SWITZERLAND Law and Practice Contributed by: Lorenzo Olgiati and Pascal Hubli, Schellenberg Wittmer Ltd
company. Its main duty is to determine the cor - porate strategy and allocate corporate resources (strategic governance). In general, the board is authorised to decide on all matters that are not reserved to the shareholders’ meeting or the auditors (by law or by the articles of association), or that are delegated to the executive manage - ment based on organisational regulations. Statutory law enumerates certain fundamental matters specifically reserved for the board for decision-making (see 3.2 Decisions Made by Particular Bodies for more details). 4.7 Responsibility/Accountability of Directors The board owes its fiduciary duties primarily to the company, and must represent it and act in its best interests. When determining the best inter - ests of the company, the board, according to the prevailing legal opinion in Switzerland, should consider the long-term interests of the share - holders as well as those of other stakeholders, such as the company’s employees or creditors. 4.8 Consequences and Enforcement of Breach of Directors’ Duties The board members and “de facto directors” (ie, persons not formally appointed as directors but who factually act as directors and significantly influence the company’s decision-making pro - cess), as well as the members of the executive management, are liable for damages caused by intentional or negligent breach of their duties. As a rule, directors’ and officers’ (D&O) liability is joint and several, and each director may be held personally liable. Under the business judge - ment rule, as developed by Swiss case law, any business decision made without conflicts of interests in a proper and reasonably informed manner does not constitute a breach of obliga -
tions, even if it turns out to have been materially wrong in retrospect. The expected level of care is generally assessed based on an objective standard. However, spe - cialist knowledge may result in a higher stand - ard when assessing the actions of an individual D&O liability actions may be brought by the company, shareholders, and – in the event of bankruptcy, the company’s creditors. Share - holders’ actions can be direct, if they suffered direct damage, or indirect (as a derivative suit), if they seek to act on behalf of the company due to indirectly caused damages (ie, damage to the value of their shares resulting from dam - age suffered by the company). However, formal actions against board members are rather rare in practice. Many conflicts end with out-of-court settlements, frequently facilitated (and financed) by D&O insurers. In addition, while Swiss company law contains some rules to address and ease the cost con - cerns that typically arise in the event of share - holder lawsuits, these rules do not effectively foster shareholders’ actions, mainly because they are inapplicable to payments of advances to the courts. Finally, plaintiffs may also prefer actions against auditors, where deemed possi - ble, in search of “deep pockets” . 4.9 Other Bases for Claims/Enforcement Against Directors/Officers In addition to the potential claims mentioned under 4.8 Consequences and Enforcement of Breach of Directors’ Duties , the board of directors or the executive management of listed companies may be subject to criminal sanc - tions pursuant to the Swiss Criminal Code, if board member. Liability Actions
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