As of 1 January 2021, the legal framework governing the commercial register in Switzerland has been modernized. The new rules primarily comprise amendments to the Swiss Code of Obligations (CO, article 927 et seq.) and to the Commercial Register Ordinance (CRO). The author highlights the key changes that the new rules did—and did not—bring about.

By Daniel Häusermann* (Reference: CapLaw-2021-17)

1) Commercial Register Entries Still Become Effective Upon Registration 

The question of when commercial register entries become effective under the new rules caused somewhat of a stir early this year, in particular among parties that are involved in capital market transactions. However, it was subsequently clarified that the law has not changed at all in substance.

To explain what happened, one has to look back at the rules that were in effect until the end of 2020. Under these rules, a commercial register entry became effective as of the date of the respective journal entry, subject to approval by the Federal Office of the Commercial Register (the FOCR; article 932 (1) of the former CO). In relation to third parties, entries became effective on the working day following the publication in the Swiss Official Gazette of Commerce (the SOGC; article 932 (2) of the former CO).

The new rules (article 936a (1) CO) no longer make an express distinction between the effectiveness of an entry per se and its effectiveness vis-à-vis third parties. For this reason, the Cantonal commercial registries were instructed to add a note to the preliminary commercial register excerpts (i.e., those issued before an entry is published in the SOGC) saying that the new entry only becomes effective upon its electronic publication in the SOGC (article 34 CRO; FOCR Communication 4/20 of 10 December 2020, section 2.5). This situation affected the timelines of some capital increases by listed companies in early 2021, mainly because it was no longer clear at what point in time the new shares could be booked with the banking system and SIX SIS as book-entry securities and listed on a stock exchange. 

On 10 February 2021, the FOCR published a new Communication 1/21, in which it clarified the situation. The FOCR explained that, like under the old rules, a commercial register entry becomes effective, subject to approval by the FOCR, immediately upon its registration in the journal. It is only vis-à-vis third parties that entries become effective on the date of the publication in the SOGC. (These third-party effects are rather limited: entries are deemed to be known by everyone; a fact that has not been recorded although it ought to have been recorded may not be relied on against a third party who was not aware of such fact; and bona fide third parties can rely on the truth of an entry in some circumstances, cf. article 936b CO.) Consequently, the FOCR reworded the note to be added to the preliminary commercial register excerpts, which now reads: 

“This extract contains entries that have already been approved by the FOCR but not yet published in the SOGC. The entries only become effective vis-à-vis third parties upon publication in the SOGC.” (emphasis added)

This view is supported by the legislative history of article 936a (1) CO (see Daniel Häusermann, Handelsregistereintragungen werden schon vor SHAB-Publikation wirksam, GesKR 1/2021, 104 et seq.).

The clarification by the FOCR is important in many ways. Most importantly, the uncertainty around the timetable for equity capital market transactions has been eliminated, and these transactions can be executed according to the same timetable as in the past. 

2) Abolition of Commercial Register Blockage

Until the end of 2020, anyone was able to block the registration of new commercial register filings with respect to a specific company by simple request for up to ten calendar days and without having to show cause (article 162 of the former CRO). Although such commercial register blockages were rarely seen in practice, they did create execution risks in transactions that require a commercial register filing. 

Under the new rules, it is no longer possible to temporarily block the commercial register without a court injunction. Rather, an interested party would have to petition a court to do so via a preliminary injunction (vorsorgliche Massnahme). In such a proceeding, the petitioner would have to overcome significant hurdles. For instance, a petitioner would have to credibly show a violation or imminent violation of their rights that could not be easily remedied after the registration in the commercial register (cf. article 261 Code of Civil Procedure), and the counterparty usually has a right to be heard before the court takes action (cf. article 265 Code of Civil Procedure e contrario). Last but not least, a petitioner would have to pay a court fee retainer and would potentially have to provide security for losses that a blockage may cause to the counterparty (article 101 Code of Civil Procedure).

The abolition of the commercial register blockage upon simple request is a welcome change, as it has lowered the execution risk of a wide variety of transactions, including mergers, certain acquisitions, and capital market transactions.

3) Reduction of Administrative Burden

The new rules reduce the administrative burden in relation to the commercial register in several ways:

– First, unless a statute requires otherwise, commercial register applications on behalf of a company no longer have to be signed by board members or, in the case of an LLC, managing officers. In these cases, a commercial register application can be signed by any authorized signatory of the company, or by another person based on a power of attorney (which itself has to be signed by board members or managing officers with corresponding signatory powers). Commercial register applications still have to be signed by board members or managing officers where the law expressly requires this to be the case (cf. article 17 (1) CRO), such as with regard to capital increases (article 652h (1) and 653h CO), changes with respect to authorized signatories (article 720 (2) CO), the dissolution of a company and the appointment of liquidators (article 737 and 740 (2) CO), as well as mergers, demergers, conversions of legal form and bulk transfers (article 21 (1), article 51 (1), article 66, article 73 (1) Merger Act). However, many of the above-referenced statutory rules that require that a commercial register application be signed by board members or managing officers will be amended by the new corporation law adopted on 19 June 2020 (e.g., article 652h (1), article 653h, article 720 (2) and article 737 CO).

– Second, the commercial register fees have been lowered by about one third (cf. Ordinance on Fees of the Commercial Register of 6 March 2020, SR 221.411.1), as the commercial registries are now bound by the Swiss fiscal law principles of equivalence (Äquivalenzprinzip) and prohibition of profits (Kostendeckungsprinzip) (article 941 (3) CO). For example, the commercial register fee for establishing a corporation or a limited liability company has been lowered from CHF 600 to CHF 420.

– Third, articles of association and foundation deeds have to be made available via the internet free of charge (article 936 (2) CO).

– Fourth, the so-called “Stampa declaration” (a confirmation that no undisclosed contributions in kind, acquisitions and intended acquisitions of assets, contributions via set-off or special benefits exist) no longer has to be a separate document. Rather, such confirmation has to be given in the respective public deed.

4) Conclusion

The modernization of the legal framework governing the commercial register increases transaction security for many kinds of transactions and is also a welcome step towards a more streamlined and efficient handling of corporate affairs and housekeeping matters. 

However, the commercial register ordinance will undergo further changes soon. On 17 February 2021, the Federal Council started a consultation process with regard to further updates to the CRO to implement the corporate law reform adopted on 19 June 2020. The consultation is open until 24 May 2021.

Daniel Häusermann (daniel.haeusermann@homburger.ch)

*) The author thanks his colleague Francesco Bernasconi for helpful suggestions and comments.