The following shall
provide an overview of selected legal developments in Switzerland. The
presented legislative projects are deemed to be of particular interest for
parties conducting or intending to conduct business in Switzerland. They are
legislative projects and, thus, subject to change.
Currently, the Federal Law Governing
the Acquisition of Real Estate by Non-Residents (so called “Lex Koller”)
provides for certain restrictions in respect of the acquisition of real
estates by persons living abroad.
On 1 November 2005, the Swiss
Federal Council adopted a resolution according to which the Lex Koller shall
be completely repealed.
The resolution of the Swiss Federal
Council calls for the use of protective zoning measures to avoid negative
effects of a boom in the construction of holiday homes in tourist areas.
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Currently,
the Federal Law Govering the Acquisition of Real Estate by Non-Residents
(so called “Lex Koller”) provides for certain restrictions in respect to
the acquisition of real estates by persons living abroad.
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In
principle, the acquisition of real estate in Switzerland by foreigners is
subject to the grant of an authorisation. Foreigners are considered to be
non Swiss citizens having their residence outside of Switzerland, non
Swiss citizens who reside in Switzerland but are neither citizens of the
member states of the European Union (“EU”) or the European Free Trade
Association (“EFTA”) nor holders of a valid “C” residence permit,
corporations having their legal domicile outside of Switzerland, legal
entities and associations having their legal and factual domicile in
Switzerland but are controlled by foreigners as well as persons who are
not subject to the Lex Koller but who acquire real estate for the benefit
of a foreigner.
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The
acquisition of single-family and multi-family residences, condominiums
and land on which residences of these types may be built by foreigners
requires a permit. The Lex Koller provides for the following exceptions:
no authorisation is required for the acquisition of a primary residence
by a foreign person, the acquisition of real estate that is acquired
along with the acquisition of a place of business and that is necessary
for the operation of the business as well as real estate that is used for
business purposes. No authorisation is further required for the
acquisition of real estate by citizens of EU-/EFTA-countries working as
cross border employees as long as the relevant property is located in the
geographic area of their place of work.
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On 1
November 2005, the Swiss Federal Council adopted a resolution according
to which the Lex Koller shall be completely repealed. Therewith the
foreign buyer of real estate in Switzerland shall generally be released
from the prerequisite of an authorisation. The resolution of the Swiss
Federal Council calls for the use of protective zoning measures to avoid
negative effects of a boom in the construction of holiday homes in
tourist areas. In order for the cantons and communities to have
sufficient time to implement such zoning measures, the repeal of the Lex
Koller should not be proposed until three years from the implementation
of the amended zoning rules. Hence, for the time being, the acquisition
of real estate by foreigners still remains subject to the grant of an
authorisation.
Trusts are well-established legal instruments in states
with common law traditions.
Today, certain foreign trusts are recognized under
Swiss conflict of law rules.
However, the legal concept of trusts under Swiss law
calls for uncertainty.
The ratification of the Hague Convention shall create a solid legal basis for
the dealing with trusts in Switzerland and thereby support Switzerland’s
position as financial centre.
For full text of the Hague Convention on the Law
applicable to Trusts and Recognition of Trusts:
www.hcch.net
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A trust is understood to be a legal relationship
according to which certain assets are transferred to one or more persons
(trustees) on a fiduciary basis. The trustees are obliged to manage these
assets and use them for a purpose determined in advance by the settlor.
The purpose can be of general nature or can comprise the preferential
treatment of certain persons.
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Trusts are well-established legal instruments in
states with common law traditions. Swiss law does not explicitly provide
for a form of property ownership equivalent to the form of ownership
known as a trust in Anglo-Saxon jurisdictions. Even though a trust cannot
be created under Swiss law, the trust business in Switzerland is growing.
A great volume of assets which belong to foreign trusts or are
administered in the name of trusts is held in Switzerland. Trusts are
becoming increasingly important for the private client sector of Swiss
banks as well as for business financing. An increasing number of
companies domiciled in Switzerland are specialised in the administration
and planning of trusts.
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Certain foreign trusts are recognized under Swiss
conflict of law rules. Under Swiss law in terms of its legal form, a
trust lies somewhere between a fiduciary relationship and a foundation.
Provided that the assets of a trust are sufficiently independent from the
trustee and the settlor a large number of Swiss scholars qualify a trust
as an organized economic unit in terms of art. 150 para. 1 of the Swiss
Private International Law Act (“PILA”). Pursuant to art. 154 para. 1 PILA,
the law governing the existence of an organized economic unit is the law
of the state under which it was organized. Hence, under the current Swiss
law, a trust is only recognized in Switzerland if the legal requirements
of the jurisdiction of its organization have been met. If these
organizational requirements have not been satisfied, art. 154 para. 2
PILA provides that the trust shall be governed by the law of the
jurisdiction in which it is actually managed. A trust managed in
Switzerland will therefore not be recognized as a trust.
