The Board of Directors in Switzerland, governed by the Swiss Code of Obligations, holds key responsibilities in business management, including strategic direction and compliance with regulations. Its specific duties include rigorous financial oversight, diligent management, and vigilance regarding solvency, capital loss, and overindebtedness, ensuring the financial health and legality of businesses.
The duties of the board in brief
- Inalienable duties (Art. 716a CO): seven powers that the board cannot delegate — overall management, organisation, accounting, appointment and supervision of management, annual report, notification in case of overindebtedness.
- Duty of care (Art. 717 CO): diligent and prudent management, in the interest of the company.
- Financial vigilance (Art. 725 CO): monitoring solvency, capital loss and overindebtedness.
- Personal liability (Art. 754 CO): a breach of duty engages the personal — and joint — liability of the director.
Contents
The inalienable duties of the board of directors (Art. 716a CO)
The effective governance of a company in Switzerland requires a Board of Directors (BoD) whose duties, regulated by the Swiss Code of Obligations, encompass crucial responsibilities. These inalienable duties, defined by general principles, grant the BoD exclusive powers such as overall direction of the company, establishment of an efficient organization, and the setting of strict accounting standards.
Article 716a paragraph 1 CO lists seven duties that the board cannot delegate:
- the overall management of the company and the issuing of the necessary directives;
- the determination of the company’s organisation;
- the organisation of the accounting, the financial control and the financial planning;
- the appointment and dismissal of the persons entrusted with management and representation;
- the overall supervision of those persons, in particular with regard to compliance with the law, the articles of association, the regulations and the directives;
- the drawing up of the annual report and the compensation report, the preparation of the general meeting and the implementation of its resolutions;
- the filing of an application for a debt-restructuring moratorium and the notification of the court in the event of overindebtedness.
Diligent and prudent management (Art. 717 CO)
Beyond these general duties, the BoD is responsible for maintaining rigorous financial vigilance, closely monitoring solvency and compliance with prevailing regulations. Additionally, it must ensure diligent and prudent management of the company’s affairs, in accordance with Article 717 paragraph 1 of the Swiss Code of Obligations.
Financial vigilance: solvency, capital loss and overindebtedness (Art. 725 CO)
Furthermore, specific duties are imposed on the BoD, such as the establishment of an early warning system to assess the solvency of the company. In the event of insolvency risk, it must take remedial measures in accordance with Article 725 of the Swiss Code of Obligations. It is also obligated to monitor capital loss, and in cases of overindebtedness, its responsibility is to file for bankruptcy, except in exceptional situations provided by law.
These general and specific obligations aim to maintain the financial health and legal compliance of the company, carefully monitoring key indicators such as solvency, capital loss, and overindebtedness. Adhering to these obligations is crucial to ensure the longevity and compliance of any business.
The personal liability of the director (Art. 754 CO)
These duties are not nominal: a breach engages the personal and joint liability of the director. Under Article 754 CO, the members of the board of directors and all persons entrusted with the management are liable to the company, to each shareholder and to the company’s creditors for the damage caused by an intentional or negligent breach of their duties. A late notification of overindebtedness (Art. 725 CO) or the non-payment of social security contributions are among the most frequent grounds for liability.
RISTER® advice
The duties of the board are demanding and cannot be delegated away. Entrusting a director or manager mandate to a professional does not remove these duties — it ensures they are actually carried out: monitored accounts, documented decisions, timely alerts. This is the condition of a compliant and durable Swiss company.
FAQ: duties of the board of directors in Switzerland
What are the duties of the board of directors in Switzerland?
Article 716a CO gives the board seven inalienable duties: overall management, determining the organisation, organising the accounting and financial control, appointing and dismissing management, supervising it, drawing up the annual report, and notifying the court in the event of overindebtedness. These duties cannot be delegated.
Is a director personally liable in Switzerland?
Yes, in the event of fault. Under Art. 754 CO, directors are personally and jointly liable for the damage caused by an intentional or negligent breach of their duties. Liability may be engaged, for example, by a late notification of overindebtedness (Art. 725 CO) or the non-payment of social security contributions.
Can the duties of the board be delegated?
The management can be delegated to a director or to third parties (Art. 716b CO), but the seven inalienable duties of Art. 716a CO remain with the board. It retains overall supervision and responsibility, even where day-to-day management is delegated.
Sources
- Swiss Code of Obligations (CO) — SR 220, Art. 716a (inalienable duties of the board), Art. 717 (duty of care)
- Swiss Code of Obligations (CO) — SR 220, Art. 725 (capital loss and overindebtedness), Art. 754 (liability of the directors)
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