SWITZERLAND Law and Practice Contributed by: Philippe Reich, Meera Rolaz, Kaspar Projer, Samantha Salsench and Anna Zellweger, Baker McKenzie Switzerland AG
Concept of Control In accordance with SECO FAQ, point 1.9, if any of the following criteria is met, it is assumed that the entity in question is controlled by a designated person: “a) the natural person, company or organization has the power to appoint and/or remove, formally or de facto, the majority of the members of the administra - tive or management body of the company or organi - zation; b) he or she formally or de facto holds the majority of the voting rights of the company or organization; c) he or she has the right to exercise a dominant influ - ence over the company or organization by virtue of a contract concluded with it or by virtue of a provision laid down in the memorandum or articles of associa - tion; d) he or she has the power to exercise the right to exercise a dominant influence within the meaning of point (c) without itself holding that right; e) he or she has the right to use all or part of the funds and economic resources of the company or organiza - tion or to determine how they are used; f) he or she manages the business of the company or organization on a uniform basis with the preparation of consolidated accounts; g) he or she is jointly and severally liable for the finan - cial liabilities of the company or organization or acts as guarantor for it; h) as a lender, he or she formally and/or de facto exer - cises a controlling influence on the decisions of the management.” These criteria may be met individually or based on agreements with another shareholder or a third party. The presumption established by meeting any of these criteria can be rebutted on a case-by-case basis (see SECO FAQ, point 1.9; see also below on “ring-fenc - ing”). These criteria coincide with those in the EU Best Practices, paragraphs 63-65.
In addition, SECO takes into account the following non-exhaustive criteria to assess whether funds or economic resources have been formally transferred to third parties, but the designated person still exercises control over them: “- the close relationship (family, business, personal) between the person directly subject to the asset freeze and the third party; - the economic and/or professional independence of the third party who is now the nominal owner of the funds or economic resources; - the value and frequency/regularity of the benefits in question in comparison with benefits to the third party that were made before the sanction was imposed; - existence and content of formal agreements between the sanctioned person and the third party; - compliance with the arm’s length principle in the transfer of value (eg, terms of sale of company shares)” (see SECO FAQ, point 1.10). Under the last criterion, transactions must take place under the same conditions as would be agreed between unrelated third parties in an environment of free competition and under comparable circum - stances. Measures of Ring-Fencing Where the above-mentioned ownership or control is established with regard to entities significant for the economy, operating in sensitive sectors or employing a significant workforce, SECO supports the imple - mentation of ring-fencing measures. Ring-fencing in this sense aims at removing the designated person from the day-to-day operations and any business decisions of the entity that they own or control and the resulting resources and profits. Ring-fencing meas - ures enable the affected entity to continue operating (ie, having access to funds and economic resources as well as receiving services), under the new condi - tions, free from the ownership or control of a desig - nated person. The ultimate goal of such measures is to refute the presumption of ownership or control of the designated person.
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