New to Switzerland 3: Management and Board of Directors

by hauser@m-win.ch, Tel. +41 (52) 269 21 11

by sueess@m-win.ch, Tel. +41 (52) 269 21 00

The choice of suitable board members and an entrepreneurial Managing Director are essential to lead a company to success. What is a Board of Directors and what is a Managing Director? We give you an overview based on public limited companies (AG) and limited liability companies (GmbH).

Readers from Germany in particular should note at the outset:

• The Swiss AG and GmbH models are much closer to each other than the corresponding forms in Germany. Since most of the rules are dispositive (amendable), an AG can (with few restrictions) be made very similar to a GmbH and vice versa.
• In Switzerland, the AG also has a one-tier management model: the Board of Directors is both the highest executive and controlling body. A number of important competences/responsibilities are mandatory for the Board of Directors (Art. 716a CO); other powers can be delegated to an executive board with partial discharging effect, but this often does not happen in small AGs.

The same applies to the Managing Director of a GmbH, Art. 810 para. 2 CO regulates non-transferable and inalienable duties of Managing Directors. The duties of the Chairperson, or the sole Managing Director, are regulated in Art. 810 para. 3 CO. They conduct the business of the company but may also delegate the management (Art. 716 para. 2 CO; Art. 716b para. 1 CO).

In addition, the Board of Directors as well as the Managing Director should have subsidiary competence, i.e. they are competent in matters in which the general meeting (Art. 716 para. 1 CO) or the shareholders’ meeting (Art. 810 para. 1 CO) is not competent.

Both the Board of Directors of an AG and the Managing Directors of a GmbH represent the company externally but may regulate otherwise (cf. Art. 718 para. 2 CO, resp. Art. 814 para. 2 CO).

Both types of company have in common the need that at least one person is resident in Switzerland and able to represent them. According to the law (Art. 718 para. 4 CO for the AG, Art. 814 para. 3 CO for the GmbH), this person must be a member of the Board of Directors (AG) or Managing Director (GmbH) or Director. In this context, “director” only means that he or she must be authorised to sign without any restriction as to content, i.e. not an authorised signatory. They do not have to be an “organ” of the company, i.e. not authorised to make decisions, and is not liable as an organ, even though they are the only signatory resident in Switzerland.

This should be very clearly stated in a contract between this person and the company and should also continue to function in this way. In particular with regard to liability, the so-called “material concept of a corporate body” applies: a corporate body is not only someone who is registered as such in the commercial register, but also a person who makes decisions reserved for corporate bodies or is responsible for the actual management of the company and thus has a decisive influence on the formation of the company (cf. e.g. BGE 114 V 213).

Corporate bodies are subject to duties of care and loyalty (Art. 717 para. 1 CO, resp. Art. 812 CO). One manifestation of this is, for example, that members of the Board of Directors must inform the Board of Directors in the event of conflicts of interest affecting them. Managing Directors of a limited liability company are also subject to a non-competition clause, unless the articles of association provide otherwise.

A balanced, well-considered composition of the Board of Directors and the management is needed e.g. in terms of competences, network, know-how, to bring in different perspectives. In this way, holistic, sensible decisions can be made and implemented in favour of the company.

MSM Group AG has many years of experience in supporting Boards of Directors and management in the correct administrative exercise of their responsibilities: e.g. accounting, personnel administration, ordinary and extraordinary meetings, meetings and their minutes, tax returns. In legal matters, the experienced lawyers of Martin Rechtsanwälte GmbH are at your disposal.

If you are interested, please e-mail to sekretariat@m-win.ch; we will get back to you.

This article was produced in cooperation with the independent law firm “Martin Rechtsanwälte GmbH“.

Please refer to the following contributions from the series:

• Company formation – Insurances (What do I have to do? How do I proceed?)
• Setting up a company – How can I become operational as quickly as possible? What do I need to do this?
• Setting up a company – Taxes (What needs to be considered?)
• Setting up a company – Financing (how to raise money)
• Moving in as a private individual – Insurance (What do I have to do? How do I proceed?)
• Moving in as a private individual – residence/work permit (Who has what options?)
• Moving in as a private individual – Taxes (What will I have to pay?)

Already published articles:

• New to Switzerland – Blog Series on Settlement
• New to Switzerland 1: Setting up a company
• New to Switzerland 2: Setting up a business – staff

Further articles on the topic of managing directors and the board of directors:

• Directors’ liabilities (will follow soon in English)