On January 1, 2023, the regulatory package will enter into force which constitutes the third major revision of company law, after those that occurred in 1936 and 1992, respectively after a legislative process that lasted 20 years.

Net of the important innovations brought about by this reform, such as: the possibility of establishing the share capital in a currency that is not only the Swiss Franc (currently therefore: EUR, USD, YEN, GBP), of keeping accounts in this currency foreign exchange, the possibility of distributing interim dividends, the introduction of a new institution of increase or capital decrease (the so-called “capital variation margin” or “Kapitalband”), the greater flexibility given for the conduct of Shareholders’ Meetings and BoDs through the use of new technologies, with this writing we want to concentrate on one aspect particular that involves and amplifies the responsibility for the Board of Directors.

The new obligations to monitor and react in the event of a risk of insolvency

The new Article 725 CO effectively introduces a new duty for the Board of Directors, namely that of “supervising [the] solvency of the company” (see Article 725 para. 1 CO).

In order to fully understand the future scope of this new obligation, we believe it is essential to analyze the changes that have taken place during the legislative process.

In fact, both the preliminary draft and then the bill contained a different formulation, centered on the obligation of the corporate bodies to act when there was a “founded fear” (“begründete Besorgnis”) of incapacity to cope (systematically and therefore not already episodically) to its commitments within a period of time which between preliminary project and project has been shortened to 6 months, from the initial 12, for companies exempt from ordinary auditing.

In the current formulation, the concept of well-founded fear has been replaced by the generic obligation of surveillance, which we can only interpret as a permanent obligation and therefore not only deriving from a well-founded fear.

During the legislative process, not only the concept of “founded fear” was removed, but also the consequent obligation to prepare a liquidity plan, an instrument which was clearly indicated both in the preliminary draft and then in the project and understood as a corollary to the “financial plan”, which was intended to be introduced as a mandatory tool for any company and not only for “large companies” (cf. art. 716a para. 1 no. 3 Preliminary project).

What therefore appears to be a “qualified silence” of the law regarding the tools to be used to fulfill the surveillance obligation, on the contrary becomes deafening and even more evident by taking note of the further charges for the BoD mentioned in paragraph 2 of art. 725CO:

“If there is a risk that the company will become insolvent, the board of directors takes measures to ensure solvency. To the extent necessary, it adopts other restructuring measures for the company or proposes their adoption to the general meeting if these are within the competence of the company. If necessary, submit an application for a moratorium on composition with creditors.”

Well, what other tool than a liquidity plan can make it possible to become aware of the existence of a risk of insolvency? Indeed, becoming aware of a risk presupposes that the effects of the same have not already manifested themselves. And then, how would it be possible to adopt “solvency-guarantee measures” with due effectiveness without a liquidity plan?

Particularly relevant for the purposes of understanding the rationale and therefore the scope of the new art. 725 CO is the following comment inserted on page 138 of the Explanatory Report concerning the amendment of the Code of Obligations (law of the limited company)  submitted with the draft law:

“Article 725 takes precedence over the rules concerning the loss of capital and the excess of debts and constitutes the core of the new law on restructuring in the CO”.

In fact, the content of this comment, expressed at the beginning of the legislative process, has not been changed at all by the apparent reductions that art. 725 CO has undergone in the long process that gave birth to the final version that will enter into force on 01.01.2023. If on the one hand it is clear that insolvency can affect perfectly capitalized companies, on the other it is clear that insolvency is often the first indicator of much more structural problems, where the will of the legislator is evidently to anticipate reaction times by the Board of Directors.

This appears evident from the permanence in all the phases of evolution of the art. 725 CO of the residual obligation: i.e. that of submitting an application for a composition moratorium if the measures adopted on its own by the BoD have not had the desired effects and with them not even those of

The COVID-19 friendly agreement signed in June 2020 between Switzerland and Italy on the topic of smart working, i.e. (tele)working from the home of the frontier worker will expire at the end of January 2023.

