In a hypothetical example, a US executive accepts a Swiss subsidiary appointment alongside an existing regional role. Group finance controls the bank accounts, the parent approves major spending and a global insurance program names directors among its insured persons. The appointment can look like another reporting line. Swiss law asks a different question: which decisions and omissions belong to the individual under the subsidiary’s own legal form? Delaware concepts remain useful points of comparison, but the parent’s corporate documents do not determine the Swiss mandate.
1. Who carries the Swiss mandate after management is delegated?
An AG and a GmbH do not place the same offices behind the English word “director.” Under Art. 718(3)–(4) OR, at least one AG board member must have authority to represent the company, and the company must be capable of representation by a Swiss resident who is a board member or director. The residence requirement therefore does not invariably require a resident board member. Under Art. 814(2)–(3) OR, at least one GmbH manager must be authorized to represent it, while the resident representative may be a manager or director. The resident person must have access to the relevant share register. Satisfying these representation rules does not settle who carries management responsibility.1Bundesgesetz betreffend die Ergänzung des Schweizerischen Zivilgesetzbuches (Fünfter Teil: Obligationenrecht) vom 30. März 1911 (SR 220) (OR), Art. 716a–718, 809–814, 820 and 827.
For an AG, Art. 716a OR reserves ultimate direction, organization and specified financial and supervisory responsibilities to the board. Preparation, implementation and monitoring work may be assigned internally, with appropriate reporting to the members. That allocation does not transfer the reserved responsibility. A parent’s finance function can produce the numbers, but the legal question remains whether the Swiss board discharged the task that those numbers were supposed to support.
The management delegation permitted by Art. 716b OR has a different function. Unless the articles provide otherwise, an organizational regulation may transfer management wholly or partly to members or third parties. Art. 754(2) OR then makes due care in selection, instruction and supervision relevant to liability for the delegate’s conduct. A reporting chart naming the group chief financial officer does not by itself answer whether that delegation was authorized, what it covered or which reserved board responsibility remained.
A GmbH manager is not simply an AG director under another name
Art. 809 OR starts from joint management by the members, subject to a different arrangement in the articles, and permits only natural persons to serve as managers. Art. 810 OR gives those managers their own nontransferable responsibilities, subject to the statutory qualifications. A corporate member appointing a natural person to perform that function cannot make the person disappear behind the corporate member’s name. Under Art. 811(2) OR, approval by the members’ meeting does not restrict the managers’ liability. The allocation between owner and manager therefore needs its own analysis even where the parent owns the entire company.
The opposite assumption can also fail: absence from the Swiss register does not necessarily keep a group executive outside organ liability. In BGE 128 III 92, the Federal Supreme Court distinguished ordinary parental influence from transferred or assumed decision-making competence in the subsidiary. BGE 128 III 29 rejected organ status where the person’s work remained subordinate or isolated. The distinction concerns what the executive actually decided independently and persistently, rather than the title on a group organization chart. A parent executive who takes over subsidiary decisions and an adviser who helps prepare them do not necessarily occupy the same position.2BGE 128 III 92, 93–95 E. 3a–3c; BGE 128 III 29, 30–33 E. 3a–3c.
Neither doctrine erases the formally appointed organ’s own duties. A local signature arrangement and centralized group control may therefore produce overlapping responsibilities rather than a clean transfer from one person to another. Which person could decide, which person merely supplied information and which person retained a duty to intervene can become separate questions about the same transaction.
A parent’s instruction can explain why a Swiss subsidiary made a decision without transferring the individual’s duty to that subsidiary or the liability attached to making it.
2. When does a group instruction conflict with the subsidiary’s position?
A group may have a persuasive commercial reason to concentrate cash, share a manufacturing site or move a research program. Under Art. 717 OR, however, AG board members and persons managing the company owe diligence and loyalty to that company. Art. 717a OR requires prompt, complete disclosure of their conflicts to the board and measures necessary to protect the company’s interests. Art. 812 OR supplies the GmbH’s diligence and loyalty duties. Agreement with the parent’s strategy and compliance with the subsidiary’s duties are related judgments, not interchangeable descriptions of the same approval.3OR (n 1), Art. 717, 717a, 810 and 812.
