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瑞士
Switzerland – Goodwill indemnity for termination of a distribution agreement
28 1 月 2020
- 分销协议
Quick summary – Under Swiss law, a distributor may be entitled to a goodwill indemnity after termination of a distribution agreement. The Swiss Supreme Court has decided that the Swiss Code of Obligations, which provides commercial agents with an inalienable claim to a compensation for acquired customers at the end of the agency relationship, may be applied by analogy to distribution relationships under certain circumstances.
In Switzerland, distribution agreements are innominate contracts, i.e., agreements which are not specifically governed by the Swiss Code of Obligations (“CO”). Distribution agreements are primarily governed by the general provisions of Swiss contract law. In addition to that, certain provisions of Swiss agency law (articles 418a et seqq. CO) may be applied by analogy to distribution relationships.
Particularly with regard to the consequences of a termination of a distribution agreement, the Swiss Supreme Court has decided in a leading case of 2008 (BGE 134 III 497) concerning an exclusive distribution agreement that article 418u CO may be applied by analogy to distribution agreements. Article 418u CO entitles commercial agents to a goodwill indemnity (sometimes also referred to as “compensation for clientele“) at the end of the agency relationship. The goodwill indemnity serves as a mean to compensate an agent for “surrendering” its customer base to the principal upon termination of the agency relationship.
The assessment whether a distributor is entitled to a goodwill indemnity consists of two stages: In a first stage, it is necessary to analyse whether the requirements stipulated by the Swiss Supreme Court for an analogous application of article 418u CO to the distribution relationship at stake are met. If so, it must be analysed, in a second stage, whether all requirements for a goodwill indemnity set forth in article 418u CO are fulfilled.
Application by analogy of article 418u CO to the distribution agreement
An analogous application of Article 418u CO to distribution agreements requires that the distributor is integrated to a large extent into the supplier’s distribution organisation. Because of such strong integration, distributors must find themselves in an agent-like position and dispose of only limited economic autonomy.
The following criteria indicate a strong integration into the supplier’s distribution organisation:
- The distributor must comply with minimum purchase obligations.
- The supplier has the right to unilaterally change prices and delivery terms.
- The supplier has the right to unilaterally terminate the manufacturing and distribution of productscovered by the agreement.
- The distributor must comply with minimum marketing expenditure obligations.
- The distributor is obliged to maintain minimum stocks of contract products.
- The distribution agreement imposes periodical reporting obligations (e.g., regarding achieved sales and activities of competitors) on the distributor.
- The supplier is entitled to inspect the distributor’s books and to conduct audits.
- The distributor is prohibited from continuing distributing the products following the end of the distribution relationship.
The more of these elements are present in a distribution agreement, the higher the chance that article 418u CO may be applied by analogy to the distribution relationship at stake. If, however, none or only a few of these elements exist, article 418u CO will most likely not be applicable and no goodwill indemnity will be due.
Requirements for an entitlement to a goodwill indemnity
In case an analogous application of article 418u CO can be affirmed, the assessment continues. It must then be analysed whether all requirements for a goodwill indemnity set forth in article 418u CO are met. In that second stage, the assessment resembles the test to be carried out for “normal” commercial agency relationships.
Applied by analogy to distribution relationships, article 418u CO entitles distributors to a goodwill indemnity in cases where four requirements are met:
- Considerable expansion of customer base by distributor
First, the distributor’s activities must have resulted in a “considerable expansion” of the supplier’s customer base. The distributor’s activities may not only include targeting specific customers, but also building up a new brand of the supplier.
Due to the limited case law available from the Swiss Supreme Court, there is legal uncertainty as to what “considerable expansion” means. Two elements seem to be predominant: on the one hand the absolute number of customers and on the other hand the turnover achieved with such customers. The customer base existing at the beginning of the distribution relationship must be compared to the customer base upon termination of the agreement. The difference must be positive.
- Supplier must continue benefitting from customer base
Second, considerable benefits must accrue to the supplier even after the end of the distribution relationship from business relations with customers acquired by the distributor. That second requirement includes two important aspects:
Firstly, the supplier must have access to the customer base, i.e., know who customers are. In agency relationships, this is usually not an issue since contracts are concluded between customers and the principal, who will therefore know about the identity of customers. In distribution relationships, however, knowledge of the supplier about the identity of customers regularly requires a disclosure of customer lists by the distributor, may it be during or at the end of the distribution relationship.
Secondly, there must be some loyalty of the customers towards the supplier, so that the supplier can continue doing business with such customers after termination of the distribution relationship. This is the case, e.g., if retailers acquired by a former wholesale distributor continue buying products directly from the supplier once the relationship with the wholesale distributor ended. Furthermore, a supplier may also continue benefitting from customers acquired by the distributor if it can make profitable after-sales business, e.g., by supplying consumables, spare parts and providing maintenance and repair services.
Swiss case law distinguishes between two different kinds of customers: personal customers and real customers. The former are linked to the distributor because of a special relationship of trust and will usually remain with the distributor once the distribution relationship comes to an end. The latter are attached to a brand or product and normally follow the supplier. In principle, only real customers may give rise to a goodwill indemnity.
The development of the supplier’s turnover after the end of a distribution relationship may serve as an indication for the loyalty of customers. A sharp downfall of the turnover and a need on the part of the supplier (or new distributor) to acquire new or re-acquire former customers suggests that customers are not loyal, so that no goodwill indemnity would be due.
- Equitability of goodwill indemnity
Third, a goodwill indemnity must not be inequitable. The following circumstances could render a goodwill indemnity inequitable:
- The distributor was able to achieve an extraordinarily high margin or received further remunerations that constitute a sufficient consideration for the value of customers passed on to the supplier.
- The distribution relationship lasted for a long time, so that the distributor already had ample opportunity to economically benefit from the acquired customers.
- In return for complying with a post-contractual non-compete obligation, the distributor receives a special compensation.
In any event, courts dispose of a considerable discretion when deciding whether a goodwill indemnity is equitable.
- Termination not caused by distributor
Fourth, the distribution relationship must not have ended for a reason attributable to the distributor.
This will notably be the case if the supplier has terminated the distribution agreement because of a reason attributable to the distributor, e.g., in case of a breach of contractual obligations or an insufficient performance by the distributor.
Furthermore, no goodwill indemnity will be due in case the distributor has terminated the distribution agreement itself, unless such termination is justified by reasons attributable to the supplier (e.g., a violation of the exclusivity granted to the distributor by the supplier).
A goodwill indemnity cannot only be due in case a distribution agreement for an indefinite period of time ended due to a notice of termination, but also in case of the expiry respectively non-renewal of a fixed-term distribution relationship.
Quantum of a goodwill indemnity
Where article 418u CO is applicable by analogy to a distribution relationship and all above-mentioned requirements for a goodwill indemnity are met, the indemnity payable to the distributor may amount up to the distributor’s net annual earnings from the distribution relationship, calculated as the average earnings of the last five years. Where the distribution relationship lasted shorter, the average earnings over the entire duration of the distribution relationship are decisive.
In order to calculate the net annual earnings, the distributor must deduct from the income obtained through the distribution relationship (e.g., gross margin, further remunerations etc.) any costs linked to its activities (e.g., marketing expenses, travel costs, salaries, rental fees etc.). A loss-making business cannot give rise to a goodwill indemnity.
In case a distributor marketed products from various suppliers, it must calculate the net annual earnings on a product-specific basis, i.e., limited to the products from the specific supplier. The distributor cannot calculate a goodwill indemnity on the basis of its business as a whole. Fixed costs must be allocated proportionally, to the extent that they cannot be assigned to a specific distribution relationship.
Mandatory nature of the entitlement to a goodwill indemnity
Suppliers regularly attempt to exclude goodwill indemnities in distribution agreements. However, if an analogous application of article 418u CO to the distribution agreement is justified and all requirements for a goodwill indemnity are met, the entitlement is mandatory and cannot be contractually excluded in advance. Any such provisions would be null and void.
Having said that, specific provisions in distribution agreements dealing with a goodwill indemnity, as, e.g., contractual provisions that address how the supplier shall compensate the distributor for acquired customers, still remain relevant. Such rules could render an entitlement to a goodwill indemnity inequitable.
QUICK SUMMARY: Contract negotiations do not take place in a legal vacuum. A party who negotiates contrary to the principle of good faith and then breaks off negotiations may become liable to the other party. However, the requirements for such liability are high and the enforcement of damage claims is cumbersome. At the end of the post I will share some practical tips for contract negotiations in Switzerland.
Under Swiss law, the principle of freedom of contract is of fundamental importance. It follows from the freedom of contract that, in principle, everyone is free to enter into contract negotiations and to terminate them again without incurring any liability. A termination of contract negotiations does not have to be justified either.
However, the freedom of contract is limited by the obligation to act in good faith (cf. article 2 para. 1 of the Swiss Civil Code), which is of equal fundamental importance. From the moment when parties enter into contract negotiations, they are in a special legal relationship with each other. That pre-contractual relationship involves certain reciprocal obligations. In particular, the parties must negotiate in a serious manner and in accordance with their actual intentions.
Negotiating parties must not stir up the hope of the other party, contrary to their actual intentions, that a contract will actually be concluded. Put differently, a party’s willingness to conclude a contract must not be expressed more strongly than it actually is. If a party realizes that the other party wrongly beliefs that a contract would certainly be concluded, such illusion should be dispelled in due course.
A negotiating party that terminates contract negotiations in violation of these principles, whether maliciously or negligently, may become liable to the other party based on the culpa in contrahendo doctrine. However, such liability exists in exceptional cases only.