Failure to renew this agreement will bring with it consequences which must be taken into account and which were confirmed in a very recent ruling by the Revenue Agency (n. 171/2023), which confirmed the Italian position, i.e. the according to which even just 1 day of telework carried out after 1 February 2023 will cause the benefits referred to in art. 15 CDI: the frontier worker will therefore have to declare in full the income earned in Switzerland and subject himself entirely to Italian taxation.

The concept of frontier worker therefore presupposes, and imperatively, that the worker carries out his work in Switzerland, going through customs every day. Any teleworking performed in part, i.e. in the morning in presence and in the afternoon in smart working does not exempt from risks and lends itself to possible disputes.

Furthermore, the disapplication of the benefit reserved for cross-border commuters will also affect the tax monitoring obligations for financial assets held abroad, i.e. the obligation to complete the RW framework as well as the forfait of €7,500 for annual income abatement. (€10’000 since the new agreement will be in force – presumably from 2024).

Finally, it remains to mention the potential risk for the Swiss employer of being attracted to Italy by a personal permanent establishment, with all the consequences of the case.

The recent meeting in Bern between representatives of the two countries has given new impetus to speculation about the entry into force of the new text of the Agreement.

In fact, the Protocol already signed provides that the entry into force of the new text and therefore of the new “regime” will take effect starting from 1 January of the following year that of the completion of the formal approval process by both countries and in specific case what is missing is the approval by the Italian Parliament.

How likely it is that said approval will take place before 31.12.2022 therefore remains entirely in the hands of the Italian Government and in its intentions and priorities. If this ratification were to take place in the context of the approval of the Budget Law and therefore before the end of the current year, then the entry into force of the new Agreement on cross-border commuters will effectively take effect on 01.01.2023.

The tax section of the Italian Court of Cassation has sanctioned in the very recent sentence of 1. September 2022 n. 25698/2022 how the right to a tax credit is effectively given for what is withheld by the foreign State in the context of the distribution of dividends to natural persons resident in Italy, holders of non-qualified shareholdings (and from 2018 onwards also for qualified ones) .

The sentence in question deals with a case concerning the payment of dividends by a US company to its shareholder resident in Italy recognizing the credit for taxes paid abroad on distributed dividends. By analogy, the principle also affects the relationship between Switzerland and Italy, and better in the case of the distribution of dividends from Swiss sources to an individual residing in Italy, where the Preventive Tax withheld in the amount of 35% by the AFC is recoverable in the Italian declaration only at a rate of 20%.

Previously, the Italian tax authority did not recognize its individual taxpayers the tax credit on the part of the conventional withholding tax that remained definitively in Switzerland, i.e. 15%. This is due to the fact that the taxation of dividends is subject, under Italian domestic law, to a substitute tax of 26%, exempting the recipient from the obligation to declare the dividend collected. In fact, Italian internal legislation provides that the tax credit for foreign taxes withheld definitively is allowed only where the income in question is the subject of a declaration by the taxpayer.

The Cassation has therefore established the principle according to which the conventional norms have a higher rank than the internal norms. Therefore, when the obligation to eliminate legal double taxation is foreseen in the Conventions to eliminate double taxation (the vast majority), the granting of the tax credit for foreign taxes, even where the relative income is subject to a substitute tax, must be recognized by the Italian tax administration.

With the sentence mentioned at the entrance of the Tax Section of the Court of Cassation, therefore finally a perfect alignment was achieved between (Italian) domestic law and the provisions of the related Convention against double taxation, thus allowing Italian taxpayers who are shareholders of Swiss companies to receive dividends due to them without any more conflicts with the higher law intended to exclude double taxation.

While waiting for the Agenzia delle Entrate to issue a special circular which implements the final judgment and makes the application of the principle established in the aforementioned sentence even simpler, the Arifida Team remains available for any need.

On 1 January 2023, various innovations in the field of company law will come into force in Switzerland, therefore applicable to the Anonymous Company (SA) and consequently also to the Limited Guarantee Companies (Sagl).

