SWITZERLAND Law and Practice Contributed by: Alexander Vogel, Marc Baumberger and Selina Bruderer, MLL Legal
8.3 ESG Considerations in JVs Under Swiss law, public companies, banks and insur - ance companies that employ at least 500 people and either exceed CHF20 million in total assets or gener - ate more than CHF40 million in annual turnover (ie, large undertakings) are required to publicly report on non-financial and sustainability matters. This report - ing must address environmental concerns (particu - larly CO₂ targets), social and employee-related issues, human rights and anti-corruption measures. The report must include the information necessary to understand the company’s development, performance and posi - tion, and the impact of its activities on these issues. Specifically, it must include/cover: • a description of the business model; • the company’s policies and due diligence process - es relating to ESG matters; • the measures implemented and an assessment of their effectiveness; • the principal risks associated with ESG matters, including those arising from the company’s opera - tions, business relationships, products or services; and • key performance indicators relevant to these issues. Since 1 January 2024, the Federal Ordinance on Mandatory Climate Disclosures for Large Companies has been in force. This ordinance mandates climate- related reporting in accordance with the recommen - dations of the Task Force on Climate-related Financial Disclosures (TCFD), thereby aligning Swiss standards with international best practices. For Swiss JVs, these requirements are unlikely to apply directly, as the thresholds are relatively high and typically not met by JV vehicles. However, an indirect impact is certainly possible. For example, where a JV participant holds a substantial interest in the JV, it may be required to consolidate the JV into its group report - ing and request ESG-relevant data from the JV. Moreover, Swiss JVs may also become subject to EU ESG regulations, particularly under the Corporate Sustainability Reporting Directive (CSRD), which will be phased in between 2024 and 2028. Unlike Swiss law, the CSRD applies to both listed and non-listed
large companies and sets a lower employee threshold (250 employees). A Swiss JV may fall within the scope of the CSRD if it has an EU subsidiary that meets the relevant criteria. Notably, beginning in 2029 (for the 2028 financial year), non-EU entities will also be subject to CSRD obligations if they generate at least EUR150 million in turnover within the EU and have either an EU subsidi - ary meeting CSRD thresholds or an EU branch with at least EUR40 million in sales. Consequently, Swiss corporate JVs meeting these thresholds may become subject to EU reporting obligations, and these obliga - tions may extend to their non-EU subsidiaries. Given these developments, JV participants – par - ticularly those with international operations – should assess whether their JV structures or activities may trigger ESG reporting obligations under Swiss or EU law. Even where formal reporting duties do not apply, it is advisable to implement appropriate ESG policies and internal data collection processes to ensure readi - ness for future regulatory developments and stake - holder expectations. 9. Exit Strategies and Termination 9.1 Termination of a JV Corporate JV Under Swiss law, corporations (AG/SA) are typically established for an indefinite duration. As such, the ter - mination of the JV agreement does not, in principle, affect the legal existence of the JV vehicle itself. How - ever, the articles of association may include provisions stipulating that the company will be dissolved upon termination of the JV agreement. Alternatively, the shareholders may resolve to dissolve the company at a general meeting, in accordance with the applicable corporate law requirements. Contractual JV Contractual JVs, such as simple partnerships ( ein- fache Gesellschaft / société simple ), are governed by the provisions of the CO. Where such a JV is formed for an indefinite period or linked to the lifetime of a partner, any partner may unilaterally terminate the JV by giving six months’ notice. To ensure commercial
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