Pursuant to the Swiss Federal Supreme Court’s ruling 4A_138/2014 of 16 October 2014 (BGE 140 III 533), up-stream and cross-stream loans which are not at arm’s length block an intra-group lender’s freely distributable equity and limit dividend distributions in the amount of any such up-stream or cross-stream loan. In the same ruling, the Swiss Federal Supreme Court ended a controversy in legal doctrine by deciding that additional paid-in capital (Agio) is to be treated like general reserves and, hence, can be distributed as dividends.

By Marc Hanslin / Roland Lüthy (Reference: CapLaw-2015-30)