Swiss Company Law DIKE. Lukas Handschin. Fully revised second edition. Dr. iur., Attorney at Law Professor at the University of Basel

Transcription

1 Lukas Handschin Dr. iur., Attorney at Law Professor at the University of Basel Swiss Company Law Fully revised second edition The book is based on a translation of «Gesellschaftsrecht in a nutshell» by Lukas Handschin, lawyer in Zurich and Professor at the University of Basel. The translation was done in collaboration with Cecilia Subido, lawyer, LLM (University of Melbourne). DIKE

2 Abbreviations XXIII Part 1: Basics 1 I. Legal basis 1 II. Terms and definitions 2 1. Corporate body (corporation) or foundation 2 2. Partnership vs. legal entity 2 3. Relation to third parties: can a company acquire rights and incur liabilities? 3 4. Partnership or capital company? 4 5. Internal and external relationships 4 6. Commercial enterprise 5 III. Company name 6 1. Basics 6 2. Deceptive company names Relation between company name and object of the company Advertising elements in a company name Simple terms as company names 7 3. Geographic terms as part of a company name 7 4. Obligation to use the company name 8 IV. Domicile, statute and nationality 8 V. The possible company forms 9 1. Association (Art. 60 et seqq. CC) 9 2. Foundation (Art. 80 et seqq. CC) 9 3. Simple Partnership (Art. 530 et seqq. CO) 9 4. General Partnership (Art. 552 et seqq. CO) Limited Partnership (Art. 594 et seqq. CO) Corporation (Art. 620 et seqq. CO) Partnership limited by Shares (Art. 764 et seqq. CO) Limited liability company (LLC) (Art. 772 et seqq. CO) Cooperative (Art. 828 et seqq. CO) 11 V

3 Part 2: Association (Art. 60 et seqq. CC) 13 I. Basics 13 II. Setting up the association 13 III. Financial Situation Property rights Equity Criminal law aspects 15 IV. Internal relationships Basics Decision-making (managing and non-managing members, how they decide) Basics institutionalized separation of managing and non-managing members Assembly of members Management / executive committee Revocation of managing competences Inspection and control rights of the non-managing members, annual report and financial statement Basics Inspection and control rights of the non-managing members Annual report and financial statement Audit Profit participation Right to keep status, voting right, preemptive right Loss participation, obligations to contribute Loyalty Change of members Basics Admission Resignation / expulsion Expulsion Change of members 23 V. External Relations Basics 24 VI

4 2. Name of the association Representation and action of the association toward third parties Basics Acting through governing bodies 25 a) Basics 25 b) Representation authority of the governing bodies 25 c) Optional constitution of the governing body 26 d) Diverging rules for the representation power to conclude agreements 26 e) Other representatives Liability of the managing and non-managing members 27 VI. Termination / dissolution of the association Termination Liquidation 29 Part 3: Foundation (Art. 80 et seqq. CC) 31 I. Basics 31 II. Setting up the Foundation 31 III. Financial Situation Property rights Equity Criminal law aspects 32 IV. Internal relationships Basics Decision-making Inspection and control rights, audit Profit participation 34 V. External Relations Basics Foundation name Representation and action of the foundation toward third parties Acting through governing bodies Representation authority of the governing bodies 35 VII

5 3.3 Applicability of the rules regarding other legal entities Liability of the board of trustees 35 VI. Termination / dissolution of the foundation 36 Part 4: Partnerships (Simple, General and Limited Partnerships) 37 I. Basics Simple Partnership (Art. 530 et seqq. CO) General Partnership (Art. 552 et seqq. CO) Limited Partnership (Art. 594 et seqq. CO) 38 II. Setting up the Partnerships Simple Partnership General and Limited Partnerships 40 III. Financial Situation Property rights Basics Contribution of assets by the partners (Art. 531 CO) Equity Basics Change of equity, reduction of the company's assets Criminal law aspects 43 IV. Internal relationships Basics Decision-making Basics Assembly of partners / partnership resolutions Management Revocation of management competences Specific rules for the Limited Partnership Inspection and control rights of the non-managing members, annual report and financial statement Basics Simple Partnership / General Partnership Limited Partnership Annual report and financial statement Audit 48 VIII