The first change concerns the currency in which the share capital can be expressed: no longer only in Swiss Francs, but also in Euros (EUR), American Dollars (USD), Pounds Sterling (GBP) and Yen. This possibility is open not only to newly incorporated companies but also to existing ones, by means of a retrospective or prospective adjustment at the beginning of an accounting period.

A further novelty is represented by the introduction of the “capital variation margin” (“Kapitalband”), i.e. the possibility of anchoring in the Articles of Association the concession to the Board of Directors of freedom of action to carry out capital increases or decreases within a pre-established margin not exceeding 50% of the pre-existing capital (both increasing -150%- and decreasing -50%-) and within an equally pre-established term of a maximum of 5 years.

The new law also provides for procedural changes to the provisions concerning the ordinary increase of the share capital, its ordinary reduction and finally the increase through conditional capital. The minimum nominal amount per single share has been abolished, an amount which may therefore be lower than the current minimum of 1 cent, provided that this value is greater than zero.

On the subject of contributions in kind and release of capital through offsetting the new law introduces new features, essentially adapting the current practice by streamlining its implementation.

In terms of distributions to shareholders, the new law introduces two substantial innovations: the first is determined by the possibility of distributing interim dividends, i.e. dividends deriving from an ongoing and therefore not yet concluded financial year. The second novelty concerns the distribution of the legal reserve from capital coming from different types of contributions and in particular from the premium (premium on the issue of new shares): in line with a 2014 ruling, the new law explicitly establishes the legitimacy and respectively the conditions of implementation, making a distinction between operating companies and holding companies.

In addition to the changes mentioned above and which concern the structure of the share capital and the management of its variability over time, there are some changes to note regarding the (strengthened) rights of shareholders and the functioning of the General Meeting of shareholders. If it is true that starting from 1 January 2023 it will no longer be possible to conduct meetings in circular form or respectively not in presence only as waived by the COVID-19 provisions, the new company law which will enter into force on the same date will allow to adapt the Articles of Association and provide for other forms of holding Assemblies (therefore no longer necessarily in presence and in a single place, paving the way for holding Assemblies also abroad and respectively with the use of electronic media).

Last but not least, the new company law introduces increased obligations for the Board of Directors in situations of financial difficulty. In particular, we note the explicit obligation regarding constant supervision of solvency and therefore the right to keep faith with current payables. In addition to this, the existing obligations deriving from the recognition of a capital loss remain, with further obligations such as the need for the Board of Directors to have an auditor verify the annual accounts that show a capital loss even where the company has waived a limited audit ( “opting out”), with the only exception being the launch of an application for a moratorium on composition with creditors. As regards instead the case of excess debts, the new law introduces a term of 90 days from the date of preparation of an interim balance sheet (verified) which suspends the obligation to notify the judge if there are well-founded possibilities restructuring, respectively the elimination of excess debts without prejudice to the interests of creditors.

IN CONCLUSION: the new law brings innovations that modernize company law to the practice and respectively to the expectations of the economic world. The innovations affecting both the shareholders and the Board of Directors therefore require an active approach, aimed at seizing opportunities and awareness of the new rights and responsibilities introduced, in particular by reviewing the relevance of the statutes, organizational regulations and shareholders’ agreements . The new law will enter into force on 01.01.2023, where it is possible to proceed immediately with statutory changes (but providing for their entry into force from 01.01.2023), where the transitional law provides that the Statutes that do not comply with the new law must be updated within two years.

For any need, the Arifida team is at your disposal: do not hesitate to contact us!

On 1 January 2023, the revision of the Civil Code which affects inheritance law will come into force.

What are the main changes?

Expansion of the quota available to the testator,
Consequently: the legitimate share is aligned both for the surviving spouse or registered partner and for the children to half the legitimate share (currently: three quarters for children). In addition, any entitlement to the statutory share for the parents disappears,
For spouses in the process of divorce: the loss of the right to the legitimate share already occurs with the introduction of the divorce procedure (therefore no longer after the relative judgment becomes final) or after at least two years of separation.