- The fact that contract negotiations took a long time is not sufficient for incurring such liability. The duration of negotiations is, in itself, not decisive.
- It is not possible to derive liability from pre-existing contractual relationships between the negotiation parties, as for example in cases where parties negotiate a “mere” prolongation of an existing agreement. The decisive factor is not whether parties were already contractually bound before, but only whether the party that terminated the contract negotiations made the other party believe that a new agreement would certainly be concluded.
- It is not decisive whether the party who terminates contract negotiations knows that the other party has already made costly investments in view of the prospective contract. In principle, anyone who makes investments already prior to the actual conclusion of a contract does so at its own risk. Even where a party to contract negotiations knows that the other party has already made (substantial) investments in the prospective agreement, a termination of the contract negotiations will, in itself, not be considered as an act of bad faith.
What does a liability for breaking off negotiations include?
If a party violates the aforementioned pre-contractual obligations, the other party may be entitled to compensation for the so-called negative interest. This means that the other party must be put in the position it would have been if the negotiations had not taken place. Damages may include, e.g., expenses in connection with the negotiation of the contract (travel costs, legal fees etc.), but also a loss of income in cases where a party was not able to do business with third parties because of the contract negotiations. However, the other party has no right to be treated as if the contract had been concluded (so-called positive interest).
Having said that, it must be kept in mind that the requirements set by Swiss court for the substantiation of damages are rather high, so that the enforcement of a liability for breaking off negotiations will often be a cumbersome process. Therefore pursuing damage claims with relatively low amounts in dispute might often require a disproportionate effort.
Practical tips – Do’s and don’ts when negotiating contracts
- Do not overstate your willingness to conclude a contract. Be frank with your counterparty. Make it clear from the beginning of the negotiations what clauses are important to you.
- Do not tell the other party that you are willing to sign a contract, if you still have doubts or you are even unwilling to do so. Confirm that you will sign only if you are convinced to do so.
- Do not allow someone else (e.g., a representative, employee, branch office etc.) to negotiate on your behalf if you are not willing to enter into an agreement anyway. Keep an eye on how the negotiations are going on and intervene if necessary.
- Do not make costly investments before a legally binding agreement is concluded. If, for time or other reasons, such investments are necessary already before the conclusion of an agreement, insist on the conclusion of an interim contract governing such investments for the event that the envisaged agreement is not concluded finally.
In 2020, an important revision of the Swiss statute of limitations enters into force. The new law provides for longer limitation periods in cases of personal injury and extends the relative limitation periods in tort and unjust enrichment law from one to three years.
Background of the revision
In June 2018, the Swiss parliament adopted an amendment to the Swiss Code of Obligations (“CO”) pertaining to a revision of the statute of limitations. In November 2018, the Swiss government decided that the revised statute of limitations shall enter into force on 1 January 2020.
The revision was significantly influenced by asbestos cases. Under the current law, damage claims of asbestos victims were time-barred in some cases even before asbestos-related diseases could be diagnosed. In March 2014, the European Court of Human Rights held in Howald Moor and others v. Switzerland that the Swiss statute of limitations amounts in such cases to a violation of article 6 paragraph 1 of the European Convention on Human Rights (right of access to a court).
Having said that, the revision does not only concern cases of personal injury, but also includes numerous other important changes as described in the following.
Key changes regarding limitation periods
A. Tort law
In tort law, the new relative limitation period amounts to three years from the date on which the injured party became aware of the damage and of the identity of the person liable (revised Art. 60 para. 1 CO). Under the current law, the relative limitation period amounts to one year only.
With the exception of cases of personal injury, the absolute limitation period remains ten years as from the date when the conduct that caused the damages occurred or ended (revised Art. 60 para. 1 CO).
In cases of personal injury, the new relative limitation period amounts to three years from the date on which the injured party became aware of the damage and of the identity of the person liable. Currently the relative limitation period amounts to one year only.
The new absolute limitation period in cases of personal injury amounts to twenty years after the date when the conduct which caused the damages occurred or ended (new Art. 60 para. 1bis CO). Under the current law, there was no special absolute limitation period for cases of personal injury, so that the ordinary 10-year period applied (Art. 60 para. 1 CO).
If conduct, which gives rise to liability under tort law, is also punishable under criminal law, the (longer) limitation period under criminal law remains applicable (cf. Art. 97 of the Swiss Criminal Code). However, where a first-instance criminal judgment is rendered before the conduct is time-barred under criminal law, the limitation periods ends not earlier than three years as from that criminal judgment (revised Art. 60 para. 2 CO). The current law does not provide for such an additional three-year limitation period.
B. Unjust enrichment law
In unjust enrichment law, the new relative limitation period amounts to three years as from the date on which the injured party knows about the claim (revised Art. 67 para. 1 CO). Under the current law, the relative limitation period amounts to one year only.
The absolute limitation period is not affected by the revision and remains ten years after the date on which the claim arises (revised Art. 67 para. 1 CO).
C. Contract law
With regard to contractual claims, the ordinary limitation period remains ten years from the due date (Art. 127 CO). Furthermore, the shorter limitation period of five years from the due date applicable to (amongst others) claims for rent, interest on capital and other periodic payments, (most) claims out of employment relationships etc. remains unchanged too (Art. 128 CO).
However, in cases of personal injury, the revised statute of limitations introduces a new relative limitation period of three years from the date on which the injured party became aware of the damage, as well as a new absolute limitation period of twenty years after the date when the conduct which caused the damages occurred or ended (new Art. 128a CO). The current law does not provide for distinct relative and absolute limitation periods for contractual claims in cases of personal injury. Instead, the ordinary ten-year limitation period (Art. 127 CO) usually applied to such cases.
D. Summary
In summary, the most important elements of the revised statute of limitations are the longer (trebled) relative limitation periods in tort and unjust enrichment law (i.e., three years instead of one year) and the new special rules for cases of personal injury, which now benefit from a 20-year absolute limitation period.
Transitional provisions / application of the revised statute of limitations to pre-existing claims
The longer limitation periods under the revised CO apply to any claims that are not yet time-barred when the revision enters into force (i.e., on 1 January 2020; revised Art. 49 para. 1, Final Title of the Swiss Civil Code). In other words, the limitation periods of any claims that do not become time-barred until 31 December 2019 at the latest will be prolonged. This is of particular relevance with regard to claims based on tort and unjust enrichment; the short one-year relative limitation periods under the current law will be extended by another two years.
In contrast, the current law remains applicable in case the revised statute of limitations provides for shorter limitation periods (revised Art. 49 para. 2, Final Title of the Swiss Civil Code). This concerns, in particular, contractual claims in cases of personal injury. The new three-year relative limitation period under the revised law might not apply to such claims, as the current statute of limitations does not provide for a relative limitation period at all.
Further changes brought by the revision
In addition to the changes of the limitation periods set out above, the revision of the statute of limitations contains numerous further modifications. Some of them are listed in the following:
- Limitation periods do not commence or are suspended in the event that a claim cannot be asserted for objective reasons before any court worldwide (revised Art. 134 para. 1 no. 6 CO). The current law provides for such non-commencement or suspension only if the claim cannot be brought before a Swiss court.
- Parties to a dispute may agree in writing that limitation periods shall be suspended during settlement discussions, mediation proceedings or other out-of-court settlement proceedings (revised Art. 134 para. 1 no. 8 CO).
- Once a limitation period has commenced to run, waivers of statute of limitation defenses are admissible, but must not exceed ten years (revised Art. 141 para. 1 CO). Any such waivers must be in writing (new Art. 141 para. 1bis CO).
- In general terms and conditions (“GTC”), statute of limitation defenses may be waived by the party who makes use of the GTCs only. In contrast, a waiver by the party on whom the GTCs are imposed (e.g., consumers) is ineffective (new Art. 141 para. 1bis CO).
- The limitation period for an actio pauliana under the Swiss Debt Enforcement and Bankruptcy Act (“DEBA”) is extended to from currently two years to three years after service of a loss certificate, the opening of bankruptcy proceedings or the confirmation of a composition agreement with an assignment of assets (whichever is applicable; revised Art. 292 DEBA).
