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Details on Site Contribution
 
Site contribution
Date: October 2014
Prepared by:
Dr. Martin Eckert, Attorney at law, Partner
MME Legal | Tax | Compliance
Gubelstrasse 11
6300 Zug
Phone:   +11 41 726 99 66
Fax:   +41 41 726 99 60
E-Mail:   martin.eckert@mme.ch
Caution: This summary is an overview only. It is highly recommended to seek professional advice.
I. Summary
The most important channels of selling in Switzerland are local agents or distributors. Foreign companies may also market their products and services through employed sales persons, local branches or local subsidiaries. The different channels are subject to different legal frameworks.
Switzerland provides an excellent infrastructure for companies operating in the greater European area and offers attractive opportunities for foreign companies wishing to sell their products and services in Switzerland, Europe and the Middle East. Many multinationals use Switzerland as hub for their EMEA sales activities.
Sales organizations may benefit from Swiss law since – as shown below – no goodwill payment is due according to Swiss distribution law under certain circumstances.
A typical choice of law clause reads as follows:
This Agreement shall be governed by and construed and interpreted in accordance with the substantive laws of Switzerland, excluding the Swiss conflict of law rules. The United Nations Convention for the International Sales of Goods ("Vienna Sales Convention") is excluded.
Please note that for distribution into the EU market, the principal-friendly Swiss law is overruled by mandatory EU law. EU law provides for a mandatory goodwill payment in favor of the agent and the distributor.
II. Applicable Law
  •  
  • Code of Obligations (CO)
  •  
  • Ordinance on the Commercial Register (HRegV)
  •  
  • Civil Code (CC)
  •  
  • Federal Act on Cartels and other Restraints of Competition (CartA)
  •  
  • Federal Law on Product Liability
  •  
  • Federal Law on Product Security
  •  
  • Swiss Fair Trading Act
  •  
  • United Nations Convention on Sales of Goods (Vienna Sales Convention)
    III. Detailed Information
    Agency contracts are governed by article 418a to 418v Swiss Code of Obligations (CO). Article 418a CO defines the agent as a person who is contractually obliged, on a continuous basis and without being an employee, either (i) to act as an intermediary on behalf of one or several principals in business transactions (application agent), or (ii) to conclude such transactions in their names and for their accounts (underwriting agent).
    Although an agent in the aforementioned sense is acting in the name and for account of a third party (the principal), he always performs his work independently, that is in a self-employed capacity. He may organize his work and dispose of his time freely. In practice, commercial agents and insurance agents play a decisive role in business. To insurance agents, additional rules of the Swiss Insurance Contract Law apply.
    If a person or a company acts independently, like an agent, but on a case by case basis or on a single deal basis rather than continuously, such arrangement is not to be qualified as an agency contract but constitutes a brokerage contract. Brokerage contracts are governed by different legal rules (article 412 et seq. CO). On the other hand, even if a commercial agent is working only on a part-time basis, but continuously, the provisions concerning commercial agency agreements (article 418a et seq. CO) are applicable, unless the parties have stipulated something different in writing (article 418a para. 2 CO).
    A person or company undertaking, against payment of a commission, to sell and/or purchase goods in his own name rather than in the principal's name, although acting on the principal's account, is not a (commercial) agent, but a commission agent, again subject to a different legal regime (article 425 et seq. CO).
    Agency agreements are not subject to any specific written formalities and may be concluded orally. In any case, due to the complexity of the relationship between the commercial agent and the principal, written contracts are generally recommended.
    In general, the parties may freely negotiate the contractual terms. However, when drafting an agency contract, the parties should be aware of the statutory agency law (article 418a et seq. CO):
  • There are mandatory provisions.
  • There are subsidiary provisions (these provisions apply if the parties have nothing agreed to the contrary).
  • Certain provisions can only be modified, if the parties put their agreement in writing (articles 418a para. 2, 418c para. 2 and 3, 418f para. 3, 418g para. 1 and 3, 418k para. 1, 418q para. 1, 418t para. 2 CO).
    Further, if an agent operates a commercial business of a certain size, he or she must register the business in the commercial register (article 36 HRegV).
    The principal is generally entitled to directly compete with the agent and/or to engage as many other agents for his purposes as he deems necessary. In practice, the parties usually negotiate exclusivity provisions and define a certain scope of exclusivity (geographical area or a class of goods). Unless otherwise agreed in writing, a commercial agency agreement is not exclusive and an agent is entitled to work in the territory of his choice. An agent is also entitled to work for several principals, even if they are competitors (article 418c CO), the written contract does not provide otherwise. Conflicting representations, that is representing the principal and the customer in the same business transaction, however, are prohibited (see III.1.5).
