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Site contribution
Date: July 2006
Prepared by:
Christoph Stäubli
Walder Wyss & Partners
Münstergasse 2
8022 Zürich
Phone:   +41 44 498 98 98
Fax:   +41 44 498 98 99
E-Mail:   christoph.staeubli@walderwyss.com
Introduction
In the following please find a selection of the relevant legal developments concerning doing businesses in Switzerland. It is designed to inform on the legal process in the national legislature and serve as a potential source of useful hints to corporate counsels and practitioners. The selection will be updated on a semi-annual basis.

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1 November 2005, the Swiss Federal Council adopted a resolution according to which the Lex Koller shall be completely repealed.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