如何确保你的债权在长期内可以得到执行？如果满足某些条件，债权人可以冻结债务人在瑞士所拥有的资产。在实践中，在两种情况下资产可被扣押：第一种情况是债权人对在瑞士没有住所的债务人主张债权；第二种情况是债权人持有可执行的判决或裁决。
毫无疑问，尽管面临着监管压力，瑞士金融业在当今金融界依旧发挥着主导作用。因此，瑞士管辖权有利于希望对持有瑞士银行账户或其他资产的债务人主张债权的债权人。尽管实践表明，被查封的主要是银行账户，但其他资产，如房地产，艺术品或对第三方的索赔同样可以被扣押。
经过申请，债权人可以指示银行所在地或资产所在地的瑞士法院实施单方面冻结以对抗在瑞士拥有资产的债务人，如果提出申请的债权人可以初步证明自己满足以下瑞士联邦债务执行与破产法（“DEBA”）中规定的三个条件：
（一）请求冻结令的债权人有一个成熟无担保债权；
（二）存在冻结请求的法律依据；
（三）债务人的资产位于瑞士。
正如前文所指，冻结请求的最相关因素是：
（一）债务人不在瑞士居住，债权本身与瑞士有足够的联系，或基于由债务人签署的确定的债务（“对非瑞士居民财产的扣押”）；
（二）债权人对债务人有可执行的法院判决或仲裁裁决（“可强制执行的所有权”）。
对非瑞士居民财产的扣押：根据瑞士联邦债务执行与破产法，仅仅是资产位于瑞士不足以建立“与瑞士的充分联系”。“与瑞士的充分联系”的要求，很大程度上取决于瑞士法院以逐案审查的标准审查的具体事实。瑞士法院认为足够的联系应建立在以下情况下：基本合同在瑞士签订或履行，基本合同受瑞士法律管辖，债权人居住在瑞士，债权人的债权与瑞士的商业活动有关联。
可强制执行的所有权：此为冻结请求的第二种因素，债权人需要有可强制执行的所有权。瑞士联邦债务执行与破产法没有区分国内和外国法院判决或仲裁裁决。假设它们均可被强制执行（无论是根据卢加诺公约、瑞士国际私法可强制执行判决或根据纽约公约可强制执行在非瑞士地区仲裁的裁决），所有的判决和裁决均可以作为扣押位于瑞士的资产的因素。
瑞士法院将要求债权人在上文所述的扣押的先决因素下提供初步证据。因为扣押本身被认为是单方面的，它会在许多情况下，以债务人措手不及。由于这一意外效应和扣押的性质，即防止债务人进一步处置将被扣押的资产，扣押很有可能有助于债权人在未来保护并最终主张其债权。
有一些地方适合进行仲裁，而一些地方需要避免。这篇文章的目的不是赞扬前者或者是批评后者，而是想要说明为何瑞士是一个仲裁地的极佳选择。
仲裁条款有时候会被称为 “午夜条款”。它们被称为“午夜条款”是因为它们往往是双方在试图敲定一份交易合同时谈判的最后条款。如果双方正在寻找一个好的争端解决机制或者在最后关头难以找到合适的折衷办法，那么在瑞士进行仲裁是一个很好的选择。为什么呢？接下来本文将介绍几个此举特别的优点。
第一点，瑞士在举办各种国际仲裁（包括特设的和机构的）上有悠久的传统。这个传统可以追溯到一百多年前。由于这些历史和经验，你将很容易接触到许多优秀的法律从业人员，包括律师和仲裁员。
第二点，瑞士在政治上是中立的，并且是许多国际组织（WTO世界贸易组织，WIPO国际知识产权组委会，IOC国际奥委会等）的所在地。这确保了瑞士对不同文化和价值观念的开放态度并且使其成为进行国际仲裁的好去处。
第三点，瑞士实体法为其用户提供了一个非常自由、明确和可预见的法律框架。因此，在瑞士进行的仲裁非常理想地结合了受利于瑞士实体法的法律选择条款。
第四点，很重要的是，瑞士提供了一个非常稳定的法律体系和一个优秀的法律框架。瑞士的国际仲裁法遵循一个有效的制度并且仅由18个非常简洁的条款组成。此外，瑞士司法机构在处理有关仲裁裁决的争议时采用非常友好的仲裁办法，并且只在特殊情况下加以干预。当只有一个争议时，这个争议会提交给瑞士最高法院——瑞士联邦最高法院。最高院不会审查判决的是非曲直，但是它将确保最基本的法律原则（公共政策）得到很好的执行。因此当事人不会有把争议提交州法院前的多步撤销诉讼成本。争议一般在六个月内会解决。
第五点，瑞士在旅行准入、酒店、安全、法庭报告和翻译需求方面都提供了重要的基础设施。
最后一点，在瑞士进行的仲裁给你提供了极大的灵活性。你可以采用所有主要仲裁机构的仲裁法，比如ICC国际商会、Swiss Chambers of Commerce瑞士商会、LCIA伦敦国际仲裁院、SCC斯德哥尔摩商会仲裁院、DIS德国仲裁机构、AAA美国仲裁协会、SIAC新加坡国际仲裁中心、HIAC休斯顿国际仲裁俱乐部、CIETAC中国国际经济贸易仲裁委员会或者采用特设规则，这将会为你的仲裁建立一个合适的基础。因为所有上述原因和更多其他原因，来自瑞士的仲裁裁决会有一个良好的声誉，并且在需要的情况下很容易在国际上被强制执行。
The goal of this short article is to examine the annual business report, mandatory for all Swiss companies. The board of directors prepares the annual business report, which is composed of:
- The annual financial statements;
- The annual report, and;
- The consolidated financial statements if such statement are required by law.
The annual financial statements comprise the following three documents: profit and loss statement (or income statement), balance sheet, and annex.
The profit and loss statement must distinguish between operating and non-operating, as well as extraordinary, income and expenses. Income must be split separately between:
- Revenues from deliveries and services;
- Financial income, and;
- Profits from the disposition of capital assets.
Expense must at least show cost of goods sold, personnel expenses, financial expenses, as well as depreciation.
The balance sheet shall show the current assets and the capital assets, debts and equity. Current assets are divided into liquid assets, claims resulting from deliveries and services, other claims, as well as inventories. Capital assets are divided into financial assets, tangible and intangible assets. The outside funds are divided into debts resulting from deliveries and services, other short-term liabilities, long-term liabilities and provisions. Equity is divided into share capital, legal and other reserves, as well as a profit brought forward. Capital not paid in, the total amount of investments, the claims and liabilities against affiliates or against shareholders, accruals and deferrals, as well as losses carried forward are disclosed separately.
The Annex includes:
- The total amount of guarantees, indemnity liabilities and pledges in favour of third part;
- The total amount of assets pledged or assigned for the securing of own liabilities, as well as of assets with retention of title;
- The total amount of liabilities from leasing contracts not included in the balance sheet;
- The fire insurance value of assets;
- Liabilities to personnel welfare institutions;
- The amounts, interest rates and maturities of bonds issued by the company;
- Each participation essential for assessing the company’s financial situation;
- The total amount of dissolved hidden; reserves to the extent that such total amount that exceeds newly formed reserves of the same kind, and thereby show a considerably more favourable result;
- Information on the object and the amount of revaluations;
- Information on the acquisition, disposition, and number of own shares held by the company, including its shares held by another company in which it holds a majority participation; equally shown shall be the terms and conditions of such share transactions;
- The amount of the authorized capital increase and of the capital increase subject to a condition;
- Other information required by law.
The Annual report describes the development of the business, as well as the economic and the financial situation of the company. It reproduces the auditors’ report.
If the company, by majority vote or by another method joins one or more companies under a common control (group of companies), it is required to prepare consolidated financial statements. The company is exempted from consolidation if it, during two consecutive business years, together with the affiliates, does not exceed two of the following parameters:
- Balance sheet total: CHF. 10’000’000
- Revenues: CHF. 20’000’000
- Average annual number of employees: 200
However, consolidated statements shall be prepared if:
- the company has outstanding bond issues;
- the company’s shares are listed on a stock exchange;
- shareholders representing at least ten per cent of the share capital so request;
- this is necessary for assessing as reliably as possible the company’s financial condition and profitability.
Swiss valuation principles are conservative. Assets are valued at the lower of cost or market. A full provision for all known liabilities must be made. In addition, the Code gives discretionary powers to the board to value assets at amounts lower than maximum carrying values prescribed by law, or to create hidden reserves. The maximum asset values permissible are set out in articles 664 through 670 of the Code. These are as follows:
Costs of incorporation, capital increase, and organization resulting from the establishment, expansion or reorganization of the business may be included in the balance sheet. They must be shown separately and amortized within five years. Capital assets are to be valued at a maximum of the acquisition or manufacturing costs less the necessary depreciation. Participations and other financial investments are also part of the capital assets. Participations are permanent investments in the capital of subsidiary companies; usually they give a controlling influence in the management of the affiliate. Share blocks representing at least twenty per cent of the votes are classified as participations.
Raw materials, semi-finished and finished products, as well as merchandise, shall be valued at a maximum of the acquisition or manufacturing cost. If the cost is higher than market value on the date of the balance sheet, then market value is used.
Listed securities shall be valued at a maximum of their average stock exchange price during the month preceding the date of the balance sheet. Unquoted securities shall be valued at a maximum of the acquisition cost under deduction of any necessary value adjustments.
Depreciation, value adjustments and provisions should be made to the extent required by generally accepted accounting principles. Provisions are to be established in particular to cover contingent liabilities and potential losses from pending business transactions. The board may take additional depreciation, make value adjustments and provisions and refrain from dissolving provisions, which are no longer justified. Hidden reserves exceeding the above are permitted to the extent justified in the interest of the continuing prosperity of the company or to enable the regular distribution of dividends, taking into account the interests of the shareholders. The auditors must be notified in detail of the creation and the dissolution of replacement reserves and hidden reserves exceeding the above.
If half of the sum of the share capital and legal reserves is lost, real estate property or participations whose fair market value has risen above cost may, for the purpose of eliminating the deficit, be re-valued up to a maximum of such deficit. The revaluation amount shall be shown separately as a revaluation reserve. The revaluation is only permitted if the auditors confirm in writing to the general meeting of shareholders that the legal provisions have been respected.
Companies are required to allocate five per cent of the annual profit to the legal reserve until it has reached twenty per cent of be paid-in share capital. Also, after having reached the statutory amount, the following shall be allocated to this reserve:
- any surplus over par value upon the issue of new shares;
- after deduction of the issue costs, to the extent such surplus is not used for depreciation or welfare purposes;
- the excess of the amount which was paid in on cancelled shares over any reduction on the issue price of replacement shares ten per cent of the amounts which are distributed as a share of profits after payment of a dividend of five per cent.
To the extent it does not exceed half of the share capital, the legal reserve shall only be used to remove an accounting deficit, to preserve the existence of the business enterprise in bad times, to counteract unemployment, or to soften its consequences.