    Notwithstanding the general principle of non-exclusivity, the law presumes that if a certain territory or a clientele is being allocated to an agent, the latter has exclusivity (exclusive agent) in such territory or for such clientele, unless otherwise agreed upon in writing (article 418f para. 3 CO).
    A commercial agent is obligated to carefully safeguard the interests of the principal with the care of an ordinary merchant (duty of care, article 418c para. 1 CO). The scope of authority of an agent is limited (article 418e para. 1 CO). An agent is obliged (and authorized) to act as an intermediary in business transactions, to receive notices and other declarations of defect or non-performance by which the customer asserts his right arising out of undue performance of the principal. An agent is, however, not generally authorized to accept payments from customers, to grant or extend terms of payment, or to modify otherwise, alter or supplement contracts between principal and customer (article 418e para. 2 CO). Consequently, an agent is not responsible for the payments and the performance of customers, or for debt collection expenses (delcredere liability). If an agent shall bear such delcredere risks, this must be agreed upon in writing. In this case, the agent has an inalienable right to an adequate special compensation for taking this additional risk (article 418c para. 3 CO).
    Fiduciary duties play an important role in agency agreements. An agent shall be loyal to his principal. The duty of loyalty prohibits an agent from disclosing the principal's business secrets to third parties, even after termination of the agency agreement (article 418d para. 1 CO). Moreover, as a result of his duty of loyalty, an agent is in general not allowed to represent both the principal and the purchaser in the same transaction (conflicting representations). If he still does so, the respective contract, as a rule, yet remains valid, but the agent has to remit to the principal any consideration received from the purchaser and shall indemnify the principal for damages, if any. On the other hand, an agent is generally entitled to work for several principals, unless otherwise agreed upon in writing (see III.1.4 above).
    During the contract period, non-competition clauses and exclusivity clauses are allowed and must be in writing.
    Unless otherwise agreed upon in writing, the agent may act on behalf of several principals during the agency relationship (article 418c para. 2 CO). However, without the principal’s approval the agent may not act as an agent for competitors during the agency relationship.
    After the termination of the contract, non-competition clauses are allowed but restricted (article 418d para. 2 CO). In order to be enforceable, such post-contractual non-competition clause must be in writing and reasonably limited with regard to place (usually the agent's territory), time (at most three years following termination of the agreement), and subject (as a rule, the principal's business under the agency agreement). If these three limitations are not sufficiently observed, the judge may reduce the scope of the non-competition obligation accordingly (article 340a para. 2 CO, by analogy). In case an agent breaches the obligation to not compete, the principal is entitled to damages.
    In case of a stipulated post-contractual prohibition against competition, the agent has an inalienable right to a special compensation upon termination of the agency agreement (so-called waiting allowance according to article 418d para. 2 CO).
    Subject to other agreements between the parties, the principal basically has the following three duties:
    (a)  the duty to pay the commissions agreed upon (article 418g para. 1 CO);
    (b) the duty to support the agent to the extent necessary to enable him/her to successfully perform his/her function (article 418f para. 1 CO); and
    (c) the duty to refrain from doing anything that could jeopardize the success of the agent's activity (article 418f para. 1 CO).
    An agent is entitled to the agreed or customary brokerage commission or underwriting commission on all business transactions in which he acted as an intermediary, or which were concluded during the term of his agency agreement. Unless otherwise agreed upon in writing, the agent is also compensated for transactions not directly procured by him/her, but concluded by the principal with customers that the agent formerly solicited for such transactions (article 418g para. 1 CO). Equally, the agent is entitled to commissions which result from follow-up orders of customers that were solicited by the agent during the term of his agency agreement (article 418t para. 1 CO).
    Commissions are usually based on sales prices and calculated as a percentage of such sales prices. In practice, the parties frequently agree on other forms of remuneration, such as payments per pieces sold, lump sum compensations, fixed fees, etc.
    The Swiss Code of Obligations provides special rules for agents to whom a certain territory or a certain clientele is exclusively allocated (see article 418f para. 3 CO, above III.1.4). Such exclusive agents are entitled to the agreed upon or customary commissions on all business transactions that are concluded with customers in that territory or of that clientele during the term of the agency contract, irrespective of whether or not the agents were involved (article 418g para. 2 CO).