6 4. Profit participation Simple Partnership General and Limited Partnership Right to keep status, voting right, preemptive right Loss participation, obligations to contribute Basics Simple Partnership General and Limited Partnership Loyalty Simple Partnership General and Limited Partnership Change of members Basics Admission after formation of the partnership Resignation Change of members Vesting of membership rights 55 V. External Relations Basics Name of the Partnership Simple Partnership General Partnership Limited Partnership Representation and action of the company toward third parties Basics Simple Partnership General and Limited Partnership 58 a) Basics 58 b) Acting through governing bodies 58 c) Other representatives 59 d) Self-conclusion Liability of the managing and non-managing members Basics Simple Partnership General and Limited Partnership 62 IX

7 VI. Termination / dissolution of the partnership Simple Partnership Ordinary reasons for termination Extraordinary reasons for termination Consequences of termination General and Limited Partnership Reasons for termination Avoidance of termination Consequences / Execution of termination and liquidation 65 Part 5: Corporation (Art. 620 et seqq. CO) 67 I. Basics 67 II. Setting up the corporation Founders' partnership Incorporation / deed of incorporation (Art. 629, 631 CO) Subscription of shares and contributions (Art. 630, 632 et seq. CO) Basics Money contribution Contribution in kind Contribution by set-off The articles of incorporation Founders' report (Art. 635 CO) Entry in the Commercial Register (Art. 640, 641 CO) Acquisition of the status of a legal entity (Art. 643 CO) Partnership limited by Shares 74 III. Financial Situation Basics Equity and its protection Basics, Function of Equity Specific equity rules for Corporations 77 a) Amount 77 b) Share capital and participation capital 77 c) Protection of equity 77 X

8 3. Change of equity, reduction of the company's assets General remarks, terms and definitions 78 a) Capital increase 78 b) Capital reduction, reduction of the company's assets 78 c) Criminal law aspects Capital increase 79 a) Basics 79 b) Ordinary increase of share capital (Art. 650 CO) 80 c) Authorized increase of capital (Art. 651 CO) 81 d) Common rules for ordinary and authorized capital increase (Art. 652 CO) 81 e) Capital increase subject to a condition (Art. 653 CO) Capital reduction (Art. 732 et seqq. CO) 84 a) Basics 84 b) Capital reduction as partial liquidation 84 c) Capital reduction as part of financial restructuring 85 d) Form Capital band 87 IV. Internal relationships Basics Decision-making (managing and non-managing members, how they decide) Basics General assembly of shareholders 90 a) Competences 90 b) Calling the general assembly of shareholders 90 c) Voting rules 91 (1) Basics 91 (2) Shares with privileged voting rights (Art. 627 fig. 10, 693 CO) 91 (3) Own shares 91 (4) Important resolutions 92 XI

9 d) Representation of the shareholder at the general assembly of shareholders 94 (1) Basics 94 (2) Member of the company or an independent person as proxy / proxy of deposited shares 94 (3) Notice of proxy 94 e) Unauthorized attendance (Art. 691 para. 2 and 3 CO) 95 f) Participation of members of the board of directors 95 g) Challenging resolutions of the general assembly of shareholders Board of directors 96 a) Constitution 96 b) Term of office 96 c) Resolutions of the board of directors 96 d) Information rights 97 e) Competences of the board of directors 97 f) Duties of the board of directors 98 g) Delegation of the management to inferior bodies 98 h) Revocation of management competence Partnership limited by Shares 99 a) Basics 99 b) Assembly of shareholders 99 c) Board of directors 99 d) Auditing board 100 e) Revocation of management competences 100 Inspection and control rights of the non-managing members, audit Basics Notification of business report Right to information and inspection Special audit 101 a) Basics 101 b) Approval of the general assembly of shareholders 102

10 c) Disapproval of the general assembly of shareholders 102 d) Appointment of the special auditor 102 e) Activity report of the special auditor 102 f) Communication of the special auditor's report Partnership limited by Shares Statutory audit 103 a) Basics 103 b) Categories of Auditors 104 c) Ordinary audit 104 (1) Basics 104 (2) Execution of the ordinary audit 105 (3) Independence of the auditor 106 d) Limited audit 106 (1) Basics 106 (2) Execution of the limited audit 107 (3) Waiver of the audit (Opting out) 107 e) Audit liability Profit participation Basics Dividend payments Purchase of own shares No repayment of contributed share-capital Partnership limited by Shares Right to keep status, voting right, preemptive right Basics preemptive rights Partnership limited by Shares Loss participation, obligations to contribute Basics No shareholders' obligation to contribute Partnership limited by Shares Loyalty Basics Shareholder agreement Partnership limited by Shares Change of members Basics 116 XIII

