Skip to main content
Business LibreTexts

Untitled Page 60

  • Page ID
  • \( \newcommand{\vecs}[1]{\overset { \scriptstyle \rightharpoonup} {\mathbf{#1}} } \) \( \newcommand{\vecd}[1]{\overset{-\!-\!\rightharpoonup}{\vphantom{a}\smash {#1}}} \)\(\newcommand{\id}{\mathrm{id}}\) \( \newcommand{\Span}{\mathrm{span}}\) \( \newcommand{\kernel}{\mathrm{null}\,}\) \( \newcommand{\range}{\mathrm{range}\,}\) \( \newcommand{\RealPart}{\mathrm{Re}}\) \( \newcommand{\ImaginaryPart}{\mathrm{Im}}\) \( \newcommand{\Argument}{\mathrm{Arg}}\) \( \newcommand{\norm}[1]{\| #1 \|}\) \( \newcommand{\inner}[2]{\langle #1, #2 \rangle}\) \( \newcommand{\Span}{\mathrm{span}}\) \(\newcommand{\id}{\mathrm{id}}\) \( \newcommand{\Span}{\mathrm{span}}\) \( \newcommand{\kernel}{\mathrm{null}\,}\) \( \newcommand{\range}{\mathrm{range}\,}\) \( \newcommand{\RealPart}{\mathrm{Re}}\) \( \newcommand{\ImaginaryPart}{\mathrm{Im}}\) \( \newcommand{\Argument}{\mathrm{Arg}}\) \( \newcommand{\norm}[1]{\| #1 \|}\) \( \newcommand{\inner}[2]{\langle #1, #2 \rangle}\) \( \newcommand{\Span}{\mathrm{span}}\)

    II.Company Law

    1. CODES

    As mentioned at the beginning of this chapter, the Articles about company law (including the law on securities) can be found in divisions three to five of the Code of Obligations (further, the last part of division two regarding the simple partnership belongs to company law rather than to contract law). Division three covers commercial enterprises and the cooperative (Articles 552–926) and is followed by division four which concerns the commercial register (Articles 927–943), business names (Articles 944–956), and commercial accounting (Articles 957–964). Division five is entirely dedicated to negotiable securities, covering registered securities, bearer securities, and instruments to order (Articles 965–1155) as well as bonds (Articles 1156–1186).


    a)Company Forms

    Unlike Swiss contract law, the provisions of Swiss company law do not provide for the freedom to create any kind of company. On the contrary, one’s choice is limited to the types of company the law provides for. Most types of business associations are regulated in the Code of Obligations, while more variations can be found in the Civil Code and in the Federal Act on Collective Investment Schemes.33 Which type is chosen in the circumstances depends on the intentions and interests of the people creating the company. The company forms can be grouped as follows:


    Figure 1: Types of Business Associations

    By far the far most common business form in Switzerland is the sole proprietorship (b.), followed by the company limited by shares (c.), and the limited liability company (d.), respectively. Thus, these three forms will now be studied in greater detail.

    b)Sole Proprietorship

    The easiest to create is the sole proprietorship. It has no separate legal personality from the person running the business.



    Figure 2: Sole Proprietorship

    c)Company Limited by Shares

    The flagship of commercial enterprises is the company limited by shares.



    Figure 3: Company Limited by Shares (Ltd.)

    d)Limited Liability Company

    Also very popular is the limited liability company. After an initial niche existence it somehow experienced a boom in popularity. This change was due to the increase of the default minimum share capital needed for establishing a company limited by shares from CHF 50’000 up to CHF 100’000 in 1992 and a law reform of the limited liability company in 2008, consequently shaping the limited liability company as a personalized corporation.



    Figure 4: Limited Liability Company (Ltd liab. Co)


    Generally, shareholders and corporations (as separate legal entities, e.g. a company limited by shares) are each liable “for their own business”, and neither one is liable for the obligations of the other. But the Swiss Federal Supreme Court has recognised exceptions to that principle. This can be seen in its established practice of breakthrough (also known as “piercing the corporate veil”) where the company is totally dominated by one shareholder and this shareholder has somehow used the company for his or her own purposes.

    It can therefore be assumed that in accordance with the economic reality, there is an identity of the natural and the legal person and that the legal relations which bind one also bind the other; this is always the case where the assertion of difference constitutes an abuse of rights or results in an obvious violation of legitimate interests of third parties.34

    a)Breakthrough-Case I35

    Liability of dominating shareholder for company limited by shares

    The claimant, an engineer, sold a patent to a natural person. Under this licence contract, the buyer incurred some obligations, e.g. the obligation to refrain from exporting goods produced with the patent and to share experiences with the seller. The buyer then did not perform these obligations. The user of the patent was a company limited by shares that was dominated by the buyer as principal shareholder. The Federal Supreme Court stated that in the present case the natural person (buyer) and the legal person (the company limited by shares) were identical, although the buyer was formally not the sole shareholder. The court declared the other shareholders only as dummies and stated that it would be a violation of good faith if the company limited by shares did not have to execute the duties its dominating shareholder had incurred.

    b)Breakthrough-Case II36

    Liability of company limited by shares for dominating shareholder

    To enforce a claim against an obligor, the claimant sequestrated a property. Formally the property had not belonged to the obligor but to a company limited by shares that he dominated. The Federal Supreme Court stated that in the present case the natural and legal person were identical and thus that it would be a violation of good faith if the obligor could escape his obligations by determining that the assets belonged to a separate legal entity.

    33Federal Act on Collective Investment Schemes of 23 June 2006 (Collective Investment Schemes Act, CISA), SR 951.31.

    34BGE 121 III 319 Consideration 5.a)aa), confirmed e.g. in BGE 132 III 489 Consideration 3.2 or Judgment of the Federal Supreme Court 5A_330/2012 of 17 July 2012, Consideration 3.1.

    35BGE 71 II 272.

    36BGE 102 III 165.

    Untitled Page 60 is shared under a CC BY license and was authored, remixed, and/or curated by LibreTexts.

    • Was this article helpful?