so you need to check beforehand what are the particular requirements.

Now that you’ve secured a mortgage, it’s time to sign the paperwork. In certain cantonal and smaller Swiss banks, the borrower must sign all of the paperwork in person. Several foreign banks enable you to sign in person or even online, depending on where you are in the world.

The Deed of Sale

You have 30 days to sign the notary’s sales deed once the notary obtains the appropriate foreigner permission. The notary must apply for a fresh permit if it is not signed within that time frame. The buyer may pay the deposit and stage payments to the notary after the contingent for new construction has been received.

The sale deed must be completed in person before a notary; however, sellers and buyers may now sign electronically instead of in person.

The Completion Date

The parties can agree on a “completion” date, which might be when the buyer has paid in full or when the property has been completed in the event of a new construction or renovation. If you’re buying anything used, it’s common for the sales contract to stipulate that payment for the remaining amount must be made within 30 days of signing it.

Guarantees

The seller must give an electrician’s certificate that the electrical system has been evaluated and authorized before selling you a resale property older than 20 years. Sellers in Switzerland have additional legal requirements and assurances related to the willful concealing of faults.

Keys and Money

Vendors and purchasers commonly think that the deal is “finished” when the keys are handed over to each other. For non-Swiss buyers and sellers alike, this isn’t always the case in the country.

If the buyer is a foreigner, the Federal government (Bern) has 30 days to appeal to the canton’s permission. So, until the 30-day time has ended and the change of ownership has been recorded in the land registry, the transaction has not “finished.” The cantonal authorities manage many land registries, and it can take weeks to register a change of ownership. Valais currently needs six to eight weeks to process.

The seller will frequently agree to give over the keys to the property once the buyer has paid in full since these two stages are only formalities.

There is a delay in receiving money from a transaction if the seller is a foreigner because of all the legal paperwork (if the buyer is a foreigner). To guarantee that any outstanding taxes are paid, the notary will hold 5% of the selling profits even after the recorded property transfer. They’ll release the last 5% after they’re satisfied that everything has been paid.

What Else Would You Like to Know?

Additionally, keep in mind that the date of sale recorded in the Land Registry will reflect the day the sales deed was signed, not the date the property was sold (not the date the land Register processes it). If you ever decide to resell the home, this will be an essential consideration since, in Canton Valais, a foreign seller cannot do so until they have held the property for five years.

An application for special approval from the notary to sell your property before the five-year limit may be made. In the event of bankruptcy, divorce, or illness, you will be granted this, but you will not be allowed to resell it for a profit.

Corporate Law

Company Types in Switzerland

March 22, 2022 Comments Off lexpro read

What are the main forms of business types? What are the advantages and disadvantages of each company type?

The following are the two most common types of business vehicles in Switzerland:

Limited liability company
Corporation with limited liability

For each of these two types of organizations, the legal name and membership structure are different from each other. The LLC is better suited to small businesses because it doesn’t need as much money, has more control over how the company runs and must do certain things (like making sure all shareholders’ names are made public in the commercial register).

There are times when other legal entities, like businesses, may be used as commercial vehicles.

Cooperative is a concept that refers to non-profit organizations that directly benefit its members.
The word “association” is appropriate for non-commercial professional groupings.
A partnership limited by shares differs from a corporation limited by shares in that at least one shareholder is jointly and severally responsible to creditors in a partnership limited by shares.
A foundation is a legal body that has no members but may have beneficiaries for philanthropic reasons.

The following are examples of unincorporated businesses:

Ownership by an individual
Simple partnership
Partnership in general
Partnership with a limit

With the exception of the sole proprietorship, these entities are seldom employed in business since all or at least part of the members are personally liable. Swiss law forbids a limited partnership in which the general partner is a corporation.

Establishing a Presence from Abroad

While a foreign firm may form a joint venture with a Swiss company, purchase an existing Swiss company, or form a partnership to do business in Switzerland, the following are the most prevalent options:

Establishing a local branch.
Creating a subsidiary corporation.

Local Branch

A Swiss branch office is a business facility that performs the same functions as the parent company’s headquarters while maintaining economic and commercial autonomy. The branch lacks its own legal existence and is wholly reliant on the parent company. As a result, the parent company is liable for all obligations and penalties incurred by the Swiss branch office. The branch office and its chosen authorized representatives, who must be registered in the business registration, are subject to Swiss law. Switzerland must have at least one single signature authority representative or two joint signature authority representatives at all times, or both of them.