11 8.2 Admission after establishment of the corporation Resignation / Expulsion Change of members 117 a) Basics 117 b) Bearer shares 117 c) Registered shares 117 (1) Basics 117 (2) Shares not listed on a stock exchange (Art. 685b CO) 117 (3) Registered shares / shares listed on a stock exchange (Art. 685d et seqq. CO) Vesting of shareholder rights 119 a) Basics 119 b) Participation certificates Partnership limited by Shares 119 V. External Relations Basics Company name Representation and action of the corporation toward third parties Basics Acting through governing bodies 122 a) Basics 122 b) Representation authority of the governing bodies 122 c) Optional constitution of the governing body 123 d) Diverging company rules for the representation power to conclude agreements Other representatives, proxies Self-conclusion Liability of the managing and non-managing members Basics Obligation to contribute to subscribed shares Directors' liability (Art. 754 et seq. CO) 126 a) Basics 126 b) Violation of duties 127 c) Effect of a resolution of release (discharge) 127 d) Intent or negligence 128 xrv

12 VI. e) Organizational rules, delegation to management 128 f) Enforcing the directors'liability 128 (1) Basics 128 (2) Persons entitled to claim the directors' liability outside of bankruptcy proceedings 128 (3) Filing by a shareholder of a responsibility suit against the directors 129 (4) Claims in case of bankruptcy 129 (5) Piercing the corporate veil Partnership limited by Shares 130 The corporation in crisis; duties and responsibilities of the board in corporate restructuring Basics Analysis of the corporation's economic and financial status Basics Going concern; analysis of corporate liquidity Duty of the board of directors to rescue the corporation Restructuring by the assembly of shareholders in case of loss of capital Notice to the judge in case of over-indebtedness Basics Revaluation of hidden reserves Subordination Bankruptcy 136 VII. Termination / dissolution of the corporation Basics Protection of creditors Ordinary reasons for termination (Art. 736 fig. 1 / 2 CO) Extraordinary reasons for termination (Art. 736 fig. 3-5 CO) Termination without liquidation / restructuring Implementation of the liquidation / dissolution with liquidation Partnership limited by Shares 141 XV

13 Part 6: Limited liability company (LLC) 143 I. Basics 143 II. Setting up the LLC Basics Incorporation / deed of incorporation (Art cCO) Capital Contributions (Art. 773 et seq. CO) The articles of incorporation Entry in the Commercial Register (Art. 778 CO) 145 III. Financial Situation Basics Equity and its protection Basics, Function of Equity Specific equity rules for the LLC 146 a) Amount 146 b) Function and protection of the company capital 146 c) Protection of equity Change of equity, reduction of the company's assets Basics Increase of company capital Capital reduction 147 IV. Internal relationships Basics Decision-making (managing and non-managing members, how they decide) Basics Members' meeting 149 a) Competences 149 b) Calling the members'meeting 150 c) Resolutions 150 (1) Passing of resolutions 150 (2) Shares with privileged voting rights (Art. 806 para. 2 CO) 151 (3) Qualified majority 151 (4) Approval of management decisions by the members'meeting 152 XVI

14 (5) Right of veto 152 (6) Challenging resolutions of the members' meeting Management 152 a) Basics 152 b) Revocation of management competences Inspection and control rights of the non-managing members, annual report and financial statement Basics Notification of business report Right to information and inspection Audit Profit participation Right to keep status, voting right, preemptive right Loss participation, obligations to contribute Basics Supplementary financial contributions Other contributions Assent to the obligation for supplementary contributions Loyalty Change of members Basics Admission after formation of the LLC Resignation / Expulsion Change of members Certificate of shares not a security 158 V. External Relations Basics Company name Representation and action of the company toward third parties Liability of the managing and non-managing members 160 VI. Termination / dissolution of the company Basics Protection of creditors 160 XVII