There are no filing requirements in Switzerland for annual financial statements except in the case of banks, finance and insurance companies.
A reduction in capital requires a resolution by the general meeting of shareholders amending the articles. Such an amendment cannot be passed unless a special audit report shows that all claims of creditors are fully covered in spite of the reduction in capital. The auditors’ report must be prepared by a qualified auditor. Prior to implementing the reduction, the board of directors is required to publish the decision three times in the Swiss Official Gazette of Commerce. Creditors are to be informed. An exception is made for reductions in the event of capital deficiency. Under no circumstance may the share capital be reduced below SFr. 100,000. In the case of a financial restructuring of the company, the par value of the old shares may however be reduced to less than SFr. 10 each. In spite of a reduction in the par value, a share may still carry the same voting rights as before reduction.
A company may be dissolved for any voluntary reason provided for by the articles or by decision of the general meeting of shareholders. An involuntary dissolution can be imposed upon the company by bankruptcy or a court decision. A court can dissolve a company, for example, in cases where serious violations of legal or statutory provisions have occurred. Furthermore, shareholders representing at least ten per cent of share capital may request dissolution by the court if they have good cause (for example, if minority rights have been violated).
Except in the case of a bankruptcy, the board must register the dissolution of the company with the Commercial Register. During the period of liquidation, the company remains a legal entity and retains its name with the addition in liquidation. Unless the company appoints special liquidators, the liquidation procedures are carried out by the board. The name of the liquidators is to be registered. At least one of the liquidators must be domiciled in Switzerland and have authority to represent the company.
The term liquidation means that the company’s normal business activities are discontinued and restricted to such operations as are necessary to settle all pending matters. The liquidators must prepare a balance sheet upon assuming their duties. If the balance sheet shows an excess of liabilities over assets, the liquidators must file an application for bankruptcy, unless arrangements can be made for an amicable settlement with the creditors.
In all other cases, the liquidators must attempt to wind up the business (termination of contracts, collection of receivables, payment of outstanding debts) with a view to reaching a final settlement with creditors and shareholders. In this connection, creditors reflected in the books of the company or known in any other way shall be informed of the dissolution of the company in writing and requested to file their claims; unknown creditors and creditors whose domiciles are not known are notified by publication in the Swiss Official Gazette of Commerce. In order to protect unknown or disputed creditors who have failed to lodge their claims, an appropriate amount of money must be deposited in escrow. A distribution of net assets is postponed until such liabilities have been settled.
After settlement of all liabilities, the remaining net assets of the liquidated company may be distributed among the shareholders in proportion to their holdings and in accordance with the rights attached to their shares. Upon termination of liquidation procedures, the liquidators apply for deregistration and designate a safe place where the books must be kept for a period of ten years. Deregistration is contingent upon express approval by the Federal and Cantonal Tax Administration, to ensure that all taxes on income, capital and distribution have been paid in full.
A resolution dealing with the merger of companies may only be passed at the general meeting of the shareholders, if at least two thirds of the shares are represented. Creditors of merging companies are given special protection.
The merger procedures can be summarized as follows:
- The board of directors of the acquiring company must issue a call for registration of claims by the creditors of the company to be dissolved.
- The net assets of the company to be dissolved must be administered separately by the acquiring company until creditors are satisfied or secured.
- The dissolution of the absorbed company must be registered in the Commercial Register as soon as creditors have been satisfied or secured.
- Subsequent to this registration, shares of the acquiring company may be delivered to the shareholders of the absorbed company, according to the contract.
The members of the board of the acquiring company are personally, jointly and severally liable to the creditors of the absorbed company. The net assets of the absorbed company may be used exclusively for the satisfaction of that company’s creditors.
A corporation can be converted into a limited liability company, provided that the capital of the limited liability company is not less than the corporation’s share capital, that shareholders are informed about the possibility of becoming participants in the newly created company, and that their participations amount to at least two thirds of the share capital of the transformed company. Any retiring shareholder is entitled to a proportionate share of the net assets valued at fair market price. With regard to the creditors of the transformed company, the same provisions apply as for mergers. A limited liability company may not be transformed into a corporation. It must be liquidated and a new corporation formed.
There are three bodies in a Swiss corporation, namely: the general meeting of shareholders (the supreme body), the board of directors and the auditors.
Shareholder’s meeting
The general meeting of shareholders is the supreme authority of the company and is composed of all shareholders. There are two types of meetings:
- Ordinary general meeting. This is held annually within six months after the close of the business year;
- Extraordinary general meeting, which is called as often as considered necessary.
The general meeting of shareholders has the right to adopt and amend the articles, to appoint directors and auditors, to approve the financial statements and the directors’ report, to ratify certain decisions of the Board, and, in general, to make all important decisions which are not delegated to any other body. The shareholders must also approve the proposal of the Board relative to the distribution of annual profits. A general meeting is called by the board or, if it fails in its duties, by the auditors. One or more shareholders, representing together at least 10 % of the share capital, may at any time request the calling of an extraordinary shareholders’ meeting. This must be done in writing, indicating the purpose of the meeting. In general, a simple majority of votes represented at the general meeting is sufficient to pass a resolution and hold elections. However, certain decisions require a vote of two thirds of the votes represented and the absolute majority of the· par value of the shares represented (such as change of corporate purpose, extension of scope of business, distribution of shares with privileged voting rights etc.).
Shareholders cannot be deprived of their acquired rights without their consent. The term acquired rights includes the right to vote, to dividends, to a share of the liquidation proceeds and to receive sufficient information on the financial condition of the company. The Swiss Code distinguishes two kinds of shareholders rights: financial interests and personal membership rights.
Each shareholder has the right to a proportionate share of the profits distributed. Dividends may only be paid out of net profits or out of reserves specially created for this purpose. There is no interest payable on the ordinary share capital and a company may not declare interim dividends out of current year profits. Dividends can only be declared by the general meeting of shareholders and after attribution to the legal reserve. A share of the net profits may be paid to members of the board of directors if:
- the articles specifically provide for such payments,
- the allocations to the legal reserve fund have been made and,
- a dividend of at least five percent has been paid to the shareholders.
Unless otherwise stated in the articles or in the resolution for the increase in share capital, each shareholder has an option to subscribe to new shares in the same proportion that his original holding bears to the total shares issued.
Each shareholder is entitled to a proportionate share of the proceeds of liquidation unless the articles of incorporation provide otherwise. The proceeds are calculated in proportion to the amounts paid in on the share capital.
Most personal membership rights are acquired rights which means that even with the general meeting’s consent, the shareholder cannot be deprived thereof. These include the following:
- Shareholders exercise their rights at the general meeting of shareholders. Every shareholder may attend the meeting in person or be represented by his proxy. A holder of bearer shares is considered authorized to attend if he presents the share. On the other hand, registered shares can only be represented if a written proxy is produced.
- Voting rights.
- Shareholders are entitled to review the financial statements, which must be available for inspection at the address of the company not later than 20 day prior to the annual general meeting. Any shareholder may request a copy to be sent to him before the meeting.
Board of Directors
The company is managed by the board composed of one or more individual directors who must be shareholders. A majority of board members must be Swiss citizens residing in Switzerland. If the board consists of a single member, he or she must be a Swiss citizen residing in Switzerland. The directors are elected at the general meeting for a period fixed by the articles (maximum six years). The directors can however be re-elected indefinitely.
The articles may require that during their term of office they must deposit a certain number of shares at the corporation’s registered domicile. This is designed to protect the corporation against damages that directors may cause in the fulfilment of their duties. The board can delegate part of its authority to either an executive committee or to individual directors, to officers or to agents. At least one director must have power and authority to represent the company. The board designates the individuals authorized to represent the company vis-a-vis third parties and determines the details concerning the signatory powers. The company is unrestricted in the selection of its executive personnel, such as managers and officers, although managers and employees of foreign nationality require a permit to take up residence and employment in Switzerland.
The board is responsible for the preparation of the general meeting. It gives the necessary instructions to the management for the proper conduct of the company’s business and supervises those authorized to act on behalf of the company. It is the primary responsibility of the board, although generally delegated to management, to keep the accounting records and to prepare the annual financial statements. Furthermore, the board must submit a written annual report on the company’s financial position and the results of its activities to the general meeting of shareholders.
Auditors
The general meeting of shareholders elects one or more independent auditors who may be individuals or legal entities. Auditors must be professionally qualified to fulfil their duties. At least one auditor must have his domicile, registered office, or a registered branch in Switzerland. The auditors may not serve as directors nor be otherwise employed by the company, nor may they assume managerial functions for the company. Auditors may be elected for a maximum period of three years. Re-election is possible.
Auditors must have special professional qualifications if the audited entity:
- has outstanding bond issues;
- has shares listed on a Swiss stock exchange;
- exceeds two of the following parameters in two consecutive years:
- Balance sheet total: CHF 20’000’000
- Revenues: CHF 40’000’000
- Average number of employees: 200
The auditors must report on whether the accounting records and the financial statements, as well as the proposal concerning the appropriation of the available profit, comply with the law and the articles of incorporation. If the auditors, in the course of their examination, find violations either of law or of the articles, they report this in writing to the board of directors and, in important cases, to the general meeting of shareholders. In the event of obvious over-indebtedness, the auditors must notify the judge if the board fails to do so. Auditors are liable to the shareholders and creditors for damage caused by intentional or negligent failure to perform their duties. The auditors are required to attend the general meeting of shareholders.