Subsidiary Company

A Swiss subsidiary company is a legal entity subject to Swiss jurisdiction and controlled by Swiss law. The foreign parent firm often owns the majority of the shares in the subsidiary business and has managerial control over it. While the Swiss subsidiary firm is legally separate from the foreign parent business, its commercial and economic independence vary. For the most part, the foreign parent company is not responsible for the Swiss subsidiary’s debts or promises to pay.

The two most popular legal kinds of subsidiaries in Switzerland are corporations limited by shares and limited liability firms (LLCs). The required minimum capital in Swiss currency (CHF 100,000 for limited liability corporations and CHF 20,000 for limited liability partnerships) must be invested in the firm at the time of formation. When these businesses are registered under commercial registration, they get legal personality. At least one authorized representative with a single signature or two authorized representatives with joint signatures must reside in Switzerland and be registered with the business registry. Third-party shares (in a business limited by shares) or quotas may be issued or transferred (in an LLC). Another way for a limited liability subsidiary company to become public is to put its stock on a stock market.

Comparison

Compared to subsidiaries, local branches offer the following advantages:

Swiss corporate income tax on earnings and yearly capital tax on taxable stock apply to Swiss branches and subsidiaries. However, profits returned to headquarters from branch offices are free from Swiss withholding tax.
The process of launching a branch office may be simpler and more cost-effective. Compared to a subsidiary company, branch offices dissolve more quickly in liquidation and have lower operating costs (like fees to register changes to the commercial register), which makes them cheaper to run.
Local branches are not obliged by law to have a certain amount of corporate capital.
If you’re only going to be in Switzerland for a short time and you don’t know what the future holds when you start a business, branch offices are better than subsidiary businesses.

The following are some of the benefits of having a subsidiary firm rather than a local branch:

Branches are immediately impacted by the bankruptcy or insolvency of the principal foreign business since they are an integral element of the foreign principal firm’s activities and depend on it.
Customers in Switzerland can choose to work with a local subsidiary instead of a global company (branch office).

Branch offices sometimes fall short when it comes to the parent company’s non-responsibility for the subsidiary company’s duties and pledges.

Except in the event of a regulated organization (such as a Swiss firm operating in the same industry), a foreign corporation may normally trade without acquiring a license in Switzerland. Trading can be conducted cross-border (via postal services, telecommunications, and occasional business travel to Switzerland), through the establishment of a representative or branch office in Switzerland, or through collaboration with a Swiss individual or legal entity acting as an agent, distributor, franchisee, or similar. The immigration legislation, which restricts the number of days foreigners may remain in Switzerland each year without acquiring a residency or work visa, may generate practical complications.

If a foreign firm does business in Switzerland via a local branch, the branch must be registered with the commercial register.

General Partnerships

General partnerships, which must have at least two partners, are governed by articles 552 to 593 of the Swiss Code of Obligation (CO) (natural persons). After the parties sign a partnership agreement, the general partnership is formed. It is required to register with commercial registration (it is constitutive for businesses pursuing non-commercial aims and declaratory for businesses pursuing commercial aims). A general partnership has no minimum capital requirement.

A general partnership seems to be legally distinct. It may thus acquire rights, take on obligations, bring litigation, and be sued in its own name. The assets are held by the partners jointly. Any obligations taken on in the partnership’s name by the controlling partner, as well as any tortious conduct performed by a partner while performing partnership activities, are the responsibility of the partnership. The partners are jointly and severally accountable for the partnership’s commitments to third parties. A partner’s assets, on the other hand, are only held responsible in a secondary capacity (after the partnership’s assets have been exhausted). Individuals who join a general partnership after it has been created are jointly and severally responsible with their whole assets for the firm’s existing obligations. Creditors have five years from the date of dissolution to make claims against the partnership. The individual partnership agreement governs internal responsibility.

For tax reasons, the partnership is deemed transparent. Individual partners, on the other hand, are responsible for paying taxes on their portion of the partnership’s revenue and assets, as well as any additional sources of income and assets.

