Born 1973, lic. iur., LL.M., Attorney-at-law
German law requires notarization when transferring or pledging limited liability shares. In the past it was possible to make significant savings by obtaining notarization in foreign jurisdictions, especially certain Swiss cantons. Following the amendment of a number of relevant provisions of Swiss and German law, controversy has arisen as to whether foreign notarization can still be validly obtained in Switzerland.
An organization's internal control system covers all of the procedures, methods and controls established by its board of directors and management in order to ensure the proper functioning of business operations. The recent revisions to auditing law have resulted in the need for auditors to audit these systems and present their findings to the board of directors.
In light of the global financial crisis, the federal government has extended the revision of the law on corporations and new accounting legislation that will create standardized rules for all company forms in Switzerland. It has also issued an additional opinion as a counter-proposal to a popular initiative submitted in 2008.
In a recent landmark ruling the Supreme Court deviated from its previous practice to hold that, in certain circumstances, exclusive distributors have a claim for mandatory compensation upon termination of the distributorship agreement. The court further held that the distributor's claim for client compensation is mandatory and cannot be waived in the distributorship agreement.
In two recent decisions the Supreme Court took the opportunity to lay down the minimum standards for an authorized delegation of management competency from the board of directors to individual board members or a third person. Board members in Switzerland may now want to take appropriate steps to ensure that they have correctly delegated the management of their company.
The revised auditing legislation which entered into force on January 1 2008 implemented new requirements for the independence of auditors. The primary principle for both ordinary and limited audits is that independence may not be affected either in fact or in appearance.
The revised auditing legislation has entered into force, which comprises changes to the Code of Obligations and the entry into force of the new Audit Supervision Act. The amendments establish uniform requirements for all legal entities and provide for an overall auditing law which no longer differentiates between the legal form of entities, but rather focuses on the economic importance of the company.
The Supreme Court has previously outlined the requirements subject to which a company deleted from the Commercial Register can be reregistered. In most cases a creditor requests re-entry, and it must show credibly the existence of its claim and that it has interests in the reregistration of the company worthy of protection. A recent case considers the existence of these interests.
A release from the general shareholders' meeting shelters the board members from liability claims by the company arising from the intentional or negligent violation of their duties. Recently the Supreme Court dealt with a case involving the release of three members of a board of directors. The court defined the scope of application and the effects of a release granted to the board members.
New legislative amendments are intended to adapt the Swiss corporation to reflect current business needs and afford greater flexibility in relation to the organization and incorporation of such companies. The changes are the first step in an initiative to revamp Swiss corporate law to accommodate the needs of modern businesses and to take account of issues that have emerged over the past decades.
According to the Swiss Code of Obligations, at the general meeting of shareholders any shareholder is entitled to request information from the board of directors concerning the affairs of the company, and from the auditors concerning the execution and results of their examination. The Supreme Court recently stated more precisely the scope and limitations of this right.
The Supreme Court recently decided a case which involved the question of whether a partner in a partnership had acted within or beyond the ordinary scope of the partnership's business and whether the partner's actions had been binding for the partnership. The court held that the type and magnitude of a legal transaction must be considered when deciding whether a legal transaction is ordinary.
Under Swiss law, every corporation must appoint an auditor to audit its annual financial statement, and auditors must be qualified in order to fulfil their duties. A recent Supreme Court decision provides guidance on auditors' qualifications. More detailed independence rules in the pipeline contain an explicit list of circumstances which prohibit audit firms and auditors from auditing certain clients.