Swiss Federal Supreme Court rules that shareholders have no say on asset sales in composition proceedings

According to Swiss corporate law, the board of directors is generally competent to resolve on asset sales. The responsibility shifts towards shareholders, though, if an asset sale relates to all or a very significant part of the company's assets and where there is no intention to reinvest the sales proceeds in accordance with the company's statutory purpose (so called factual liquidation). If no such shareholder approval is sought, an asset sale transaction is exposed to the risk of being null and void for breaching mandatory Swiss corporate law. A counter exception is admitted by the Swiss Federal Supreme Court where the company is over-indebted and where time is of the essence or in case of a stalemate among shareholders.

The Swiss Federal Supreme Court has now ruled in its most recent decision 5A_53/2026 of 4 May 2026, published on 27 May 2026, that the aforementioned corporate law rules are superseded by the rules on composition proceedings if an asset sale transaction is being pursued during composition proceedings. In essence, the following rules apply:

• During a composition moratorium, the board and management of a Swiss company remains in place and is responsible for the company's affairs. It acts under the supervision of the court and, to the extent appointed by the court, by an administrator.
• Certain transactions cannot be carried out by the company and the administrator alone but require approval from the court (or the creditors' committee, if appointed). This requirement applies, in particular, to the sale of non-current assets (including, e.g., property, plant and equipment as well as investments in subsidiaries).
• The court will approve a sale of non-current assets if time is of the essence and further provided that it supports the company's restructuring and is not detrimental to the interests of creditors.
• If the court approves an asset sale, shareholder approval is not required even if a factual liquidation results from the sale. Shareholders (like creditors) also have no standing to challenge the court approval.

The decision of the Swiss Federal Supreme Court removes uncertainty for asset sales and ensures that pre-pack and other transactions can be structured robustly and implemented without undue delay or shareholder obstruction. This does not mean, though, that shareholder interests may be ignored entirely by the board of directors under its fiduciary duties when proposing an asset sale transaction during a composition moratorium, namely if a residual equity value exists.

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Legal Note: The information contained in this Smart Insight newsletter is of general nature and does not constitute legal advice.