    Besides the ordinary commissions as outlined above, an agent is occasionally entitled to collection commissions (Inkassoprovisionen) (article 418l para. 1 CO) and delcreder commissions (Delkrederekommissionen) (article 418c para. 3 CO). The statutory collection commission for amounts collected by the agent, in accordance with special instructions from the principal, may be waived, while delcreder commissions are within the agent's inalienable right.
    While performing his contractual obligations, the agent is confronted with costs such as overhead expenses, telecommunication and mailing costs or travel expenses. Under Swiss law, the agent has no claim for reimbursement of such costs and expenses incurred in the ordinary course of his business (article 418n para. 1 CO). However, costs incurred upon special instructions of the principal shall be compensated (article 418n para. 1 CO).
    As a guarantee for being paid, the agent has an inalienable right of retention against the principal up to the amount of his claims arising under the agency relationship. The agent may retain movable property and financial instruments of the principal which are in his possession under the agency agreement (article 418o para. 1 CO). Likewise, an agent is entitled to withhold customer payments which he collected for the principal's account pursuant to a special authority to collect (article 418e para. 2 CO). In the event of the principal's insolvency, the right of retention is granted even for claims not yet due (article 418o para. 1 CO). Notwithstanding the above, the right of retention is limited to realizable property (property which has a market value) and therefore can not be exercised, for instance, on the principal's price lists, general conditions of sale, advertising materials, customer lists, and other non-commercial business documents (article 418o para. 2 CO).
    The parties may freely negotiate the term and renewal of agency agreements. Although Swiss law does not set specific limits for fixed-term agency agreements, an excessively long duration restricts the personal freedom of either party unduly and thus is void (article 27 para. 2 CC). Most courts are likely to treat exclusive agency agreements with excessively long fixed terms (e.g., more than ten years) as unlimited agreements subject to the ordinary termination rules.
    If the agency contract was concluded for a limited period of time, or if such period can be deducted from ist purpose, the agency contract is terminated without further notice upon the expiration of such period (article 418p para. 1 CO). If, in spite of the expiration of the fixed term, the relationship is tacitly continued by both parties, the agreement is deemed to have been renewed. Thereby, the law explicitly provides that a renewal shall last for the same period of time, but under no circumstances for longer than one year (article 418p para. 2 CO).
    If the agreement does not specify a determined period (unlimited agency agreement), and if such period can not be deduced from ist purpose, the party wishing to terminate the agreement has to send a notice of termination. During the first year of the contract period, the contract can be terminated with a notice period of one month effective as of the end of a calendar month. An agreement of shorter notice must be in writing (article 418q para. 1 CO). If the contractual relationship has lasted for a period of at least one year, it can be terminated with a notice period of two months, effective at the end of a calendar quarter. The parties have the possibility to agree upon longer notice periods and/or other effective dates (article 418q para. 2 CO), but they can not validly agree on notice periods shorter than two months. Finally, the stipulation of different notice periods for the principal and the agent is prohibited in all cases (article 418q para. 3 CO).
    Besides the ordinary termination right according to article 418q CO, both parties have the right to terminate an agency agreement immediately and without notice. Such a termination without notice is only allowed for so called valid reasons (termination with cause, article 418r CO). This provision is compulsory. The law defines valid reasons as any circumstance under which the terminating party can not in good faith be expected to continue the contractual relationship (article 337 para. 2 CO by analogy). 'Valid reasons' is a very vague concept of law giving a judge wide discretion on the existence of such circumstances (article 337 para. 3 CO). Notwithstanding, the parties are free to explicitly define valid reasons in their agreement. A termination for valid reasons shall be exercised without delay, otherwise the cause is deemed to be forfeited.
    All claims of an agent for commissions or other compensations become due at the end of the agency relationship at the latest (article 418t para. 2 CO). Unless otherwise agreed upon or customary, an agent has a claim for post-contractual commissions only on such orders which the principal received prior to the termination of the agency relationship and only on transactions solicited by the agent during the agency relationship.
    Under certain circumstances, a commercial agent has an inalienable right for a compensation for clientele. This special compensation is not qualified as an additional consideration for the performance of an agent, but it is rather a payment for the goodwill of the principal and may be used after termination of the agency contract. In order to be entitled to such goodwill payment, the following preconditions must be met (article 418u para. 1 CO): The agent, through his/her activity, has substantially increased the principal's clientele so that, even after termination of the agency relationship, the principal benefits substantially from the business relations with the acquired clientele. The claim for compensation is forfeited if the agency relationship is terminated for a reason which the agent is responsible for (article 418u para. 3 CO). The goodwill claim shall not exceed the amount of net earnings derived under the contract for one year. It is calculated on the average earnings of the last five years, or if the relationship has not lasted so long, on the average of the total contract period (article 418u para. 2 CO).
