SWITZERLAND Law and Practice Contributed by: Alexander Vogel, Marc Baumberger and Selina Bruderer, MLL Legal
sions may also be reflected in the articles of associa - tion and internal business regulations. Under Swiss law, only natural persons may serve as members of the board of directors; legal entities can - not be appointed as directors but may be represented by individuals. Each JV party generally appoints its own representatives to the board, and the inclusion of one or more independent directors may also be agreed upon to provide balance or neutrality. Swiss corporate law requires that at least one person with sole signatory power, or two persons with joint signatory power, be resident in Switzerland. While internal regulations can limit these powers internally, third parties acting in good faith may rely on the offi - cial signature authority as recorded in the Commercial Register. 7.2 Duties and Functions of JV Boards and Directors Under Swiss law, the board of directors is responsible for the overall management and supervision of the company. While certain duties are non-transferable and must be exercised by the board as a whole, all other powers may be delegated to individual direc - tors, executive board members or third parties. This flexibility allows the creation of a structure similar to a two-tier governance system. The non-transferable and inalienable duties of the board include: • ultimate supervision of management and issuance of management directives; • determining the company’s organisational struc - ture; • organising the accounting system, financial con - trols and financial planning; • appointing, supervising and, if necessary, dismiss - ing individuals responsible for management and representation; • preparing the annual financial statements and con - vening shareholders’ meetings; and • filing for a debt restructuring moratorium or notify - ing the court in case of over-indebtedness.
Board members must fulfil their duties with due care and in good faith, and are bound by the fiduciary duties of loyalty and care. This means that they must act in the best interest of the JV company. Where a conflict arises between the interests of the JV com - pany and the JV participant that appointed the direc - tor, the director must prioritise the interests of the JV company to avoid personal liability. A breach of fiduci - ary duties – such as favouring the appointing party at the expense of the JV – can result in personal liability for any resulting damage. The board may also establish subcommittees (eg, audit, remuneration, risk management or nomination committees) to prepare decisions, supervise specific business areas or execute delegated tasks. While this can enhance board efficiency, it may also lead to information asymmetries among board members, which should be carefully managed through appropri - ate governance processes. There are no statutory reporting obligations of the board to the JV participants outside of those owed to the shareholders under general corporate law. Howev - er, the JV agreement may include additional informa - tion rights or reporting duties to align with the parties’ expectations and governance framework. 7.3 Conflicts of Interest Under Swiss law, directors are required to immediately disclose any actual or potential conflicts of interest to the board of directors. Upon disclosure, the board must take appropriate measures to safeguard the interests of the JV company. These measures may include requiring the conflicted director to refrain from participating in discussions and voting on the mat - ter or, in certain cases, escalating the decision to the shareholders’ meeting. Generally, transactions between the JV company and a member of its board of directors must be concluded in writing, unless the value of the transaction does not exceed CHF1,000, and must be conducted on arm’s length terms. Board members appointed by a JV participant are typically permitted to act in the interests of that par - ticipant. However, where the interests of the appoint -
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