Limited Partnerships

Articles 594 to 619 of the CO regulate limited partnerships. Limited partnerships, like general partnerships, have quasi-legal personalities, are required to register with the commercial register (which is constitutive for non-commercial organizations and declaratory for commercial enterprises), and do not have a minimum capital requirement. Limited partnerships, unlike general partnerships, may incorporate legal entities as partners (but only as limited partners). Two partners are required, with at least one of them being a natural person with unlimited liability. The responsibility of the other partners is restricted to the amount specified in the business registration. If the restriction of responsibility is not written down in the business register, the “limited” partner is responsible for everything unless the partner can show that the third parties knew about the restriction of responsibility.

Joint ventures

In Switzerland, international joint ventures (JVs) are prevalent and may assume a number of legal forms. The stages involved in forming a JV differ depending on the legal structure chosen. Contractual joint ventures, for example, may be created via the execution of one or more agreements between existing legal entities; corporate joint ventures, on the other hand, need the formation of a new company. Additionally, agreements are often used in corporate joint ventures to define the enterprise’s governance.

Trusts

Swiss law doesn’t allow trusts to be set up. In some cases, though, different legal methods may all lead to the same thing.

When the HCCH Convention on Trust Law and Recognition was signed in 1985, Swiss people agreed to sign it in 2007. For this reason, Swiss courts usually accept the results of trusts set up properly under a foreign law that the settlor named in the trust instrument.

Forming a Private Company

Regulatory Framework

A corporation limited by shares (SA) and a limited liability company (LLC) are both legal entities with distinct legal personalities. Shareholders (or quota holders in the case of an LLC) are their members, and their responsibility is limited to the registered company capital. Due to its reduced minimum capital requirement and customizable governance structure, the LLC model is preferred by several small to medium-sized firms. A limited liability company’s disclosure requirements are more stringent than those of a corporation limited by shares.

The name of the quotaholder, in particular, is recorded in the corporate registry and therefore accessible to the general public. A limited liability company (LLC) must have a minimum capital of CHF 20,000 (payable in full at the time of establishment), whereas a company limited by shares must have a minimum capital of CHF 100,000 (of which at least CHF 50,000 must initially be paid up).

The commercial registration authority of the canton in which the firm will be registered is the competent authority for the formation of a company limited by shares or LLC.

Corporate Law

Licensing of Reviewing Bodies Under the Financial Services Act – An Initial Assessment

March 7, 2022 Comments Off lexpro read

Introduction

From January 1, 2020, FinSA (together with FinSO) implemented a new prospectus regime for Swiss capital markets, including specific statutory requirements, applicable to all financial instruments (subject to exemptions and customizations for certain financial instruments), under which

(i) any individual in Switzerland who makes a public offer to purchase securities or

(ii) any person seeking the admission of securities to trading on a Swiss trading venue must first publish a prospectus (article 35(1) FinSA).

Perhaps most significantly, and in contrast to the previous system, any such prospectus has to be submitted to a Reviewing Body for approval before publication (i.e., ex-ante prospectus approval) (article 51(1) FinSA). Notably, prospectus approval may be requested for qualifying debt instruments after the prospectus is published (i.e., ex-post prospectus approval).

BX Swiss AG (BX Swiss) and SIX Exchange Regulation AG (SIX Exchange Regulation) stated on May 28, 2020, that they had received clearance from FINMA to function as Reviewing Bodies under FinSA beginning on June 1, 2020. As a result, the prospectus review offices at SIX Exchange Regulation and BX Swiss accept prospectus review and/or deposit applications by FinSA.

According to FinSO, when a public offer or a request for admission to trade on a trading venue is submitted, the need to publish a FinSA approved prospectus will only take effect on December 1, 2020 (i.e., six months after the Reviewing Bodies were licensed by FINMA, article 108(1) FinSO). Therefore, until December 1, 2020, issuers may continue to comply with the former system, in which a so-called offering and listing prospectus may be prepared in line with the Swiss Code of Obligations (CO) and/or the listing requirements of the relevant exchange (where applicable) (article 109(2) FinSO).

After the six-month transition period expires, the duty to issue a FinSA compliant prospectus will apply to all publicly offered securities in Switzerland as well as to those looking to be admitted to trading.

Following their designation as Reviewing Bodies, SIX Exchange Regulation and BX Swiss have now issued the respective rules, lists, directives, and fee schedules of their prospectus offices as anticipated by FinSA and FinSO.