阿根廷 
巴西 
意大利 
乌拉圭 
德国 
西班牙 
法国 
欧洲 
写信给 Renato
Switzerland – Liability for termination of contract negotiations
23 12 月 2019
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瑞士
- 契约
Quick summary – Under Swiss law, a distributor may be entitled to a goodwill indemnity after termination of a distribution agreement. The Swiss Supreme Court has decided that the Swiss Code of Obligations, which provides commercial agents with an inalienable claim to a compensation for acquired customers at the end of the agency relationship, may be applied by analogy to distribution relationships under certain circumstances.
In Switzerland, distribution agreements are innominate contracts, i.e., agreements which are not specifically governed by the Swiss Code of Obligations (“CO”). Distribution agreements are primarily governed by the general provisions of Swiss contract law. In addition to that, certain provisions of Swiss agency law (articles 418a et seqq. CO) may be applied by analogy to distribution relationships.
Particularly with regard to the consequences of a termination of a distribution agreement, the Swiss Supreme Court has decided in a leading case of 2008 (BGE 134 III 497) concerning an exclusive distribution agreement that article 418u CO may be applied by analogy to distribution agreements. Article 418u CO entitles commercial agents to a goodwill indemnity (sometimes also referred to as “compensation for clientele“) at the end of the agency relationship. The goodwill indemnity serves as a mean to compensate an agent for “surrendering” its customer base to the principal upon termination of the agency relationship.
The assessment whether a distributor is entitled to a goodwill indemnity consists of two stages: In a first stage, it is necessary to analyse whether the requirements stipulated by the Swiss Supreme Court for an analogous application of article 418u CO to the distribution relationship at stake are met. If so, it must be analysed, in a second stage, whether all requirements for a goodwill indemnity set forth in article 418u CO are fulfilled.
Application by analogy of article 418u CO to the distribution agreement
An analogous application of Article 418u CO to distribution agreements requires that the distributor is integrated to a large extent into the supplier’s distribution organisation. Because of such strong integration, distributors must find themselves in an agent-like position and dispose of only limited economic autonomy.
The following criteria indicate a strong integration into the supplier’s distribution organisation:
- The distributor must comply with minimum purchase obligations.
- The supplier has the right to unilaterally change prices and delivery terms.
- The supplier has the right to unilaterally terminate the manufacturing and distribution of productscovered by the agreement.
- The distributor must comply with minimum marketing expenditure obligations.
- The distributor is obliged to maintain minimum stocks of contract products.
- The distribution agreement imposes periodical reporting obligations (e.g., regarding achieved sales and activities of competitors) on the distributor.
- The supplier is entitled to inspect the distributor’s books and to conduct audits.
- The distributor is prohibited from continuing distributing the products following the end of the distribution relationship.
The more of these elements are present in a distribution agreement, the higher the chance that article 418u CO may be applied by analogy to the distribution relationship at stake. If, however, none or only a few of these elements exist, article 418u CO will most likely not be applicable and no goodwill indemnity will be due.
Requirements for an entitlement to a goodwill indemnity
In case an analogous application of article 418u CO can be affirmed, the assessment continues. It must then be analysed whether all requirements for a goodwill indemnity set forth in article 418u CO are met. In that second stage, the assessment resembles the test to be carried out for “normal” commercial agency relationships.
Applied by analogy to distribution relationships, article 418u CO entitles distributors to a goodwill indemnity in cases where four requirements are met:
- Considerable expansion of customer base by distributor
First, the distributor’s activities must have resulted in a “considerable expansion” of the supplier’s customer base. The distributor’s activities may not only include targeting specific customers, but also building up a new brand of the supplier.
Due to the limited case law available from the Swiss Supreme Court, there is legal uncertainty as to what “considerable expansion” means. Two elements seem to be predominant: on the one hand the absolute number of customers and on the other hand the turnover achieved with such customers. The customer base existing at the beginning of the distribution relationship must be compared to the customer base upon termination of the agreement. The difference must be positive.
- Supplier must continue benefitting from customer base
Second, considerable benefits must accrue to the supplier even after the end of the distribution relationship from business relations with customers acquired by the distributor. That second requirement includes two important aspects:
Firstly, the supplier must have access to the customer base, i.e., know who customers are. In agency relationships, this is usually not an issue since contracts are concluded between customers and the principal, who will therefore know about the identity of customers. In distribution relationships, however, knowledge of the supplier about the identity of customers regularly requires a disclosure of customer lists by the distributor, may it be during or at the end of the distribution relationship.
Secondly, there must be some loyalty of the customers towards the supplier, so that the supplier can continue doing business with such customers after termination of the distribution relationship. This is the case, e.g., if retailers acquired by a former wholesale distributor continue buying products directly from the supplier once the relationship with the wholesale distributor ended. Furthermore, a supplier may also continue benefitting from customers acquired by the distributor if it can make profitable after-sales business, e.g., by supplying consumables, spare parts and providing maintenance and repair services.
Swiss case law distinguishes between two different kinds of customers: personal customers and real customers. The former are linked to the distributor because of a special relationship of trust and will usually remain with the distributor once the distribution relationship comes to an end. The latter are attached to a brand or product and normally follow the supplier. In principle, only real customers may give rise to a goodwill indemnity.
The development of the supplier’s turnover after the end of a distribution relationship may serve as an indication for the loyalty of customers. A sharp downfall of the turnover and a need on the part of the supplier (or new distributor) to acquire new or re-acquire former customers suggests that customers are not loyal, so that no goodwill indemnity would be due.
- Equitability of goodwill indemnity
Third, a goodwill indemnity must not be inequitable. The following circumstances could render a goodwill indemnity inequitable:
- The distributor was able to achieve an extraordinarily high margin or received further remunerations that constitute a sufficient consideration for the value of customers passed on to the supplier.
- The distribution relationship lasted for a long time, so that the distributor already had ample opportunity to economically benefit from the acquired customers.
- In return for complying with a post-contractual non-compete obligation, the distributor receives a special compensation.
In any event, courts dispose of a considerable discretion when deciding whether a goodwill indemnity is equitable.
- Termination not caused by distributor
Fourth, the distribution relationship must not have ended for a reason attributable to the distributor.
This will notably be the case if the supplier has terminated the distribution agreement because of a reason attributable to the distributor, e.g., in case of a breach of contractual obligations or an insufficient performance by the distributor.
Furthermore, no goodwill indemnity will be due in case the distributor has terminated the distribution agreement itself, unless such termination is justified by reasons attributable to the supplier (e.g., a violation of the exclusivity granted to the distributor by the supplier).
A goodwill indemnity cannot only be due in case a distribution agreement for an indefinite period of time ended due to a notice of termination, but also in case of the expiry respectively non-renewal of a fixed-term distribution relationship.
Quantum of a goodwill indemnity
Where article 418u CO is applicable by analogy to a distribution relationship and all above-mentioned requirements for a goodwill indemnity are met, the indemnity payable to the distributor may amount up to the distributor’s net annual earnings from the distribution relationship, calculated as the average earnings of the last five years. Where the distribution relationship lasted shorter, the average earnings over the entire duration of the distribution relationship are decisive.
In order to calculate the net annual earnings, the distributor must deduct from the income obtained through the distribution relationship (e.g., gross margin, further remunerations etc.) any costs linked to its activities (e.g., marketing expenses, travel costs, salaries, rental fees etc.). A loss-making business cannot give rise to a goodwill indemnity.
In case a distributor marketed products from various suppliers, it must calculate the net annual earnings on a product-specific basis, i.e., limited to the products from the specific supplier. The distributor cannot calculate a goodwill indemnity on the basis of its business as a whole. Fixed costs must be allocated proportionally, to the extent that they cannot be assigned to a specific distribution relationship.
Mandatory nature of the entitlement to a goodwill indemnity
Suppliers regularly attempt to exclude goodwill indemnities in distribution agreements. However, if an analogous application of article 418u CO to the distribution agreement is justified and all requirements for a goodwill indemnity are met, the entitlement is mandatory and cannot be contractually excluded in advance. Any such provisions would be null and void.
Having said that, specific provisions in distribution agreements dealing with a goodwill indemnity, as, e.g., contractual provisions that address how the supplier shall compensate the distributor for acquired customers, still remain relevant. Such rules could render an entitlement to a goodwill indemnity inequitable.
QUICK SUMMARY: Contract negotiations do not take place in a legal vacuum. A party who negotiates contrary to the principle of good faith and then breaks off negotiations may become liable to the other party. However, the requirements for such liability are high and the enforcement of damage claims is cumbersome. At the end of the post I will share some practical tips for contract negotiations in Switzerland.
Under Swiss law, the principle of freedom of contract is of fundamental importance. It follows from the freedom of contract that, in principle, everyone is free to enter into contract negotiations and to terminate them again without incurring any liability. A termination of contract negotiations does not have to be justified either.
However, the freedom of contract is limited by the obligation to act in good faith (cf. article 2 para. 1 of the Swiss Civil Code), which is of equal fundamental importance. From the moment when parties enter into contract negotiations, they are in a special legal relationship with each other. That pre-contractual relationship involves certain reciprocal obligations. In particular, the parties must negotiate in a serious manner and in accordance with their actual intentions.
Negotiating parties must not stir up the hope of the other party, contrary to their actual intentions, that a contract will actually be concluded. Put differently, a party’s willingness to conclude a contract must not be expressed more strongly than it actually is. If a party realizes that the other party wrongly beliefs that a contract would certainly be concluded, such illusion should be dispelled in due course.