    Upon termination, the parties have certain obligations of restitution. On the date of termination of an agency relationship, each party shall make restitution to the other of everything it has received during the contractual period from the other party or from third parties on account of the other party. The right of retention of the contracting parties as discussed above remains reserved (see III.1.9, article 418v CO).
    2.1  Definition
    Under Swiss law, a distributor is defined as a person or a company who is contractually obliged to buy the supplier's products in order to resell them in a particular territory on an exclusive or non exclusive basis. A typical duty of the distributor is the duty to perform sales promotions. In contrast to an agent who only acts as an intermediary of the principal (see III.1 above), a distributor is legally independent and acts on his own behalf and for his own account and risk. Thereby, the ownership of the contractual goods shifts from the supplier to the distributor. Accordingly, the distributor bears the whole marketing risk.
    Despite its importance in business, the distribution agreement is not laid down as statutory rules in the Swiss Code of Obligations. In practice, various statutory rules of other contracts are applied analogous to distribution agreements. It is therefore strongly recommended that the parties of a distribution agreement define its obligations and the consequences of the performance in detail.
    A distribution agreement may be concluded orally. Due to the complexity of the relationship between a distributor and his supplier, and since Swiss law does not provide statutory rules on distribution agreements, written contracts are the standard and highly recommended.
    Since distribution agreements are not regulated by statute in Switzerland, they should (and normally do) explicitly state whether the distributor is granted exclusivity or not. The parties are free to negotiate on exclusivity and also to define the scope of it. Unless otherwise agreed upon, exclusivity prohibits the supplier to appoint another distributor or to directly sell products into the exclusive territory or to the exclusive clientele. In order to comply with the Swiss antitrust law (Swiss Competition Law; CartA), however, the exclusivity clause shall not prohibit passive sales by other distributors into the exclusive area (article 5 para. 4 CartA). Accordingly, a distributor is allowed to sell goods outside of his territory, provided that he simply responds to orders reaching him from clientele and is not actively soliciting sales outside of his exclusive area.
    The distributor buys and resells the products of the principal. He does not receive a "compensation" from the principal. His revenue is the difference (the spread) between the purchase price (price to be paid to the principal) and the sales price to the market or to sub-distributors. Since a distributor, by definition, is an independent business entity, buying and selling for his own account, he is normally not entitled to claim compensation for general business costs and expenses. Unless explicitly agreed upon, a distributor may likewise not claim compensation for specific costs triggered by individual obligations under the contract such as the obligation to maintain an inventory, to engage in market analysis, research, etc.
    Agreements regarding minimum or fixed resale prices are generally illegal as this is assumed to eliminate fair trade (article 5 para. 4 CartA) and may result in a fine by the SCC (see also Directive on Vertical Restraints [Decision of the Swiss Competition Commission dated 28 June 2010]). Even price recommendations may be considered as illegal, if they have the same effect as fixed prices.
    As a security for claims resulting from the distribution relationship, general contract law grants the distributors a right to retain movable property and securities of the supplier which are in the distributor's possession pursuant to the distribution agreement (article 895 CC). However, the right of retention is limited to realizable property (i.e., property with a market value). Therefore, the right of retention may not be exercised, for example, on supplier's price lists, general conditions of sale, advertising material and/or other business documents without a market value. Unlike the agent's right of retention pursuant to article 418o para. 1 CO (see III.1.9 above), the distributor's right of retention may be waived by agreement in advance.
    A supplier is obliged to sell contractual products to the distributor pursuant to the terms and conditions of the distribution agreement. A supplier shall further refrain from selling contractual products directly or indirectly into the exclusive territory of the distributor, unless such right has been retained in the written contract. The supplier has an obligation to support the distributor's efforts to promote sales by placing at his disposal the required assistance and information for a successful resale, for promotion, after-sale service, etc. If a distributor has the right to use supplier's trademarks or other intellectual property rights, the supplier shall define the use and shall not interfere with it.
    The main obligations of a distributor are to purchase (exclusively, as the case may be) contractual products pursuant to the terms and conditions of the distribution agreement and to actively promote the resale of such products within the defined territory and/or clientele. The distributor is often contractually obliged to purchase a minimum quantity of products. By fixing minimum purchase requirements, the economic risk is shifted to the distributor. The distributor's duty to perform sales may be emphasized by a duty to engage in a market analysis or research, to advertise products, to maintain an inventory and to provide after-sales services. The distributor frequently has the obligation to use the trademark or other intellectual property rights of the supplier, thus enhancing the trademark owner's reputation.