As with the current legal system, which remains in force until 12.31.2022, the expression of will by the testator continues to require active regulation and better still in the forms provided for by law, which where already carried out on the basis of the law currently in force, will be adapted if necessary, respectively updated.

As far as the so-called “de facto partners” are concerned, the revision of inheritance law does not introduce specific rights: however, depending on the reduction of the legitimate share for the other heirs, the de facto partners will be able to benefit more, always through active regulation (i.e., for eg by holographic will).

The above is part of a first phase of revision of inheritance law, which will be followed by a further phase which will touch on the specific area of succession of family businesses. The preliminary draft law presented by the Federal Council provides in particular for measures aimed at avoiding the fragmentation of companies in the context of a succession, establishing common principles to facilitate the so-called “buy out” of non-addressee co-heirs of the family business.

For any further information, our team of specialists is gladly available.

9 February 2022 – Following a decision by the current Italian Government (“Family Act”, DL 21 December 2021 n. 230), starting from 1 March 2022, the right to a new family allowance, the so-called “single cheque”, to which all EU citizens residing in Italy will be entitled (jointly with non-EU citizens with a permanent residence permit in Italy).

Considering how this facilitation will affect all frontier workers, on the Swiss side this will entail the need for the latter to actively proceed with the request for revision of the right to receive family allowances (FA), on the basis of completing a specific form ( called “Revision for salaried persons – Verification of family benefits in Italy”) published by the IAS of Bellinzona and currently sent to all beneficiary workers or downloadable from the website www.iasticino.ch, in conjunction with the completion of the ISEE 2022 form published by INPS .

Still on the Swiss side, this will mean that, with effect from March 2022, the payment of AF will be suspended until the IAS transmits its revision decision, thus taking into consideration the amount paid in Italy directly by INPS. Note that this decision will have retroactive effect and therefore will allow workers to recover FAs not received in the meantime.

The above obviously applies to all workers affiliated to the IAS: for those affiliated to other Compensation Offices, it will be necessary to refer to the specific provisions issued by each Cassa.

On January 1, 2021, the “Executive decree concerning the minimum hourly wage by economic sector” of November 18, 2020 entered into force, which is based on the “Minimum wage law” of December 11, 2019, which entered into force in following the approval of a popular initiative on 14 June 2015.

The Decree contains the list of each economic branch, the respective median hourly wage at the Swiss level and respectively the target for the Canton of Ticino, i.e. a minimum equal to 55% of the Swiss median hourly wage.

The adjustment of the salary structure within each individual company is envisaged in various stages, the first of which (“phase 1”) to be implemented by 31 December 2021 and preferably within the deadlines set by the Decree, i.e. a minimum oscillating between 19.00 Fr/h and 19.50 Fr/h, depending on the economic sector to which they belong (NOGA classification).

The next stages of implementation are as follows:

Phase 2 to be implemented by 31 December 2023, which provides for a minimum threshold ranging between 19.50 Fr/h and 20.- Fr/h;
Phase 3 to be implemented by 31 December 2024, which provides for a minimum threshold ranging between 19.75 Fr/h and 20.25 Fr/h.

Once the transitional phase provided for by the law has ended (i.e. 12.31.2024), the cantonal minimum wage will remain between 19.75 Fr/h and 20.25 Fr/h depending on the sector to which the employer belongs, subject to annual updates based on the evolution of the national consumer price index.

In terms of penalties in the event of infringement, the law provides for an administrative fine of up to Fr. 30,000.-, respectively proportional to the amount saved by employers for failure to comply. This proportionality stands at 160% of the difference between the salary due according to the law and the amount actually paid. This proportionality may be reduced up to 50%, if the actual retroactive wage integration is proven.

For any further needs or additional information, do not hesitate to contact our specialists!