A negotiating party that terminates contract negotiations in violation of these principles, whether maliciously or negligently, may become liable to the other party based on the culpa in contrahendo doctrine. However, such liability exists in exceptional cases only.
- The fact that contract negotiations took a long time is not sufficient for incurring such liability. The duration of negotiations is, in itself, not decisive.
- It is not possible to derive liability from pre-existing contractual relationships between the negotiation parties, as for example in cases where parties negotiate a “mere” prolongation of an existing agreement. The decisive factor is not whether parties were already contractually bound before, but only whether the party that terminated the contract negotiations made the other party believe that a new agreement would certainly be concluded.
- It is not decisive whether the party who terminates contract negotiations knows that the other party has already made costly investments in view of the prospective contract. In principle, anyone who makes investments already prior to the actual conclusion of a contract does so at its own risk. Even where a party to contract negotiations knows that the other party has already made (substantial) investments in the prospective agreement, a termination of the contract negotiations will, in itself, not be considered as an act of bad faith.
What does a liability for breaking off negotiations include?
If a party violates the aforementioned pre-contractual obligations, the other party may be entitled to compensation for the so-called negative interest. This means that the other party must be put in the position it would have been if the negotiations had not taken place. Damages may include, e.g., expenses in connection with the negotiation of the contract (travel costs, legal fees etc.), but also a loss of income in cases where a party was not able to do business with third parties because of the contract negotiations. However, the other party has no right to be treated as if the contract had been concluded (so-called positive interest).
Having said that, it must be kept in mind that the requirements set by Swiss court for the substantiation of damages are rather high, so that the enforcement of a liability for breaking off negotiations will often be a cumbersome process. Therefore pursuing damage claims with relatively low amounts in dispute might often require a disproportionate effort.
Practical tips – Do’s and don’ts when negotiating contracts
- Do not overstate your willingness to conclude a contract. Be frank with your counterparty. Make it clear from the beginning of the negotiations what clauses are important to you.
- Do not tell the other party that you are willing to sign a contract, if you still have doubts or you are even unwilling to do so. Confirm that you will sign only if you are convinced to do so.
- Do not allow someone else (e.g., a representative, employee, branch office etc.) to negotiate on your behalf if you are not willing to enter into an agreement anyway. Keep an eye on how the negotiations are going on and intervene if necessary.
- Do not make costly investments before a legally binding agreement is concluded. If, for time or other reasons, such investments are necessary already before the conclusion of an agreement, insist on the conclusion of an interim contract governing such investments for the event that the envisaged agreement is not concluded finally.
In 2020, an important revision of the Swiss statute of limitations enters into force. The new law provides for longer limitation periods in cases of personal injury and extends the relative limitation periods in tort and unjust enrichment law from one to three years.
Background of the revision
In June 2018, the Swiss parliament adopted an amendment to the Swiss Code of Obligations (“CO”) pertaining to a revision of the statute of limitations. In November 2018, the Swiss government decided that the revised statute of limitations shall enter into force on 1 January 2020.
The revision was significantly influenced by asbestos cases. Under the current law, damage claims of asbestos victims were time-barred in some cases even before asbestos-related diseases could be diagnosed. In March 2014, the European Court of Human Rights held in Howald Moor and others v. Switzerland that the Swiss statute of limitations amounts in such cases to a violation of article 6 paragraph 1 of the European Convention on Human Rights (right of access to a court).
Having said that, the revision does not only concern cases of personal injury, but also includes numerous other important changes as described in the following.
Key changes regarding limitation periods
A. Tort law
In tort law, the new relative limitation period amounts to three years from the date on which the injured party became aware of the damage and of the identity of the person liable (revised Art. 60 para. 1 CO). Under the current law, the relative limitation period amounts to one year only.
With the exception of cases of personal injury, the absolute limitation period remains ten years as from the date when the conduct that caused the damages occurred or ended (revised Art. 60 para. 1 CO).
In cases of personal injury, the new relative limitation period amounts to three years from the date on which the injured party became aware of the damage and of the identity of the person liable. Currently the relative limitation period amounts to one year only.
The new absolute limitation period in cases of personal injury amounts to twenty years after the date when the conduct which caused the damages occurred or ended (new Art. 60 para. 1bis CO). Under the current law, there was no special absolute limitation period for cases of personal injury, so that the ordinary 10-year period applied (Art. 60 para. 1 CO).
If conduct, which gives rise to liability under tort law, is also punishable under criminal law, the (longer) limitation period under criminal law remains applicable (cf. Art. 97 of the Swiss Criminal Code). However, where a first-instance criminal judgment is rendered before the conduct is time-barred under criminal law, the limitation periods ends not earlier than three years as from that criminal judgment (revised Art. 60 para. 2 CO). The current law does not provide for such an additional three-year limitation period.
B. Unjust enrichment law
In unjust enrichment law, the new relative limitation period amounts to three years as from the date on which the injured party knows about the claim (revised Art. 67 para. 1 CO). Under the current law, the relative limitation period amounts to one year only.
The absolute limitation period is not affected by the revision and remains ten years after the date on which the claim arises (revised Art. 67 para. 1 CO).
C. Contract law
With regard to contractual claims, the ordinary limitation period remains ten years from the due date (Art. 127 CO). Furthermore, the shorter limitation period of five years from the due date applicable to (amongst others) claims for rent, interest on capital and other periodic payments, (most) claims out of employment relationships etc. remains unchanged too (Art. 128 CO).
However, in cases of personal injury, the revised statute of limitations introduces a new relative limitation period of three years from the date on which the injured party became aware of the damage, as well as a new absolute limitation period of twenty years after the date when the conduct which caused the damages occurred or ended (new Art. 128a CO). The current law does not provide for distinct relative and absolute limitation periods for contractual claims in cases of personal injury. Instead, the ordinary ten-year limitation period (Art. 127 CO) usually applied to such cases.
D. Summary
In summary, the most important elements of the revised statute of limitations are the longer (trebled) relative limitation periods in tort and unjust enrichment law (i.e., three years instead of one year) and the new special rules for cases of personal injury, which now benefit from a 20-year absolute limitation period.
Transitional provisions / application of the revised statute of limitations to pre-existing claims
The longer limitation periods under the revised CO apply to any claims that are not yet time-barred when the revision enters into force (i.e., on 1 January 2020; revised Art. 49 para. 1, Final Title of the Swiss Civil Code). In other words, the limitation periods of any claims that do not become time-barred until 31 December 2019 at the latest will be prolonged. This is of particular relevance with regard to claims based on tort and unjust enrichment; the short one-year relative limitation periods under the current law will be extended by another two years.
In contrast, the current law remains applicable in case the revised statute of limitations provides for shorter limitation periods (revised Art. 49 para. 2, Final Title of the Swiss Civil Code). This concerns, in particular, contractual claims in cases of personal injury. The new three-year relative limitation period under the revised law might not apply to such claims, as the current statute of limitations does not provide for a relative limitation period at all.
Further changes brought by the revision
In addition to the changes of the limitation periods set out above, the revision of the statute of limitations contains numerous further modifications. Some of them are listed in the following:
- Limitation periods do not commence or are suspended in the event that a claim cannot be asserted for objective reasons before any court worldwide (revised Art. 134 para. 1 no. 6 CO). The current law provides for such non-commencement or suspension only if the claim cannot be brought before a Swiss court.
- Parties to a dispute may agree in writing that limitation periods shall be suspended during settlement discussions, mediation proceedings or other out-of-court settlement proceedings (revised Art. 134 para. 1 no. 8 CO).
- Once a limitation period has commenced to run, waivers of statute of limitation defenses are admissible, but must not exceed ten years (revised Art. 141 para. 1 CO). Any such waivers must be in writing (new Art. 141 para. 1bis CO).
- In general terms and conditions (“GTC”), statute of limitation defenses may be waived by the party who makes use of the GTCs only. In contrast, a waiver by the party on whom the GTCs are imposed (e.g., consumers) is ineffective (new Art. 141 para. 1bis CO).
- The limitation period for an actio pauliana under the Swiss Debt Enforcement and Bankruptcy Act (“DEBA”) is extended to from currently two years to three years after service of a loss certificate, the opening of bankruptcy proceedings or the confirmation of a composition agreement with an assignment of assets (whichever is applicable; revised Art. 292 DEBA).