Importantly, if FINMA gives a license to more than one Reviewing Body, it must guarantee adequate coordination of their activity, under article 72(5) FinSO. The prospectus review offices of BX Swiss and SIX Exchange Regulation have collaborated on a number of directives and lists.

Under the new prospectus framework imposed by FinSA and FinSO, the prospectus approval procedure and entry to trade on a Swiss trading venue are often two concurrent processes:

– FinSA prospectus approval (i.e., by a Reviewing Body such as SIX Exchange Regulation or BX Swiss, subject to exclusions and adaptations); and

– Application for trading access on the applicable trading venue (i.e., by the exchange admission body, such as SIX Exchange Regulation).

Following the implementation of the new prospectus system, the Swiss stock exchanges revised their listing regulations to allow these two procedures to run concurrently. However, and probably most importantly, parties are not required to submit a prospectus for approval to the prospectus office of the trading venue on which they are also seeking admission to trade. For example, the BX Swiss prospectus office might approve a FinSA compliant prospectus for an issuer who is also seeking admission to trade on the SIX Swiss Exchange (through the SIX Exchange Regulation application procedure) and vice versa.

This might result in some rivalry in the Swiss market between the two licensed Reviewing Bodies in terms of, among other things, speed, efficiency, and accessibility. Nonetheless, FINMA must guarantee that their processes remain coordinated (see FinSO article 72(5)).

Corporate Law

Corporate Audit Requirements in Switzerland in 2022

March 7, 2022 Comments Off lexpro read

Recent Legislative Changes

The Enron crisis in the United States and the accompanying regulations (particularly SOX) directly influenced Switzerland. The modified provisions in the Swiss Code of Obligations (articles 727 et seq. CO) and the new law requiring auditors to be overseen by a regulator did, in fact, significantly change the CG landscape.

An examination of CG and auditing reveals, in my opinion, both improvements (e.g., the establishment of a supervisory authority for all auditing firms in Switzerland) and shortcomings (i.e., first, the rule that the smallest corporations may opt-out of the auditing process, which was previously mandatory for all corporations; second, the introduction of mere review auditing for small corporations with a lower independence standard for the auditors; and perhaps third, the presence of a supervisory authority for all auditing firms.

Mandatory Auditing by External Auditors?

Until lately, all companies in Switzerland — except the LLC – were subject to required external audits. The pertinent Swiss laws have been modified as of 2008.

As a general rule, all firms (excluding partnerships) must be audited, regardless of their legal structure (corporation or LLC); nevertheless, three “categories of auditing” exist, including ordinary auditing, review auditing, and opting out of auditing.

Under the new laws, only bigger organizations that fulfill particular criteria or other requirements (e.g., all publicly listed companies) must undergo regular audits (article 727 CO). Smaller firms, i.e., corporations that do not fulfill the specific criteria and standards for regular audits, may choose to review auditing at a lesser quality (article 727a CO). Finally, even the tiniest businesses may “simply say no” to any auditing at all (opting out of the auditing process following article 727a para 2 CO).

Tasks and Levels of Independence

The regular auditors must evaluate and report on whether the annual accounts and the board’s suggestions for the use of balance-sheet profits correspond with the legislation and the articles of incorporation (articles 728a et seq. ); especially, the regular auditors must verify the internal control system (article 728a para 1 Alinea 3 CO). In contrast to regular auditors, review auditors have fewer duties in line with articles 729a et seq.; for instance, the internal control system is not a problem.

Auditors’ independence is always a vital and frequently complex issue for CG reasons. However, in Switzerland, the independence standards vary depending on whether a regular or review audit is performed.

Of course, all audits must be independent in general, as underlined by articles 728 para 1 CO and 729 para 1 CO. However, as an additional general rule, regular auditors (article 728 CO) must meet a higher standard of independence than review auditors (article 729 CO); the main difference between the auditing providers is that review auditors are permitted to provide bookkeeping and other services, such as legal and tax advice, to the corporations to be reviewed by them (article 729 para 2 CO).

Auditors’ Civil Liability

Article 755 CO of Swiss corporate law explicitly allows for audit liability. All persons engaged in the audit of annual accounts and consolidated financial statements, etc., i.e., involved in auditing processes, are liable to the corporation and the shareholders and creditors for all damages caused by intentional or negligent breaches of their auditing duties.