    The parties may freely negotiate the term and renewal of distribution agreements. Agency and distribution agreements are generally treated similarly with respect to term and termination. With respect to open ended distribution agreements, courts usually apply the legal provisions for agency agreements (article 418q CO) by analogy. Fixed-term distribution agreements are terminated without further notice upon expiration of the fixed term (article 418p para. 1 CO; see III.1.10 above). In connection with fixed-term agency agreements, the law explicitly provides that a tacit continuation at the end of the term entails a renewal of the agency agreement for the same period of time, but not more than one year (article 418p para. 2 CO; see III.1.10 above). It is uncertain, whether the same rule applies to distributorship agreements by analogy. Depending on the actual circumstances, a tacitly renewed distributorship agreement may qualify as an indefinite term agreement, subject to the ordinary termination rules of partnerships (article 546 para. 1 CO: termination at any time by giving six months prior notice) or it may qualify as a renewed fixed-term agreement, subject to either the fixed term of the expired agreement, or any other term implicitly agreed between the parties.
    Like agency agreements, distribution agreements may be terminated immediately for valid reasons (see III.1.10 above). Death or incapacity of the distributor, as well as bankruptcy of the supplier generally terminate the agreement offhand.
    According to the Swiss anti-trust laws, the term of a distribution agreement containing a non-competition clause may not exceed five years (article 12 item f of the Directive). Therefore, distribution agreements containing a non-competition clause with an infinite term or with a tacit renewal clause may be illegal (article 5 para. 1 CartA).
    For decades, it was a firm assumption of Swiss courts that a distributor was developing a clientele for his own account, and for this reason courts constantly denied any goodwill compensations to distributors upon termination of their distribution agreements. Such practice was likewise heavily criticized for years by legal writers, stating that at least in connection with the sale of branded goods such assumption was not correct. In a decision of 22 May 2008, the Swiss Supreme Court finally decided that a distributor may be entitled to a goodwill compensation for his clientele like an agent (Swiss Supreme Court decision 134 III 497), if certain conditions were met. The Supreme Court explained this shift by the fact that the interests of an agent and of a distributor are rather similar, although not in every situation. According to the May 2008 Supreme Court decision, the interests of an agent and of a distributor are, indeed, comparable if two preconditions are met:
    (a) The distributor must be closely integrated into the sales organization of the supplier and the supplier must dispose of an extensive right of supervision. This means that the autonomy of the distributor is rather limited, shifting his position closely to the one of an agent. The Supreme Court considered several criteria in order to decide whether a distributor was autonomous or not: for example minimum purchase requirements, minimum stock requirements, duty to disclose business records, duty to tolerate unilateral changes of prices and conditions and the like.
    (b) Additionally, the clientele of a distributor must remain loyal to and thus transfer to the supplier after termination of the distribution agreement. In this connection, 'transfer' means that the distributor is not able to maintain the customers after the distribution contract is terminated. A transfer of customers is particularly likely and thus assumed in the case of sales of branded goods. After termination, the supplier of the goods (owner of the brand) or the new distributor (new seller of the brand) normally benefit from the clientele that was acquired by the former distributor. Customers usually stick to the new supplier of a brand and not to the former distributor.
    Nevertheless, if the two above mentioned conditions are not met, a distributor (still) has no right to a goodwill compensation. If, on the other hand, the preconditions are met, the Supreme Court, in a second step, recommends to examine the respective provisions of the agency laws to determine whether a goodwill compensation is owed (article 418u CO, see III.1.11). The following are relevant factors: The distributor, through his activity, has substantially increased the supplier's clientele so that even after termination of the distribution relationship the supplier (possibly through his new distributor) benefits substantially from the business relations with the acquired clientele. However, the claim for compensation is forfeited if the distributorship was terminated for a reason for which the distributor was responsible (article 418u para. 3 CO, by analogy). Furthermore, the goodwill claim shall not exceed the amount of net earnings derived from the contract for one year. The exact amount is calculated on the basis of the average earnings of the last five years, or if the relationship has not lasted so long, on the average of the total contract period (article 418u para. 2 CO, by analogy).