如何确保你的债权在长期内可以得到执行？如果满足某些条件，债权人可以冻结债务人在瑞士所拥有的资产。在实践中，在两种情况下资产可被扣押：第一种情况是债权人对在瑞士没有住所的债务人主张债权；第二种情况是债权人持有可执行的判决或裁决。
毫无疑问，尽管面临着监管压力，瑞士金融业在当今金融界依旧发挥着主导作用。因此，瑞士管辖权有利于希望对持有瑞士银行账户或其他资产的债务人主张债权的债权人。尽管实践表明，被查封的主要是银行账户，但其他资产，如房地产，艺术品或对第三方的索赔同样可以被扣押。
经过申请，债权人可以指示银行所在地或资产所在地的瑞士法院实施单方面冻结以对抗在瑞士拥有资产的债务人，如果提出申请的债权人可以初步证明自己满足以下瑞士联邦债务执行与破产法（“DEBA”）中规定的三个条件：
（一）请求冻结令的债权人有一个成熟无担保债权；
（二）存在冻结请求的法律依据；
（三）债务人的资产位于瑞士。
正如前文所指，冻结请求的最相关因素是：
（一）债务人不在瑞士居住，债权本身与瑞士有足够的联系，或基于由债务人签署的确定的债务（“对非瑞士居民财产的扣押”）；
（二）债权人对债务人有可执行的法院判决或仲裁裁决（“可强制执行的所有权”）。
对非瑞士居民财产的扣押：根据瑞士联邦债务执行与破产法，仅仅是资产位于瑞士不足以建立“与瑞士的充分联系”。“与瑞士的充分联系”的要求，很大程度上取决于瑞士法院以逐案审查的标准审查的具体事实。瑞士法院认为足够的联系应建立在以下情况下：基本合同在瑞士签订或履行，基本合同受瑞士法律管辖，债权人居住在瑞士，债权人的债权与瑞士的商业活动有关联。
可强制执行的所有权：此为冻结请求的第二种因素，债权人需要有可强制执行的所有权。瑞士联邦债务执行与破产法没有区分国内和外国法院判决或仲裁裁决。假设它们均可被强制执行（无论是根据卢加诺公约、瑞士国际私法可强制执行判决或根据纽约公约可强制执行在非瑞士地区仲裁的裁决），所有的判决和裁决均可以作为扣押位于瑞士的资产的因素。
瑞士法院将要求债权人在上文所述的扣押的先决因素下提供初步证据。因为扣押本身被认为是单方面的，它会在许多情况下，以债务人措手不及。由于这一意外效应和扣押的性质，即防止债务人进一步处置将被扣押的资产，扣押很有可能有助于债权人在未来保护并最终主张其债权。
有一些地方适合进行仲裁，而一些地方需要避免。这篇文章的目的不是赞扬前者或者是批评后者，而是想要说明为何瑞士是一个仲裁地的极佳选择。
仲裁条款有时候会被称为 “午夜条款”。它们被称为“午夜条款”是因为它们往往是双方在试图敲定一份交易合同时谈判的最后条款。如果双方正在寻找一个好的争端解决机制或者在最后关头难以找到合适的折衷办法，那么在瑞士进行仲裁是一个很好的选择。为什么呢？接下来本文将介绍几个此举特别的优点。
第一点，瑞士在举办各种国际仲裁（包括特设的和机构的）上有悠久的传统。这个传统可以追溯到一百多年前。由于这些历史和经验，你将很容易接触到许多优秀的法律从业人员，包括律师和仲裁员。
第二点，瑞士在政治上是中立的，并且是许多国际组织（WTO世界贸易组织，WIPO国际知识产权组委会，IOC国际奥委会等）的所在地。这确保了瑞士对不同文化和价值观念的开放态度并且使其成为进行国际仲裁的好去处。
第三点，瑞士实体法为其用户提供了一个非常自由、明确和可预见的法律框架。因此，在瑞士进行的仲裁非常理想地结合了受利于瑞士实体法的法律选择条款。
第四点，很重要的是，瑞士提供了一个非常稳定的法律体系和一个优秀的法律框架。瑞士的国际仲裁法遵循一个有效的制度并且仅由18个非常简洁的条款组成。此外，瑞士司法机构在处理有关仲裁裁决的争议时采用非常友好的仲裁办法，并且只在特殊情况下加以干预。当只有一个争议时，这个争议会提交给瑞士最高法院——瑞士联邦最高法院。最高院不会审查判决的是非曲直，但是它将确保最基本的法律原则（公共政策）得到很好的执行。因此当事人不会有把争议提交州法院前的多步撤销诉讼成本。争议一般在六个月内会解决。
第五点，瑞士在旅行准入、酒店、安全、法庭报告和翻译需求方面都提供了重要的基础设施。
最后一点，在瑞士进行的仲裁给你提供了极大的灵活性。你可以采用所有主要仲裁机构的仲裁法，比如ICC国际商会、Swiss Chambers of Commerce瑞士商会、LCIA伦敦国际仲裁院、SCC斯德哥尔摩商会仲裁院、DIS德国仲裁机构、AAA美国仲裁协会、SIAC新加坡国际仲裁中心、HIAC休斯顿国际仲裁俱乐部、CIETAC中国国际经济贸易仲裁委员会或者采用特设规则，这将会为你的仲裁建立一个合适的基础。因为所有上述原因和更多其他原因，来自瑞士的仲裁裁决会有一个良好的声誉，并且在需要的情况下很容易在国际上被强制执行。
The goal of this short article is to examine the annual business report, mandatory for all Swiss companies. The board of directors prepares the annual business report, which is composed of:
- The annual financial statements;
- The annual report, and;
- The consolidated financial statements if such statement are required by law.
The annual financial statements comprise the following three documents: profit and loss statement (or income statement), balance sheet, and annex.
The profit and loss statement must distinguish between operating and non-operating, as well as extraordinary, income and expenses. Income must be split separately between:
- Revenues from deliveries and services;
- Financial income, and;
- Profits from the disposition of capital assets.
Expense must at least show cost of goods sold, personnel expenses, financial expenses, as well as depreciation.
The balance sheet shall show the current assets and the capital assets, debts and equity. Current assets are divided into liquid assets, claims resulting from deliveries and services, other claims, as well as inventories. Capital assets are divided into financial assets, tangible and intangible assets. The outside funds are divided into debts resulting from deliveries and services, other short-term liabilities, long-term liabilities and provisions. Equity is divided into share capital, legal and other reserves, as well as a profit brought forward. Capital not paid in, the total amount of investments, the claims and liabilities against affiliates or against shareholders, accruals and deferrals, as well as losses carried forward are disclosed separately.
The Annex includes:
- The total amount of guarantees, indemnity liabilities and pledges in favour of third part;
- The total amount of assets pledged or assigned for the securing of own liabilities, as well as of assets with retention of title;
- The total amount of liabilities from leasing contracts not included in the balance sheet;
- The fire insurance value of assets;
- Liabilities to personnel welfare institutions;
- The amounts, interest rates and maturities of bonds issued by the company;
- Each participation essential for assessing the company’s financial situation;
- The total amount of dissolved hidden; reserves to the extent that such total amount that exceeds newly formed reserves of the same kind, and thereby show a considerably more favourable result;
- Information on the object and the amount of revaluations;
- Information on the acquisition, disposition, and number of own shares held by the company, including its shares held by another company in which it holds a majority participation; equally shown shall be the terms and conditions of such share transactions;
- The amount of the authorized capital increase and of the capital increase subject to a condition;
- Other information required by law.
The Annual report describes the development of the business, as well as the economic and the financial situation of the company. It reproduces the auditors’ report.
If the company, by majority vote or by another method joins one or more companies under a common control (group of companies), it is required to prepare consolidated financial statements. The company is exempted from consolidation if it, during two consecutive business years, together with the affiliates, does not exceed two of the following parameters:
- Balance sheet total: CHF. 10’000’000
- Revenues: CHF. 20’000’000
- Average annual number of employees: 200
However, consolidated statements shall be prepared if:
- the company has outstanding bond issues;
- the company’s shares are listed on a stock exchange;
- shareholders representing at least ten per cent of the share capital so request;
- this is necessary for assessing as reliably as possible the company’s financial condition and profitability.
Swiss valuation principles are conservative. Assets are valued at the lower of cost or market. A full provision for all known liabilities must be made. In addition, the Code gives discretionary powers to the board to value assets at amounts lower than maximum carrying values prescribed by law, or to create hidden reserves. The maximum asset values permissible are set out in articles 664 through 670 of the Code. These are as follows:
Costs of incorporation, capital increase, and organization resulting from the establishment, expansion or reorganization of the business may be included in the balance sheet. They must be shown separately and amortized within five years. Capital assets are to be valued at a maximum of the acquisition or manufacturing costs less the necessary depreciation. Participations and other financial investments are also part of the capital assets. Participations are permanent investments in the capital of subsidiary companies; usually they give a controlling influence in the management of the affiliate. Share blocks representing at least twenty per cent of the votes are classified as participations.
Raw materials, semi-finished and finished products, as well as merchandise, shall be valued at a maximum of the acquisition or manufacturing cost. If the cost is higher than market value on the date of the balance sheet, then market value is used.
Listed securities shall be valued at a maximum of their average stock exchange price during the month preceding the date of the balance sheet. Unquoted securities shall be valued at a maximum of the acquisition cost under deduction of any necessary value adjustments.
Depreciation, value adjustments and provisions should be made to the extent required by generally accepted accounting principles. Provisions are to be established in particular to cover contingent liabilities and potential losses from pending business transactions. The board may take additional depreciation, make value adjustments and provisions and refrain from dissolving provisions, which are no longer justified. Hidden reserves exceeding the above are permitted to the extent justified in the interest of the continuing prosperity of the company or to enable the regular distribution of dividends, taking into account the interests of the shareholders. The auditors must be notified in detail of the creation and the dissolution of replacement reserves and hidden reserves exceeding the above.
If half of the sum of the share capital and legal reserves is lost, real estate property or participations whose fair market value has risen above cost may, for the purpose of eliminating the deficit, be re-valued up to a maximum of such deficit. The revaluation amount shall be shown separately as a revaluation reserve. The revaluation is only permitted if the auditors confirm in writing to the general meeting of shareholders that the legal provisions have been respected.
Companies are required to allocate five per cent of the annual profit to the legal reserve until it has reached twenty per cent of be paid-in share capital. Also, after having reached the statutory amount, the following shall be allocated to this reserve:
- any surplus over par value upon the issue of new shares;
- after deduction of the issue costs, to the extent such surplus is not used for depreciation or welfare purposes;
- the excess of the amount which was paid in on cancelled shares over any reduction on the issue price of replacement shares ten per cent of the amounts which are distributed as a share of profits after payment of a dividend of five per cent.