If many people are accountable for damages, they are jointly and severally liable with the others (article 759 CO). This provision seems to jeopardize auditors if a claimant concentrates on them rather than the board members because of an alleged “deep pocket hypothesis.”

As a result, the current legislative reform wants to include a new clause in Swiss corporate law to limit auditors’ obligation to the plaintiff:

The Federal Council specifically included Germany and Austria in its initial proposal (bundesrätlicher Vorentwurf), which suggested limiting caps in case of negligence of CHF 10 million for private firms and CHF 25 million for listed corporations. In my opinion, such a clause would be inconsistent with Swiss general liability laws and would not qualify as a privilege for auditors. Nonetheless, the majority of observers support such a provision.

For complete information about the Audit Law and for audit services please contact our law firm in Switzerland.

Corporate Law

Overview of Shareholders’ Rights and Obligations in Switzerland in 2022

February 25, 2022 Comments Off lexpro read

General Information

Equity investors gather and exercise their rights in the corporation’s general meetings; hence, ordinary or extraordinary general meetings are a key component of the CG in Switzerland. Attempts to rank the degrees of shareholder protection are usually somewhat arbitrary. Switzerland ranks approximately in the center in this respect compared to other countries. The Swiss norm for the CG, on the other hand, is interpreted differently outside of Switzerland.

For example, the Organization for Economic Cooperation and Development (OECD) classified Switzerland as very weak on CG matters in a 1998 research. The World Economic Forum (WEF) has placed Switzerland 41st out of 133 countries to protect minority shareholders’ rights in its Global Competitiveness Report 2009-2010126.

Fiduciary Duties of Controlling Shareholders

According to article 680 para 1 CO, shareholders have one and only one obligation under Swiss corporation law, namely to contribute the amount fixed at the time of issue for a share (Liberierungspflicht); SESTA introduced two additional obligations for equity investors in listed companies at the end of the 1990s (article 20 SESTA: disclosure obligation; article 32 SESTA: mandatory takeover offer to the other shareholders).

In Switzerland, fiduciary obligations of shareholders in general, and controlling shareholders in particular, are a rare matter of legal debate. Only a few writers believe that shareholders have any fiduciary obligations at all, with the vast majority of commentaries explicitly rejecting such an idea for (controlling and other) shareholders under Swiss law.

Nonetheless, the majority and other controlling owners must comply with the law. According to article 717 CO, the board must ensure that these investors follow the laws – even if the board members may be dismissed later by controlling shareholders’ votes in the general meeting (article 705 CO).

Tunneling by controlling shareholders, for example, is unlawful under Swiss law and has implications under both corporate laws and tax law. According to article 678 CO, shareholders who have received unjustifiably and in bad faith, for example, shares of profits and interests as well as other company performances, are required to return them to the corporation (para 1/para 2); the damaged corporation and any of its shareholders may file an action (para 3) for which the current statute of limitations is five years.

Shareholders’ Rights – in Particular, Information Rights

It is practically difficult to completely define the shareholders’ rights under Swiss law in the restricted space of this Country Report.

In general, an equity investor in a firm obtains two types of entitlements: financial rights (such as dividends and pre-emptive rights) and non-financial rights (e.g., rights to call a general meeting and to participate at a general meeting, rights to speak and to vote at a general meeting, rights to file different actions against the corporation or the board members, respectively, and finally, a variety of information rights).

The many information rights (articles 696 et seq. CO) are critical for protecting (minority) shareholders in Switzerland. Under Swiss law, four information rights are paramount: article 696 CO, article 697 CO, articles 697a et seq., and article 697h CO:

– Article 696 CO: no later than 20 days before the ordinary general meeting of shareholders, the business report and, if any, the auditors’ report shall be made available for inspection at the corporation’s domicile (article 696 para 1 CO); a shareholder may request these documents in copy after approval by the general meeting (article 696 para 3 CO). In truth, most Swiss companies are significantly more forthcoming in their dealings with their investors.

– Article 697 CO: At the general meeting, each shareholder has the right to obtain information from the board on the “affairs of the business” (article 697 para 1 CO). Furthermore, if the general meeting or the board of directors has provided the necessary authorization, every shareholder has the right to see the company’s records and files (article 697 para 3 CO).

