SWITZERLAND Law and Practice Contributed by: Alexander Vogel, Marc Baumberger and Selina Bruderer, MLL Legal
agreement would have on the JV agreement and vice versa. 6.6 Rights and Obligations of JV Partners The rights and obligations of JV parties in Switzerland largely depend on the legal form of the JV – contractu - al JV (eg, simple partnership) versus corporate JV (eg, a Swiss stock corporation or limited liability company). Contractual JVs In a contractual JV, the parties enjoy broad contractual freedom to define the terms of their co-operation. This includes: • profit and loss allocation – the parties may freely agree on how profits and losses are shared and, in the absence of a specific agreement, Swiss law provides for equal sharing; • access to information – each party generally has the right to access the books and records of the JV; • non-compete obligations – these can be contrac - tually agreed to restrict parties from engaging in competing activities during the JV term; and • liability – the parties are jointly and severally liable for the debts and obligations of the JV vis-à-vis third parties. Corporate JVs In a corporate JV, the rights and obligations of the parties are governed by the statutory rules applicable to the chosen corporate form – typically a Swiss cor - poration (AG/SA) or, less frequently, a limited liability company (GmbH/Sàrl). Key aspects include: • profit sharing – profits are distributed as dividends based on shareholding. Unless preferred shares are issued with different economic rights, dividends must be paid out equally in proportion to the nomi - nal value of the shares held; • loss allocation – losses are generally not allocated directly to shareholders but reduce the company’s equity, and shareholders are not personally liable beyond their capital contributions; • access to information – shareholders have access rights as provided by law, which may be extended through the shareholders’ agreement;
• non-compete clauses – restrictions on competi - tion by shareholders or directors must be expressly agreed in the shareholders’ agreement or employ - ment/mandate contracts; and • liability – shareholders are generally not liable for the debts of the JV company, although directors may incur personal liability in case of breaches of fiduciary duties or violations of statutory obliga - tions. 6.7 Minority Protection and Control Rights In Swiss JVs, minority protection is typically achieved through contractual arrangements, most commonly in a shareholders’ agreement or JV agreement. While Swiss corporate law provides certain statutory rights to minority shareholders, effective protection in the context of a JV – especially an international one – requires tailored contractual provisions. Statutory Rights Under Swiss law, shareholders holding at least 10% of the share capital or votes have the right to request the convening of a shareholders’ meeting and a special audit under certain conditions. Only 5% sharehold - ing is needed to request items to be placed on the agenda. These rights provide a minimum level of oversight but are generally insufficient to ensure meaningful influ - ence in a JV context. Contractual Protections To ensure greater control and transparency, minority shareholders often negotiate the following rights: • board representation – a contractual right to appoint at least one member to the board of direc - tors provides direct access to the JV’s strategic decisions and internal information; • reserved matters/veto rights – the shareholders’ agreement may require the consent of the minority shareholder for certain key decisions (eg, changes to the business plan, capital increases, M&A trans - actions); • quorum requirements – specific quorum thresholds for shareholders’ or board meetings may be set to require the presence or affirmative vote of the minority shareholder;
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