15 3. Ordinary reasons for termination (Art. 821 para. 1 fig. 1 / 2 CO) Extraordinary reasons for termination (Art. 821 para. 1 fig. 3 / 4; Art. 821 para. 3 CO) Execution of termination and liquidation 161 Part 7: Cooperative (Art. 828 et seqq. CO) 163 I. Basics 163 II. Setting up the cooperative Minimum number of members Constitutive meeting Founders'report / contribution in kind Articles of incorporation Registration in the Commercial Register (Art. 835 CO) 165 III. Financial Situation Basics Equity and its protection Basics, function of equity No statutory equity in cooperatives Change of equity, reduction of the company's assets 167 IV. Internal relationships Basics Decision-making (managing and non-managing members, how they decide) Basics General meeting of members (Art. 879 CO) Administration Revocation of managing competences Inspection and control rights of the non-managing members, annual report and financial statement Basics Audit Profit participation Basics Advance the specific economic interests of its members Distribution of profits to the members 171 XVIII

16 5. Right to keep status, voting right, preemptive right Loss participation, obligations to contribute Loyalty Change of members Basics Admission after formation of the Cooperative Resignation / Expulsion Transfer of membership Vesting of membership rights 174 V. External Relations Basics Company name Representation and action of the company toward third parties Liability of the managing and non-managing members 175 VI. Termination / dissolution of the cooperative Basics Protection of creditors Ordinary reasons for dissolution / termination (Art. 911 fig. 1 / 2 CO) Extraordinary reasons for dissolution / termination (Art. 911 fig. 3 / 4 CO) Consequences of termination and liquidation 178 Part 8: Restructurings, mergers and acquisitions 179 I. Basics 179 II. Merger Basics Delimitations Share Deal Asset Deal Absorption Merger Combination Merger Merger of companies with other company forms (Art. 4 MA) Procedure Merger agreement 182 XIX

17 6.2 Content of the merger agreement Merger report Inspection rights of the members Merger resolution Entry in the Commercial Register Protection of creditors Consultation of employees Facilitated merger 184 III. Demerger Basics Split-up / Spin-off Symmetric and asymmetric demerger Demerger to merge or to establish Procedure Basics Demerger plan / demerger agreement Demerger report and audit Demerger resolution Entry in the Commercial Register Protection of the creditors Protection of employees 187 IV. Conversion (change of company form) Basics Possible conversions (Art. 54 MA) Procedure Conversion plan and conversion report Resolution and inspection rights of the members / shareholders 189 V. Transfer of assets and liabilities (Asset Deal) Basics Procedure Protection of creditors 190 VI. Takeover Rules Disclosure of shareholdings Public takeover offers 191 XX

18 Part 9: Company Groups 193 I. Terminology Group of companies Economic unity Common management / control 193 II. Interests of the Company-Group and subsidiaries, and purpose of the company 194 III. Agreements between holding companies and subsidiaries Contractual relationships between holding company and subsidiary company Conclusion of agreements between companies of a Company Group Transfer of assets and guarantees between group members 195 IV. Protection of minority shareholders; limits of control The minority shareholder in the Company Group Limits of control / protection of minority shareholders'rights Consolidated financial statement: an image of economic unity Duty to prepare consolidated financial statements Function of the consolidated balance sheet 198 V. Liability issues in Company Groups Basics The responsibility of the parent company based on agreement Comfort letters Trust on groups Tort Piercing the corporate veil Directors' liability for de facto bodies 200 Part 10: Accounting 201 I. Basics, purpose of accounting 201 II. Bookkeeping and accounting rules for commercial enterprises 202 XXI

19 1. Basics Generally accepted financial reporting principles 202 III. Financial reporting Balance sheet (Art. 959, 959a CO) Profit and loss statement (Art. 959b CO) Notes (Art. 959c CO) Management report (Art. 961c CO) Cash flow statement (Art. 961b CO) 206 IV. Valuation of assets and liabilities Going concern assumption No-Offsetting Prudence Capital assets Holdings Inventories and non-invoiced services Securities / Assets with observable market prices Own Shares Depreciation and value adjustments (impairment) Exception - Valuation at the real value, not at acquisition or manufacturing cost Hidden reserves Liabilities Provisions 211 Index 213 XXII