Directors’ liability (Swiss CO)

Under Swiss law (CO art. 754), directors, officers and members of the board of a Swiss company are personally liable for damages caused by intentional or negligent breach of their legal or statutory duties. Their liability extends to the company, its shareholders and creditors. Key situations triggering liability include: failure to file for insolvency when legally required (CO art. 725), mismanagement leading to company loss, unlawful distributions to shareholders, and breach of duty of care in transaction decisions. In M&A, assessing directors' past conduct and any pending liability claims against them is a standard component of legal due diligence.

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Example: due diligence on a Swiss SA reveals that the board continued operating for 8 months after the company became over-indebted (CO art. 725a), incurring additional liabilities of CHF 680,000 during this period. Creditors may claim personal liability against board members for this amount. This contingent liability — not provisioned in the accounts — is identified as a material risk and leads to a specific warranty in the SPA covering directors' conduct pre-closing.

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Hectelion identifies directors' liability risks in Swiss due diligence and advises on warranty structuring to protect acquirers from pre-closing governance failures.