    Non-competition undertakings for the time after termination of a distribution agreement are only admissible if the non-competition arrangement does not exceed a one-year term (article 5 para. 1 CartA and article 12 item g of the Directive). The supplier may, however, restrict for an unlimited time the use or disclosure of know-how which is not publicly known (article 12 item g para. 2 of the Directive). Unlike an agent, absent a written agreement, a distributor has so far not been afforded by the Swiss Supreme Court a right to a special compensation in case of a post-contractual non-competition arrangement.
    The Swiss Cartel Law provides for restrictions on vertical agreements, including distribution agreements. According to the Swiss Competition Commission, vertical agreements are defined as coordinated understandings or behaviour patterns between companies of different market levels fixing the terms of trade relating to the purchase, sale or resale of certain goods or services (article 4 para. 1 CartA). Such vertical agreements are illegal if they substantially interfere with the competitive environment or eliminate fair trade between market actors (article 5 para. 1 CartA). An elimination of competition is assumed, if distribution agreements allocate territories in a way that passive sales from one territory into another territory are prohibited, or if the agreement contains minimum or fixed retail prices (article 5 para. 4 CartA). Passive sales are defined as unsolicited requests for products by customers located outside the distributor's territory, which the supplier reserved for himself or for other distributors. Violations of article 5 para. 4 CartA may result in direct sanctions by the SCC. Fines may amount up to 10% of the turnover realized in Switzerland in the last three years (article 49a CartA).
    Nevertheless, vertical agreements are not necessarily and automatically deemed to be destructive. In some cases, vertical agreements may significantly enhance trade efficiency as a consequence of a better coordination between the involved companies. Such coordination may lead to a decrease of transaction and distribution costs and may optimize the turnover results of the companies. In this connection, the SCC issued the previously mentioned Directive of 28 June 2010, which entered into force 1 August 2010. This Directive contained general criteria under which vertical agreements, such as contained in distribution agreements, may be deemed eliminating competition in the sense of article 5 para. 4 CartA and thus are regarded as illegal. Even though the Directive does not officially bind civil courts, the latter are expected to take a close look at ist content when considering the admissibility of a vertical restraint in a distribution agreement. The test of whether or not a vertical restraint in a distribution agreement is considered to be illegal under the Swiss Cartel law is rather complex. It is therefore advisable to involve a professional advisor at an early stage.
    By contrast to an agent, a travelling sales person (Handelsreisender, article 347 CO) is subordinated to his/her employer and is obligated to strictly perform work according the employer's instructions. Such person acts as an intermediary or concludes business transactions outside of the premises of the employer, similar to a commercial agent, but he or she is acting under an employment contract and not as an independent business person.
    If a foreign supplier chooses to sell his/her products in Switzerland through travelling sales persons or other employees who are not Swiss nationals, a work permit is required prior to immigrating and/or working in Switzerland. Both, the foreign supplier and his/her travelling sales person(s) (employees) may become subject to Swiss social security legislation. If travelling sales persons buy products from a stock maintained by the foreign supplier in Switzerland, such activity may qualify as permanent establishment under Swiss tax law, subjecting the foreign supplier to Swiss taxes on his Swiss earnings.
    If a foreign supplier chooses to sell his products in Switzerland through a Swiss branch of a foreign company, the branch does not have a legal personality of its own although it may run the business independently. Through the branch, the foreign supplier becomes subject to Swiss taxes and Swiss jurisdiction. The foreign head office may be sued and is fully liable for any commitments of the Swiss branch. Such liability is not limited to the Swiss assets of the head office but reaches out to all of its assets wherever located in the world.
    If a foreign supplier chooses to sell his products in Switzerland through a Swiss subsidiary, such companies are usually established in the form of corporations (Aktiengesellschaft) or limited liability partnerships (Gesellschaft mit beschränkter Haftung). A corporation under Swiss law is a company with a predetermined capital that is divided into bearer or registered shares. A limited liability partnership also has a company capital, divided into partner quotas, but there are no written securities issued for such quotas. An incorporated Swiss subsidiary has its own legal personality and a foreign supplier establishing such company does not himself become subject to Swiss jurisdiction. The supplier neither becomes responsible for the Swiss company's liabilities, except indirectly as shareholder or quota holder of the Swiss subsidiary. The liability of a shareholder or quota holder is, however, limited to the full payment of the stock capital (corporation) or the nominal capital (limited liability partnership). One single founder may establish a corporation. There are no specific restrictions as to the nationality of the founder(s). At least one director (whether Swiss national or not) must be resident in Switzerland.
    IV. Useful Links
  •  
  • Swiss Legislation (in English)
  •  
  • Competition Commission