– Article 697a et seq. CO: In the early 1990s, the Swiss Parliament enacted the special audit (articles 697a et seq. CO: Sonderprüfung), which foreign models influenced (e.g., Germany). The special audit attempts to improve shareholders’ knowledge level to launch, for example, a liability action against board members.

Only facts, and therefore not legal issues, may be subject to a special audit, on which the general meeting must vote in any event; the facts must be required for exercising shareholders’ rights (article 697a para 1 CO). If the general meeting does not approve the special audit, only shareholders who fulfill specified share capital criteria may go to court at all (article 697b para 1 CO).

Following then, there is a very convoluted back-and-forth between one shareholder and the company (articles 697c et seq. CO).

Finally, at the next general meeting, the special auditor’s report will be delivered to the judge (article 697e CO) and, finally, to all shareholders (article 697f CO).

Switzerland does not have a group corporate law. Nonetheless, certain norms and precedents are vital for organizations. For example, the parent company’s shareholders have the right to see the books and files of other group companies under certain situations, and the special disclosure duty under article 697h CO also applies to the consolidated financial statements.

Corporate Law

Limitation of Liability in Commercial Contracts – A Swiss Law Perspective

February 18, 2022 Comments Off lexpro read

This kind of selection of law occurs relatively often in international business transactions for a variety of reasons. Commercial contracts require contractual limitations on damages because they help parties better assess and control the business risks associated with a commercial transaction.

We will clarify how Swiss law addresses contractual limitations on damages, focusing on which liabilities cannot be excluded or limited. Each business transaction has risks for which the parties may be held accountable, such as project delays or product non-conformity.

Without an effective limitation of liability provision, there is no financial ceiling on the damages that may be collected – with the exception of statutory restrictions. It is vital, then, to ensure that business contracts include some type of restriction and that these restrictions are effective. Clauses limiting liability may take a variety of forms.

Certain provisions aim to completely exclude responsibility. For example, some restrict culpability by capping the number of damages that may be awarded, excluding certain types of losses, limiting warranties and certain remedies, or imposing short statutes of limitations on claims.

Which liability restrictions are recognized by Swiss law?

Swiss contract law is heavily predicated on the notion of contract freedom, and there is wide room for contractual responsibility restriction (including exclusion).

However, liability limits are not permissible indefinitely. Using the limitation of responsibility in terms of maximum sums (financial caps) as an example, the following statutory limits apply under Swiss law:

Any arrangement entered into in advance that purports to restrict responsibility for an illegal purpose or gross negligence is invalid (although such an agreement might be entered into retrospectively). If the restriction of responsibility occurs in connection with state-licensed commercial activity (e.g. banks), the preceding limitation of liability for mild negligence may also be invalid, at the court’s discretion.

Limitation of responsibility is not recognized in principle for death or personal harm. Additionally, limitation of responsibility is prohibited by some parts of the Swiss Code of Obligations (e.g., in connection with purchase contracts, employment contracts, and service contracts) and by certain specific legislation, such as the Swiss Product Liability Act. Contracts with consumers and general terms and conditions are subject to stricter restrictions.

What are the implications of statutory liability restrictions being exceeded?

Contractual caps on damages in excess of the statutory limits are ineffective. Unless they affect a non-essential aspect of the contract, provisions that go beyond the statutory limitations may be removed to the extent authorized by Swiss law (so-called partial ineffectiveness of severability).

To avoid providing incentives for parties to incorporate excessive restriction provisions, however, there are an increasing number of voices advocating for complete ineffectiveness, particularly with regards to consumers and general terms and conditions.

What else must be considered while designing liability limitations?

Liability limitations are never universal. Each agreement is extremely reliant on the facts relating to the parties’ connection (the parties’ roles, industry, the value of the deal, the deal’s significance, etc. ), the risks involved with the transaction (scope, probability, expenses, etc. ), and the agreement’s other provisions. As a result, it is impossible to understand or negotiate limitations of liability in isolation from other crucial agreements (such warranties, indemnity, and so on).

A party wanting to incorporate a limitation provision in a contract should thus carefully analyze the transaction at hand, read the whole contract, and examine the relevant law’s statutory limitations and the destiny of clauses that exceed those limitations.

If you would like to discuss more on this topic, please reach out!