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In light of the growing trust business the Federal
Council wishes to create a firmer legal basis. For this purpose, the
Federal Council adopted the Opinion on the ratification of the Hague
Trust Convention on 5 December 2005.
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So far all parties involved in the committee stage
have welcomed the Federal Council’s proposal to ratify the Hague
Convention on the Law Applicable to Trusts, and to officially recognize
the Convention in Switzerland. The Message of the Federal Council
provides for the respective amendment of the Swiss International Private
Law. Pursuant to the new chapter which shall be added to the PILA, the
law applicable to trusts is to be determined in accordance with the Hague
Convention.
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Moreover, it is envisaged to extend the Federal Debt
Collection and Bankruptcy Act (“DCBA”) and to take into account in Swiss
debt enforcement proceedings the distinction between the personal assets
of the trustee and the trust.
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Hence, the general aim of the ratification of the
Hague Convention is to create a solid legal basis for the dealing with
trusts in Switzerland and thereby support Switzerland’s position as
financial centre.
The existing non-mandatory directive of
the SWX Swiss Exchange does not suffice to solve the problem of lacking
transparency with regard to the remuneration for members of the board of
directors and management.
With its expected entry into force in 2007, the revised Code of Obligations
will oblige listed companies to disclose the total amount of all
remunerations, loans and shares in the company of the present and past
members of the board of directors and of the members of the management as
well as of the persons close to them.
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The current law on stock corporations does not contain
provisions regarding the disclosure of remunerations for the members of
the board of directors or the management. The board of directors itself
determines the remunerations of its members and of the management. These
may lead to a conflict of interests as the members of the board represent
both themselves and the company. Due to the broad distribution of shares
in publicly owned firms the numerous shareholders are often not in a
position to protect their own interests. According to the opinion of the
Swiss Federal Council the existing non-mandatory directive of the SWX
Swiss Exchange does not suffice to solve the problem of lacking
transparency.
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In view of the political and economical importance of
transparency regarding the remuneration of the board of directors and the
management, the Federal Council has adopted a Message to revise the Code
of Obligations accordingly
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The revised law obliges listed companies to disclose
the total amount of all remunerations and loans granted to the present or
past members of the board of directors and the management. Furthermore,
the new provisions provide for the disclosure of remunerations and loans
of persons close to the members of the board of directors or the
management. The remuneration and loan granted to every member of the
board of directors has to be disclosed individually, comprising the name
and function of the member. With respect to the members of the
management, only the highest contribution awarded, indicating the
recipient and his function has to be disclosed.
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Finally, the shares of the members of the board of
directors, the management and such persons close to them shall also be
disclosed. The respective disclosures need to be made in the notes on the
accounts.
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The revision of the Code of Obligations regarding the
remuneration of members of the board of directors and management is
expected to enter into force during the second half of the year 2007.
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The revision of the Code of Obligations regarding the
remuneration of members of the board of directors and management is
expected to enter into force during the second half of the year 2007.
The legislation on limited liability
companies shall be revised with the purpose of creating a consistently
person-oriented capital company and improving the business environment for
limited liability companies.
The new legislation releases the number of current restrictions imposed on
the set-up and operation of limited liability companies.
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The legislation on limited liability companies shall
be revised with the purpose of creating a consequently person-oriented
capital company and improving the business environment for limited
liability companies. The revised provisions of the Code of Obligations
focus on the needs of companies with a restricted number of partners.
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Consequently, the new law abstains from regulations
with regard to the capital market as such regulations would not be
appropriate, but burdensome for smaller companies. The new law further
aims at a harmonisation of the limited liability company with other types
of companies.
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Contrary to the law in effect, the new law allows the
formation of a limited liability company by a sole partner. Taking into
account the interests of small companies, the new law upholds the minimal
company capital of CHF 20’000.-. The company capital shall however –
contrary to the current legal regulation – be fully paid in. The company
capital shall no longer be limited to CHF 2’000’000.-.
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As a consequence of the duty to fully pay in the
capital contributions, the partner’s subsidiary personal joint and
several liability shall be abolished. Furthermore, the capital increase
will no longer depend on the unanimous partners’ approval but will only
require a qualified majority. According to the new legislation, every
partner shall be allowed to own several capital contributions. The
minimal nominal value of the capital contributions shall be reduced from
currently CHF 1’000.- to CHF 100.-.
