SWITZERLAND Law and Practice Contributed by: Christoph Neeracher, Philippe Seiler and Lukas Bründler, Bär & Karrer Ltd
FSR and for preparing a defence if subjected to an ex officio investigation. Real Estate One exception to the liberal legal framework in Swit - zerland is the acquisition of real estate. Swiss law restricts the acquisition of real estate that is not per - manently used for commercial purposes (non-com - mercial property), such as residential or state-owned property, undeveloped land or permanently vacant property (the Lex Koller). Legal entities with their cor - porate seat outside Switzerland are deemed foreign under the regulations, regardless of who controls them. Further, legal entities with their corporate seat in Switzerland are deemed foreign if they are controlled by foreign investors. The law takes a very economic view to determine whether a Swiss entity is foreign controlled; namely, it looks through the entire holding and financing structure, but it is strictly formal as soon as an entity with its corporate seat outside Switzer - land is involved. ESG The topics of sustainability and environmental pro - tection, as well as social and responsible corporate governance, have gained increased attention and importance in Europe (and throughout the world) over the past few years (criteria of environmental, social and governance, ESG). With the introduction of ESG reporting requirements as of 1 January 2022, Switzer - land has followed the trend and has introduced stricter ESG requirements for Swiss companies. Depending on their size and significance, certain companies will be subject to the new ESG reporting requirements. Swiss businesses that are of public interest must create an annual, public ESG report that addresses non-financial issues. The requirement to create such a report primarily applies to listed companies and banks that, together with the domestic or foreign businesses they control, have an average of at least 500 full-time positions annually over the course of two years and have sales revenue exceeding CHF40 million or a bal - ance sheet total of at least CHF20 million. The report will discuss non-financial issues such the business strategy, newly developing threats to the environment,
employees and human rights, as well as the due dili - gence steps the firm has made to address ESG issues. Compared to companies of public interest, SMEs are not yet compelled to issue such an ESG report. However, additional due diligence obligations apply if companies (including SMEs) with their registered office, head office or primary place of business in Switzerland process or import specific minerals or metals originating from conflict or high-risk regions. Similar due diligence obligations apply to Swiss com - panies that provide goods or services for which there is a plausible suspicion that child labour was used in their manufacturing. SMEs are exempt from the due diligence obligations regarding child labour if their bal - ance sheet totals, sales revenue and full-time employ - ees fall below certain statutory thresholds. It is anticipated that the due diligence obligations regarding child labour will be the most relevant obli - gation for private equity firms intending to invest in certain businesses. Moving forward, it is highly recom - mended that private equity buyers also focus on the new reporting requirements when conducting a due diligence analysis of an acquisition target. With effect from 1 January 2024, the executive regula - tion on climate reporting for large Swiss enterprises was enacted. Publicly traded companies, banks and insurance firms with a minimum of 500 employees and either a balance sheet total of at least CHF20 million or an annual turnover exceeding CHF40 million are now mandated to publicly disclose information on climate- related matters. The mandatory public reporting must encompass both the financial risks associated with the entity’s climate- relevant activities and the impact of the entity’s busi - ness operations on the climate. Furthermore, entities are required to disclose their targets for reducing both direct and indirect greenhouse gas emissions and to outline their strategies for achieving these targets.
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