Bankruptcy Abuse: Stricter Rules Take Effect

The tightened Swiss bankruptcy legislation, in force since 1 January 2025, introduces several important changes that are not yet widely known. Below are two practical pitfalls that businesses should be aware of.

The number of corporate bankruptcies is currently rising. At the same time, new legal provisions have come into force with the aim of preventing abusive bankruptcy practices and strengthening creditor protection. These changes introduce not only new requirements but also stricter rules governing two existing practices that now require greater care and attention.

Stricter Controls on Shell Company Transactions

The practice of "organised company burial"—the transfer of inactive corporate entities, commonly referred to as shell company trading—will now be subject to closer scrutiny.

This occurs when an over-indebted company that no longer conducts any meaningful business activities and effectively consists only of its legal corporate shell is transferred to a new owner.

Under the new rules, the Commercial Register Office must actively investigate any suspected shell company transaction and request supporting documentation where necessary.

In addition, bankruptcy offices are now required to file a criminal complaint in every bankruptcy case where there are indications of possible criminal conduct or abuse.

Take Care When Opting Out of an Audit

Swiss public limited companies (AG) and limited liability companies (GmbH) are generally subject to statutory audit requirements.

A company must undergo an ordinary audit if it exceeds two of the following three thresholds during two consecutive financial years:

• Annual revenue of CHF 40 million
• Total assets of CHF 20 million
• An average workforce of 250 employees

Companies below these thresholds are normally subject to a limited audit.

An exception applies to businesses with ten or fewer full-time equivalent employees, which may opt out of the limited audit altogether.

Since 1 January 2025, however, an opting-out declaration may only apply to future financial years and only if the company's most recently audited annual financial statements are submitted.

This change significantly reduces the possibility of concealing financial difficulties by waiving the audit during an ongoing financial year.

Another new transparency measure is that the effective start of an opting-out arrangement is now published in the Commercial Register, making the information publicly accessible.

Source: Treuhand | Suisse