SWITZERLAND Trends and Developments Contributed by: Guy Deillon and Daniel Hayek, Prager Dreifuss AG
Consolidation of the revised corporate law framework The revision of Swiss corporate law, which entered into force in 2023, continues to shape governance practice as transitional periods have now largely expired. As of 1 January 2025, legacy provisions in articles of association that conflict with the revised law have ceased to apply. The focus has therefore shifted from implementation to optimisation. Key areas of continued relevance include: • capital flexibility instruments, notably the capital band; • enhanced flexibility for general meetings, including virtual and hybrid formats; • formalisation of dividend distributions and interim dividends; and • gender representation rules for large listed compa - nies. In practice, many companies are still adjusting their constitutional documents and internal regulations to fully leverage these tools. A notable trend is the increased use of capital bands in privately held companies, particularly in private equity-backed structures. This reflects a demand for flexibility in capital management without repeated shareholder approvals. At the same time, companies are refining governance processes around general meetings. Virtual meetings, initially adopted out of necessity during the pandemic, are now being institutionalised. This requires careful attention to procedural safeguards, including: • verification of shareholder identity; • ensuring proper exercise of voting rights; and • maintenance of reliable records of proceedings. Board governance and judicial scrutiny Swiss courts have recently clarified several aspects of board governance, with a particular focus on proce - dural compliance and director responsibilities.
A key development concerns the consequences of failing to re-elect board members within the statutory timeframe. The Federal Supreme Court has confirmed that directors whose term has expired without valid re-election lack authority to act, including the power to convene a general meeting. This decision underscores the importance of strict compliance with formal requirements. It also high - lights the potential for governance deadlock if proce - dural lapses occur. Another area of judicial clarification relates to the so- called business judgement rule. While Swiss law does not formally codify this doctrine, courts have consist - ently applied a standard that protects directors who: • act on an informed basis; • avoid conflicts of interest; and • make decisions in good faith and in the company’s best interests. Recent case law emphasises that this protection depends heavily on process. In particular, courts are scrutinising: • the quality and completeness of information avail - able to the board; • the documentation of deliberations and decisions; and • the handling of litigation and risk management. This reflects a broader shift towards process-based accountability. Outcomes alone are not decisive; the manner in which decisions are made is increasingly central. Shareholder loans and financial distress Judicial developments have also addressed the treat - ment of shareholder loans in insolvency scenarios. The Federal Supreme Court has clarified that subordi - nation of such loans is not automatic and depends on the specific circumstances, including potential abuse. This provides greater predictability for shareholders providing financing in distressed situations.
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