With a ruling of April 23, 2019 (view it here) the Federal Court had the opportunity to lean over a matter of no small importance: the worker’s right to request reimbursement for expenses incurred by his household and directly related to “smart working”.

Well, the judges of the highest federal instance have come to the conclusion that a refund is due and this by reason of the art. 327a CO if in the workplace there is no infrastructure available to the worker or it is insufficient, so as to make it essential to use additional infrastructure made available by the worker at his home.

In the sentence under review, therefore, the employee who was not made available a workstation with the relative archive at the employer’s offices is recognized a flat-rate reimbursement of Fr. 150.- per month.

Trying to transpose this ruling to topical issues that have seen a good number of workers spend weeks and months teleworking, it is not possible to reach immediate conclusions, where in any case the fundamental criterion for deciding whether or not there may be a right to reimbursement ex art. 327a CO seems to be based on the existence or otherwise of a work station at the employer. What is certain is that in the case of teleworking following the health emergency, the primary objective of the employer was certainly not to save on rental costs, but rather to prioritize the health of employees.

Bern, 18.09.2020 – At its meeting on 18 September 2020, the Federal Council approved the dispatch concerning the new law on COVID-19 joint and several guarantees. The aim is to transpose the COVID-19 joint and several guarantees ordinance into ordinary law, which was issued in the form of an ordinance of necessity and whose validity is limited to 25 September 2020. Since the repayment of the loans will take many years, a federal law is needed which regulates the processing of credit and surety practices. The participants who expressed themselves in the framework of the consultation welcomed the project positively.

On 25 March 2020, the Federal Council adopted the COVID-19 joint and several guarantees ordinance to ensure liquidity for Swiss companies. This gave SMEs quick and unbureaucratic access to bank loans guaranteed by the four recognized guarantee organizations. In turn, the Confederation undertook to compensate these organizations for the losses resulting from the sureties. By the end of August, just over 136,000 loans amounting to CHF 16.4 billion had been guaranteed. More than 80 percent of credits were awarded to small businesses with fewer than ten full-time jobs.

The Federal Council is required to submit bills for the transposition of necessity ordinances into ordinary law to Parliament within a period of six months. This bill regulates the rights and obligations of the four recognized guarantee organizations, especially if the banks or PostFinance Ltd enforce the guarantees and the claims are then transferred to the guarantee organizations. At the same time, the Executive implements some requests from Parliament. The new law regulates all important aspects of the term of loans and sureties. Furthermore, it contains tools for the fight against abuses and the treatment of hardship cases.

Wide approval expressed in the consultation phase

Almost all participants in the consultation were in favor of the COVID-19 joint and several guarantees ordinance and its transposition into the new law. In particular, they approve the waiver of the partial ban on investments, the consideration of hardship cases based on individual cases and the possibility of extending the deadline for depreciation from five to ten years. The waiver of transforming COVID-19 credits into non-repayable contributions has also been expressly approved.

In individual opinions, an extension of the ordinary term envisaged for amortization was requested, even in the absence of a penalty case. A relaxation of the ban on dividend distribution has also been proposed. Some participants also asked to extend the deadline for submitting a credit application. The Federal Council rejects these proposed amendments and sets out the reasons for this rejection in the message (see no. 2). Following the unequivocal results gathered during the consultation, the text of the bill largely corresponds to the preliminary draft submitted for consultation.

The Federal Council proposes to Parliament to deal with the law in the winter session according to the extraordinary procedure. Exceptionally, both Houses will have to express themselves on the law in the same session. This should allow the law to come into force on 1 January 2021.

Simultaneously with the adoption of the dispatch, the Federal Council is extending the validity period of the Ordinance on joint and several guarantees COVID-19 in order to avoid regulatory gaps until the entry into force of the new law.

Address for inquiries

Federal Finance Administration FFA, Communication
Phone +41 58 465 16 06,
kommunikation@efv.admin.ch