To the extent it does not exceed half of the share capital, the legal reserve shall only be used to remove an accounting deficit, to preserve the existence of the business enterprise in bad times, to counteract unemployment, or to soften its consequences.
There are no filing requirements in Switzerland for annual financial statements except in the case of banks, finance and insurance companies.
A reduction in capital requires a resolution by the general meeting of shareholders amending the articles. Such an amendment cannot be passed unless a special audit report shows that all claims of creditors are fully covered in spite of the reduction in capital. The auditors’ report must be prepared by a qualified auditor. Prior to implementing the reduction, the board of directors is required to publish the decision three times in the Swiss Official Gazette of Commerce. Creditors are to be informed. An exception is made for reductions in the event of capital deficiency. Under no circumstance may the share capital be reduced below SFr. 100,000. In the case of a financial restructuring of the company, the par value of the old shares may however be reduced to less than SFr. 10 each. In spite of a reduction in the par value, a share may still carry the same voting rights as before reduction.
A company may be dissolved for any voluntary reason provided for by the articles or by decision of the general meeting of shareholders. An involuntary dissolution can be imposed upon the company by bankruptcy or a court decision. A court can dissolve a company, for example, in cases where serious violations of legal or statutory provisions have occurred. Furthermore, shareholders representing at least ten per cent of share capital may request dissolution by the court if they have good cause (for example, if minority rights have been violated).
Except in the case of a bankruptcy, the board must register the dissolution of the company with the Commercial Register. During the period of liquidation, the company remains a legal entity and retains its name with the addition in liquidation. Unless the company appoints special liquidators, the liquidation procedures are carried out by the board. The name of the liquidators is to be registered. At least one of the liquidators must be domiciled in Switzerland and have authority to represent the company.
The term liquidation means that the company’s normal business activities are discontinued and restricted to such operations as are necessary to settle all pending matters. The liquidators must prepare a balance sheet upon assuming their duties. If the balance sheet shows an excess of liabilities over assets, the liquidators must file an application for bankruptcy, unless arrangements can be made for an amicable settlement with the creditors.
In all other cases, the liquidators must attempt to wind up the business (termination of contracts, collection of receivables, payment of outstanding debts) with a view to reaching a final settlement with creditors and shareholders. In this connection, creditors reflected in the books of the company or known in any other way shall be informed of the dissolution of the company in writing and requested to file their claims; unknown creditors and creditors whose domiciles are not known are notified by publication in the Swiss Official Gazette of Commerce. In order to protect unknown or disputed creditors who have failed to lodge their claims, an appropriate amount of money must be deposited in escrow. A distribution of net assets is postponed until such liabilities have been settled.
After settlement of all liabilities, the remaining net assets of the liquidated company may be distributed among the shareholders in proportion to their holdings and in accordance with the rights attached to their shares. Upon termination of liquidation procedures, the liquidators apply for deregistration and designate a safe place where the books must be kept for a period of ten years. Deregistration is contingent upon express approval by the Federal and Cantonal Tax Administration, to ensure that all taxes on income, capital and distribution have been paid in full.
A resolution dealing with the merger of companies may only be passed at the general meeting of the shareholders, if at least two thirds of the shares are represented. Creditors of merging companies are given special protection.
The merger procedures can be summarized as follows:
- The board of directors of the acquiring company must issue a call for registration of claims by the creditors of the company to be dissolved.
- The net assets of the company to be dissolved must be administered separately by the acquiring company until creditors are satisfied or secured.
- The dissolution of the absorbed company must be registered in the Commercial Register as soon as creditors have been satisfied or secured.
- Subsequent to this registration, shares of the acquiring company may be delivered to the shareholders of the absorbed company, according to the contract.
The members of the board of the acquiring company are personally, jointly and severally liable to the creditors of the absorbed company. The net assets of the absorbed company may be used exclusively for the satisfaction of that company’s creditors.
A corporation can be converted into a limited liability company, provided that the capital of the limited liability company is not less than the corporation’s share capital, that shareholders are informed about the possibility of becoming participants in the newly created company, and that their participations amount to at least two thirds of the share capital of the transformed company. Any retiring shareholder is entitled to a proportionate share of the net assets valued at fair market price. With regard to the creditors of the transformed company, the same provisions apply as for mergers. A limited liability company may not be transformed into a corporation. It must be liquidated and a new corporation formed.
There are three bodies in a Swiss corporation, namely: the general meeting of shareholders (the supreme body), the board of directors and the auditors.
Shareholder’s meeting
The general meeting of shareholders is the supreme authority of the company and is composed of all shareholders. There are two types of meetings:
- Ordinary general meeting. This is held annually within six months after the close of the business year;
- Extraordinary general meeting, which is called as often as considered necessary.
The general meeting of shareholders has the right to adopt and amend the articles, to appoint directors and auditors, to approve the financial statements and the directors’ report, to ratify certain decisions of the Board, and, in general, to make all important decisions which are not delegated to any other body. The shareholders must also approve the proposal of the Board relative to the distribution of annual profits. A general meeting is called by the board or, if it fails in its duties, by the auditors. One or more shareholders, representing together at least 10 % of the share capital, may at any time request the calling of an extraordinary shareholders’ meeting. This must be done in writing, indicating the purpose of the meeting. In general, a simple majority of votes represented at the general meeting is sufficient to pass a resolution and hold elections. However, certain decisions require a vote of two thirds of the votes represented and the absolute majority of the· par value of the shares represented (such as change of corporate purpose, extension of scope of business, distribution of shares with privileged voting rights etc.).
Shareholders cannot be deprived of their acquired rights without their consent. The term acquired rights includes the right to vote, to dividends, to a share of the liquidation proceeds and to receive sufficient information on the financial condition of the company. The Swiss Code distinguishes two kinds of shareholders rights: financial interests and personal membership rights.
Each shareholder has the right to a proportionate share of the profits distributed. Dividends may only be paid out of net profits or out of reserves specially created for this purpose. There is no interest payable on the ordinary share capital and a company may not declare interim dividends out of current year profits. Dividends can only be declared by the general meeting of shareholders and after attribution to the legal reserve. A share of the net profits may be paid to members of the board of directors if:
- the articles specifically provide for such payments,
- the allocations to the legal reserve fund have been made and,
- a dividend of at least five percent has been paid to the shareholders.
Unless otherwise stated in the articles or in the resolution for the increase in share capital, each shareholder has an option to subscribe to new shares in the same proportion that his original holding bears to the total shares issued.
Each shareholder is entitled to a proportionate share of the proceeds of liquidation unless the articles of incorporation provide otherwise. The proceeds are calculated in proportion to the amounts paid in on the share capital.
Most personal membership rights are acquired rights which means that even with the general meeting’s consent, the shareholder cannot be deprived thereof. These include the following:
- Shareholders exercise their rights at the general meeting of shareholders. Every shareholder may attend the meeting in person or be represented by his proxy. A holder of bearer shares is considered authorized to attend if he presents the share. On the other hand, registered shares can only be represented if a written proxy is produced.
- Voting rights.
- Shareholders are entitled to review the financial statements, which must be available for inspection at the address of the company not later than 20 day prior to the annual general meeting. Any shareholder may request a copy to be sent to him before the meeting.
Board of Directors
The company is managed by the board composed of one or more individual directors who must be shareholders. A majority of board members must be Swiss citizens residing in Switzerland. If the board consists of a single member, he or she must be a Swiss citizen residing in Switzerland. The directors are elected at the general meeting for a period fixed by the articles (maximum six years). The directors can however be re-elected indefinitely.
The articles may require that during their term of office they must deposit a certain number of shares at the corporation’s registered domicile. This is designed to protect the corporation against damages that directors may cause in the fulfilment of their duties. The board can delegate part of its authority to either an executive committee or to individual directors, to officers or to agents. At least one director must have power and authority to represent the company. The board designates the individuals authorized to represent the company vis-a-vis third parties and determines the details concerning the signatory powers. The company is unrestricted in the selection of its executive personnel, such as managers and officers, although managers and employees of foreign nationality require a permit to take up residence and employment in Switzerland.
The board is responsible for the preparation of the general meeting. It gives the necessary instructions to the management for the proper conduct of the company’s business and supervises those authorized to act on behalf of the company. It is the primary responsibility of the board, although generally delegated to management, to keep the accounting records and to prepare the annual financial statements. Furthermore, the board must submit a written annual report on the company’s financial position and the results of its activities to the general meeting of shareholders.
Auditors
The general meeting of shareholders elects one or more independent auditors who may be individuals or legal entities. Auditors must be professionally qualified to fulfil their duties. At least one auditor must have his domicile, registered office, or a registered branch in Switzerland. The auditors may not serve as directors nor be otherwise employed by the company, nor may they assume managerial functions for the company. Auditors may be elected for a maximum period of three years. Re-election is possible.
Auditors must have special professional qualifications if the audited entity:
- has outstanding bond issues;
- has shares listed on a Swiss stock exchange;
- exceeds two of the following parameters in two consecutive years:
- Balance sheet total: CHF 20’000’000
- Revenues: CHF 40’000’000
- Average number of employees: 200
The auditors must report on whether the accounting records and the financial statements, as well as the proposal concerning the appropriation of the available profit, comply with the law and the articles of incorporation. If the auditors, in the course of their examination, find violations either of law or of the articles, they report this in writing to the board of directors and, in important cases, to the general meeting of shareholders. In the event of obvious over-indebtedness, the auditors must notify the judge if the board fails to do so. Auditors are liable to the shareholders and creditors for damage caused by intentional or negligent failure to perform their duties. The auditors are required to attend the general meeting of shareholders.