Under Swiss company law, managing directors and board members bear substantial responsibility towards their companies and shareholders. Taking on such positions also entails liability risks. This article provides an overview of the liability issues they may face in Switzerland and explains what they should know to protect their legal position and minimise risks.
1. The duty of care
Managing directors and board members owe a comprehensive duty of care to the company and its interests. They must perform their duties conscientiously and in the company's best interests. This includes obtaining information, assessing risks properly and making appropriate decisions.
2. Duties of organisation and supervision
Managing directors and board members are responsible for ensuring that the company has an appropriate organisation and effective control mechanisms. They must ensure that the processes and structures needed to comply with statutory requirements and internal policies are in place.
3. Liability for breaches of duty
Managing directors and board members may be held personally liable for breaches of their duties of care. They may face claims for damages from the company itself or from third parties such as shareholders, creditors or employees. Liability may be civil or criminal.
4. Limitations of liability and insurance
Appropriate provisions in the articles of association can address limitations of liability for managing directors and board members. Liability insurance may also be taken out to protect against liability risks. It is advisable to examine the available limitations and insurance options carefully and seek professional advice where appropriate.
5. Avoiding conflicts of interest
Managing directors and board members must avoid or disclose conflicts of interest to preserve their integrity and independence. Transparency and objective decisions in the company's best interests are essential. The handling of conflicts should be clearly regulated within corporate governance.
Managing directors and board members bear substantial responsibility and must be aware of potential liability issues under Swiss company law. Fulfilling their duties of care, organisation and supervision and avoiding conflicts of interest can reduce their exposure. We recommend consulting one of our experienced lawyers to understand the legal aspects and take appropriate precautions.