The Federal Supreme Court has expressly identified company interest as a boundary on following majority-shareholder instructions. That does not prohibit decisions that benefit both parent and subsidiary. It makes the subsidiary’s position material where an executive is expected to act for both. An instruction to surrender a valuable license, guarantee another group company’s borrowing or accept a funding interruption raises questions that the parent’s approval cannot answer on its own. Who benefits, what the subsidiary receives and whose interests the decision actually serves may diverge.4Urteil BGer 4A_623/2018 vom 31. Juli 2019, E. 4.3.1.
Capital maintenance adds a statutory constraint to that conflict. BGE 140 III 533 addresses the limits that protected capital places on loans to a parent or sister company and the treatment of loans not made on third-party terms in determining distributable funds. The historical judgment does not make every cash pool unlawful. It shows why treating an intercompany balance as an ordinary group accounting entry may miss a capital-distribution question. Art. 675 and Art. 680(2) OR remain relevant even when everyone participating in the approval works for the same group.5BGE 140 III 533, 541–545 E. 4.1–4.5; OR (n 1), Art. 675 and 680(2).
Liquidity is a separate statutory question
Art. 725 OR requires the AG board to monitor the company’s ability to pay and, where inability to pay threatens, to act with due speed to secure liquidity and take further required restructuring measures. That inquiry differs from the capital-loss test of Art. 725a OR and the over-indebtedness inquiry of Art. 725b OR. Art. 820 OR applies these provisions correspondingly to a GmbH. A subsidiary can face a payment problem without waiting for its annual accounts to display a capital loss; a group’s consolidated solvency does not supply the subsidiary with cash when its own obligations fall due.6OR (n 1), Art. 725–725c and 820.
The 90-day provision in Art. 725b(4)(2) OR is not a general grace period: court notification may be deferred only while there is a justified prospect of curing over-indebtedness within an appropriate period, no later than 90 days after the audited interim accounts are available, without additionally jeopardizing creditors’ claims. The alternative based on creditor subordination under Art. 725b(4)(1) OR also has defined conditions, including deferral and coverage of the amount owed and interest during the over-indebtedness. Neither exception follows simply from an assurance that the parent intends to provide support.
This becomes consequential where a trial payroll or manufacturing payment depends on a parent funding decision that has not become enforceable or available. The board’s view of the support and the evidence supporting that view may differ from the parent’s expectation that funding remains discretionary. The revaluation provision of Art. 725c OR does not resolve that mismatch: it concerns qualifying real estate and participations and requires the specified auditor confirmation. A more favorable balance-sheet value is not itself a payment to the subsidiary’s creditors.
The disputed omission may consequently be different from the commercial decision everyone remembers. It may concern the information available to the Swiss organ, the failure to revisit a funding assumption or the timing of a required statutory response. A memorandum discussing the group’s strategy can leave each of those questions untouched.
3. Which claims can reach the individual?
Art. 754 OR does not make a director a guarantor of the subsidiary’s debts. It requires loss caused by an intentional or negligent breach of duty. Under Art. 759 OR, joint and several liability among persons responsible for the same loss extends to the amount personally attributable to each through that person’s own fault and the circumstances. Art. 827 OR applies the AG liability provisions correspondingly to a GmbH. The relevant conduct and fault therefore matter even where several organs participated in the same failed group arrangement.7OR (n 1), Art. 754, 756–759 and 827.
The identity of the claimant matters as well. Under Art. 756 OR, a shareholder claiming loss suffered by the company seeks payment to the company. In bankruptcy, Art. 757 OR gives the insolvency administration the initial role in pursuing the relevant claims; shareholders and creditors may pursue them if it declines. That is not a general right for every creditor to recover every unpaid company debt from a director. Direct personal loss and loss suffered through depletion of the company’s assets raise different questions.
A sole shareholder’s discharge also has a narrower reach than a general release from all consequences. Art. 758 OR limits its effect to disclosed facts and the company and specified shareholders. Other shareholders’ claim rights expire twelve months after the discharge, subject to suspension during the specified special-investigation process. The resolution does not say that a compensation office, tax authority or every creditor has relinquished its own rights. What was disclosed can therefore matter independently of the vote approving the accounts.
