SWITZERLAND Law and Practice Contributed by: Natalie Dini and Peter Vogt, Tax Partner AG
6. Roles and Responsibilities of Fiduciaries 6.1 Prevalence of Corporate Fiduciaries Corporate fiduciaries are common in Switzerland. Pri - vate banks, trust companies, family office boutiques and specialised firms routinely act as executors, trus - tees, foundation board members and guardians. Under the 2020 Financial Institutions Act (FinIA) eve - ry firm that offers trustee services “on a commercial basis” must hold a Swiss Financial Market Supervi - sory Authority (FINMA) licence and affiliate with an approved supervisory organisation. Once licensed, a corporate fiduciary must meet stricter, codified duties than a private individual acting ad hoc. In parallel, the Swiss Code of Obligations already binds all fiduciaries – corporate or natural – to a duty of loyalty and the standard of care of a diligent pro - fessional. 6.2 Fiduciary Liabilities Piercing the Veil Foreign trusts: A foreign trust has no legal personality in Switzerland, so the trustee sues and is sued in his or her own name. Creditors cannot, however, reach the trustee’s private wealth unless the trustee has breached fiduciary duties (eg, has misappropriated assets or traded while insolvent) or has contractually assumed unlimited liability. Swiss foundations (including family-support founda - tions) are separate legal persons. Board members are not answerable for the foundation’s debts merely because the foundation becomes insolvent. They are liable only for culpable breaches of duty – eg, negli - gence in administration, failure to preserve capital or faulty investment policy. If the settlor keeps effective control (eg, a revocable trust, the power to recall assets or a majority vote on the foundation board), Swiss courts and tax authori - ties may treat the assets as still belonging to the sett - lor and will “look through” the trust.
Mechanisms to Fiduciaries Fiduciaries can protect themselves with exoneration and indemnity clauses, delegation to regulated pro - fessionals and liability (D&O) insurance. 6.3 Fiduciary Regulation Swiss law does not lay down a single “prudent-inves - tor rule”, but it forces every fiduciary to invest with the care of a diligent professional. Anyone who holds assets for another under a man - date has a general civil-law duty and must manage them “with the care that a prudent business person exercises in their own affairs”. Since the FinIA, every commercial trustee or asset manager needs a FINMA licence. A Swiss foundation is a separate legal person, but its board answers to a supervisory authority that can annul investments that jeopardise the endowment. 6.4 Fiduciary Investment Every Swiss fiduciary must invest with the diligence of a “prudent business person” and, if FINMA-licensed, keep written policies and risk controls. Modern portfolio diversification is welcome, but Swiss practice vetoes positions that still look reckless to an ordinary prudent person or contradict beneficiaries’ needs. There are no fixed percentages for diversifica - tion; however, diversification is expected and concen - trated bets require explicit authorisation and benefi - ciary/protector consent. Trusts and foundations may hold and even con - trol operating companies if they install professional boards, document arm’s-length governance and keep risks from jeopardising the fund. Charitable or family- support foundations need supervisory approval.
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