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The formal requirements for the assignment of capital
contributions shall be loosened. According to the new law, a public deed
is no longer required as a written agreement together with the new
partner’s registration in the commercial register is sufficient.
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Depending on the size of the company, the limited
liability company shall be obliged to have auditors.
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The entry into force of the new legislation on limited
liability companies is planned for the second half of the year 2007.
The minor revision of Corporation Law is
joined to the new legislation on limited liability companies and provides for
various changes of Swiss corporate law.
The incorporation of a company shall be facilitated.
The requirements regarding the domicile and nationality of the members of the
board of directors will be repealed.
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The minor revision of Corporation Law is joined to the
new legislation on limited liability companies and provides for various
changes of the Code of Obligations.
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The incorporation of a company shall be facilitated.
In line with the new legislation on limited liability companies, it is no
longer required that a company shall have at least three shareholders
upon incorporation. A company can be founded by one natural person or
legal entity.
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If the corporation acquires or intends to acquire
assets from third parties upon or after incorporation, this is no longer
considered an „acquisition of assets“ and does therefore not have to be
indicated in the articles of incorporation.
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According to the minor revision of Corporation Law,
the members of the board of directors need not be shareholders of the
company. They have however, the right to attend the annual general
meeting of shareholders. The minor revision of the Corporation Law
provides that the name of the company has to include the legal form, i.e.
“ltd.”.
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The entry into force of the minor revision of
Corporation Law is planned for the second half of the year 2007.
The main issues of the major revision of Corporation Law are the improvement
of corporate governance, the new rules on capital structures, the abolishment
of bearer shares, the updating of the provisions governing the annual meeting
of shareholders as well as the new rules on accounting and reporting
requirements.
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In addition to the minor revision of Corporation Law
which accompanies the new legislation for limited liability companies a
major revision of Corporation Law is in progress. While the minor
revision is expected to enter into force in 2007, the major revision of
Corporation Law lies in the far future.
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The main issues of the major revision of Corporation
Law are the improvement of corporate governance, the new rules on capital
structures, the updating of the provisions governing the annual meeting
of shareholders as well as new rules on accounting and reporting
requirements.
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Corporate governance is to be improved by specifically
strengthening the position of the shareholders as owners of the company.
The shareholders’ rights to information are set forth in preciser terms.
The shareholders are entitled to information regarding the remuneration
paid to the board of directors. The shareholders may at all times request
information from the board of directors in writing. Furthermore, the
members of the board of directors shall be re-elected every year.
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The necessary requirements for the exercise of various
shareholders’ rights shall be lowered. Such shareholders’ rights include
special audits and the rights to convene meetings and have items included
on the agenda. Legal actions to recover unjustified payments shall be
made more efficient. The right of banks to exercise the voting rights
attached to stock they hold in safekeeping shall be abolished. Only
independent persons shall be appointed as proxies.
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The rules governing capital structures shall be
revised. The procedure regarding the increase and reduction of share
capital shall be made more flexible by the means of a so called “capital
band” (“Kapitalband”). By adopting a capital band, the general
meeting of shareholders shall be able to authorize the board of directors
to increase or reduce the share capital within a certain bandwidth.
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The requirement of a minimum nominal
share value shall be repealed. The company can thus lower the nominal
value as close to zero as it chooses. As bearer shares are no longer of
great importance, they shall be abolished. However, the issuance of
bearer participation certificates shall still be possible.
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The regulations governing the
general shareholders’ meeting shall be revised and adapted to modern
means of communication. In the future, the use of electronic tools when
preparing for and holding annual general meetings will be regulated. The
revised Code of Obligations provides for rules on holding annual general
meetings at several venues as well as abroad.
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The accounting and reporting
legislation shall be revised. The revision will establish standard rules
for all forms of company. The accounting and reporting requirements will
vary depending on the size and economic importance of the respective
company.
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The consultation procedure („Vernehmlassungsverfahren“)
was opened on 2 December 2005 and is to be completed by the end of May
2006.
The report on selected legal
developments in Switzerland has been prepared by:
Christoph Stäubli
Walder Wyss & Partners
Münstergasse 2
8022 Zürich
Tel: +41 44 265 75 11
E-Mail: staeubli@wwp.ch
The report on selected legal
developments in Switzerland is for reference purposes only. It is not
intended to replace legal advice. The election of the legal developments in
Switzerland is only discretionary and not complete. According to the nature
of legislation procedure the referenced articles, acts, codes, statutes,
laws, regulations, agreements and conventions are still subject to change.
The content of this page is updated at intervals, and may, therefore, not
reflect the most recent version.
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