Public-law claims do not share a single fault or recovery rule
Under Art. 52 AHVG, intentional or grossly negligent disregard of contribution rules causing loss can produce a compensation claim. For a corporate employer, board members and persons managing or liquidating the company bear subsidiary liability; several persons responsible for the same loss are jointly liable for the whole loss. This is a different rule from liability for ordinary negligence under Art. 754 OR and differentiated solidarity under Art. 759 OR. An assertion that payroll was outsourced does not determine whether the individual’s own conduct met the contribution-law standard.8Bundesgesetz über die Alters- und Hinterlassenenversicherung vom 20. Dezember 1946 (SR 831.10) (AHVG), Art. 52.
The federal direct-tax rule is different again. Art. 55(1) DBG makes persons administering or liquidating a legal entity jointly liable when its tax liability ends, capped by liquidation proceeds or, where its seat or effective administration moves abroad, net assets. Liability falls away on proof of all care required by the circumstances. The provision does not impose unlimited liability for every tax debt on every person with a director title.9Bundesgesetz über die direkte Bundessteuer vom 14. Dezember 1990 (SR 642.11) (DBG), Art. 55(1).
For value-added tax, Art. 15(1)(e)–(f) MWSTG distinguishes liquidators of a dissolved entity from managing organs where a legal entity moves its seat abroad. The liquidation-proceeds or net-assets cap is accompanied by the limits and defense in Art. 15(2) MWSTG: the relevant tax, interest and costs must arise or fall due during management, and liability falls away to the extent the person proves everything reasonably possible was done to determine and discharge the tax claim. Neither rule is adequately captured by a statement that directors are liable for “the company’s taxes.”10Bundesgesetz über die Mehrwertsteuer (Mehrwertsteuergesetz) vom 12. Juni 2009 (SR 641.20) (MWSTG), Art. 15(1)(e)–(f) and (2).
Criminal liability requires another separation. Art. 102 StGB addresses corporate liability, including failure of organization that prevents attribution of an offense to an individual, and an independent organizational-prevention basis for specified offenses. It does not substitute a corporate fine for every individual prosecution. Art. 29 StGB can attribute a special corporate duty to the natural person acting in the specified capacity; Art. 158 StGB and Art. 165 StGB address disloyal management and mismanagement with their own elements. An appointment alone proves neither offense. Conversely, a parent’s approval of the conduct does not remove those elements if they are established.11Schweizerisches Strafgesetzbuch vom 21. Dezember 1937 (SR 311.0) (StGB), Art. 29, 102, 158 and 165.
4. What do the board paper, indemnity and insurance actually protect?
The Swiss business judgment rule concerns judicial restraint when reviewing business decisions made through a proper process, with an adequate information base and without conflicts of interest. BGE 139 III 24 also applies an objective standard of diligence assessed against the circumstances when the act or omission occurred. An adverse outcome alone does not establish breach. Equally, a paper labeled “business judgment” does not establish the quality of the process, independence or information on which the decision rested.12BGE 139 III 24, 26–28 E. 3.2–3.3.
The distinction becomes sharper outside a genuine business choice. In its 2019 judgment, the Federal Supreme Court distinguished business decisions from control and organizational tasks suited to judicial review. A reserved oversight duty cannot simply be redescribed as commercial discretion. Whether the disputed conduct was a funding decision, the design of financial controls or the failure to make a required notification may determine whether the claimed judicial restraint is relevant at all.13Urteil BGer 4A_623/2018 (n 4), E. 3.1.
Delaware counsel will recognize the separate concepts of charter exculpation, indemnification, advancement and insurance. Under Title 8 of the Delaware Code, Section 102(b)(7), permitted monetary-damage exculpation retains statutory exceptions, including loyalty, bad faith and improper personal benefit. Under Title 8 of the Delaware Code, Section 145, indemnification depends on its applicable statutory conditions, while advancement and insurance are separately addressed. The statute includes service at the corporation’s request for another enterprise, but that does not make the Delaware parent’s charter a Swiss subsidiary exculpation provision.14Delaware General Corporation Law, Title 8 of the Delaware Code, Sections 102(b)(7) and 145(a)–(g), (j)–(k).
