Control agreement (Switzerland)

A control agreement (contrat de domination) is a Swiss intragroup agreement by which one company submits its management to the direction of a parent company, typically also transferring its profits upward. Recognised under Swiss law in certain conditions, it creates a formalised legal control relationship beyond simple majority ownership. It is used in Swiss groups to centralise management and optimise intragroup cash flows, but imposes minority shareholder and creditor protection obligations. Its implications for financial structuring and group tax planning are significant.

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Example: a Swiss industrial group's parent company enters into a control agreement with its main subsidiary to centralise treasury management and optimise dividend repatriation. Minority shareholders of the subsidiary receive a guaranteed annual compensation equal to the average dividend of the prior three years, as required by applicable legal protections — a cost factored into the group structuring analysis.

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Hectelion analyses control agreements in the context of due diligence on structured Swiss groups and advises on their implications for transaction structuring.