Nor does the comparison support a suggestion that Delaware tolerates an uninformed board. Marchand v. Barnhill connects a good-faith effort at oversight with the duty of loyalty. Its reversal of a pleading-stage dismissal illustrates the distinction between operating-level compliance activity and board-level oversight allegations, without deciding final liability. The useful comparison is therefore between different legal protections and their limits, rather than between a demanding Swiss system and an obligation-free US one.15Marchand v. Barnhill, 212 A.3d 805 (Del. 2019), corrected opinion, slip op. at 29–31, 35–37.
Funding a claim is different from eliminating the duty
A parent indemnity can promise financial support without changing the subsidiary organ’s statutory task or binding an outside claimant. Its practical value depends on the promise’s scope, enforceability and the parent’s ability to perform when the claim arises. If the parent’s instruction is itself disputed, the same document may have to address both defense funding and a disagreement about whether the director acted within the promised protection. A later reimbursement right does not necessarily answer who pays for the defense while that dispute continues.
A directors’ and officers’ liability policy (D&O) raises contractual questions of its own. Where Swiss insurance law applies, Art. 33 VVG connects cover to the insured risk and clearly specified exclusions; Art. 14 VVG supplies rules on intentional and grossly negligent causation. The applicable contract and statutory setting still matter, including the professional-policyholder provisions of Art. 98a VVG. The label “global D&O” does not establish which Swiss office, claim or defense cost is insured.16Bundesgesetz über den Versicherungsvertrag (Versicherungsvertragsgesetz) vom 2. April 1908 (SR 221.229.1) (VVG), Art. 14, 33 and 98a.
Whether a limit is shared with other group claims, when a notification must be made and whether defense costs consume that limit depend on the policy actually purchased. The position of a former director may depend on terms that matter only after the appointment ends. No generic statement that a policy exists establishes cover for a contribution assessment, tax claim or criminal allegation. Those questions cannot be settled by treating civil damages, defense costs and a public-law payment as the same insured loss.
5. Strategic Considerations for US Executives on Swiss Subsidiary Boards
The recurring tension is between an integrated business and obligations assigned to a particular company and person. A US general counsel may see a research transfer, intercompany funding decision and local appointment as parts of one group initiative. Swiss law can attach different consequences to the subsidiary’s loss, a missed contribution payment and a failure to respond to financial distress. The group’s approval process does not necessarily identify the person responsible under each regime.
That tension also reaches matters outside conventional board administration. A transfer of research work can depend on the ownership of Swiss employee inventions, while a contemplated acquisition raises distinct Swiss merger-control questions. The board’s acceptance of a commercial plan does not resolve those legal conditions. Conversely, completion of a transaction’s regulatory work does not establish that the resulting intercompany arrangements satisfy the subsidiary organ’s duties.
Who had independent decision-making authority when the parent’s funding assumption changed, and what could the Swiss organ know about it? If a group executive functionally directed the subsidiary without a formal appointment, which decisions brought that person within the organ-liability inquiry? If the parent approved a transaction and later granted discharge, which facts were disclosed and which claimant’s rights remain outside that approval? These questions depend on the actual record and the precise claim, rather than a common director-liability label.
The legal work associated with fractional counsel can sit alongside the subsidiary’s governance, but retaining an adviser does not appoint that adviser as its board or management. Whether the mandate supplied analysis, exercised independent management authority or left a reserved decision with the existing organ remains consequential. The appointment letter, organizational regulation and actual conduct may describe different roles.
The protections raise their own unresolved questions. Does the promised indemnity fund the particular defense before entitlement is settled, and does the insurance policy cover the person in the capacity in which the claim is made? What happens if the claim concerns conduct benefiting the parent but harming the subsidiary, or if several group claims compete for the same available insurance? A defensible commercial rationale, a valid delegation and a collectible funding promise address different parts of the problem. Their coexistence is not proof that the individual’s Swiss duties have been discharged.