Nominee director Switzerland: what the law actually requires

The Swiss residency requirement: Art. 718 para. 4 CO

Article 718 paragraph 4 of the Code of Obligations states that every AG (Aktiengesellschaft) must be capable of representation by at least one person who is domiciled in Switzerland. The equivalent provision for a GmbH (Gesellschaft mit beschränkter Haftung) is Article 814 paragraph 3 CO. Both forms are subject to the same structural principle: the company must have a reachable, accountable point of authority inside the country.

The requirement attaches to the company, not to its owners. A non-resident may own 100% of a Swiss AG or GmbH, sit on its board from abroad, and direct its commercial affairs without relocating. None of that triggers the rule. What the rule addresses is the company's own capacity for representation: it must be possible for the Swiss authorities, the commercial register and creditors to reach someone with authority who is present within the jurisdiction.

Residence, not nationality, is the statutory criterion. A director who is genuinely domiciled in Switzerland (regardless of passport) satisfies the requirement; a Swiss national who lives abroad does not. For a company whose entire working board sits outside Switzerland, this creates a structural gap that an external resident-director mandate fills.

The commercial register checks the residency requirement at the time of incorporation and on every subsequent change of officers. A company that cannot demonstrate compliance cannot be entered. A company that loses its only resident representative and fails to replace it falls under Art. 718b CO, which gives the register authority a formal basis to act, up to and including steps that can lead to the company's dissolution. The resident-director requirement is therefore a continuing compliance obligation, not a box ticked at formation.

The appointment, once made, is publicly recorded in the commercial register, where it is searchable by any counterparty or authority. The name, signing authority and address of the resident representative are all visible entries, which is part of what the requirement achieves: transparent, verifiable accountability.

Why every nominee director in Switzerland carries Art. 754 CO liability

Article 754 of the Code of Obligations is the provision that makes the offshore nominee model structurally unsound in Switzerland. It provides that board members are personally liable to the company, its shareholders and creditors for any loss they cause through intentional or negligent breach of their duties. That liability cannot be excluded by contract or by declaring oneself a passive participant.

The offshore nominee concept rests on the premise that a person can sit on a board without bearing real duties, either because the local law is silent on director liability or because a contractual indemnity from the beneficial owner eliminates the exposure. Neither mechanism is available under Swiss law. An indemnity from the beneficial owner does not extinguish the director's liability to third parties; it is an arrangement between two parties that cannot bind those outside it.

Passivity is not a defence under Art. 754 CO. Swiss courts have consistently treated inadequate oversight as negligent breach of duty. A director who signs documents without reviewing them, who fails to verify that the company's accounts are in order, or who does not monitor the financial position well enough to identify when Art. 725 CO over-indebtedness duties are triggered, has breached their duty of care. The fact that they intended to be passive, or that a controlling shareholder told them not to ask questions, does not alter that analysis.

Two specific exposures arise in practice at companies of any size:

Unpaid social-security contributions. A director can be held personally liable for AHV contributions (old-age and survivors' insurance) that the company failed to remit. The exposure flows from the office, not from the level of the director's involvement in the company's day-to-day management. A nominee who never saw a payslip carries the same personal exposure as an engaged director, without the oversight that might have caught the arrears early.

Over-indebtedness under Art. 725 CO. Where a company's liabilities exceed its assets, Art. 725 CO imposes defined statutory duties on the board, including specific balance-sheet and notification obligations, that a director who lacks financial visibility cannot even know have been triggered. Their failure to act when those duties arise becomes an additional head of liability on top of the underlying over-indebtedness.

These are not theoretical risks. They arise at small, simple companies with ordinary operations, not only at failing enterprises with complex balance sheets. The resident-director mandate is structured to prevent them by building in the oversight that Art. 754 CO presupposes.

What a professional resident-director mandate includes

Art. 717 CO (duty of care and loyalty) and Art. 754 CO (personal liability) together define what a professional resident-director mandate must deliver: genuine board participation with real oversight, not a renamed nominee arrangement. The scope, as established in practice, covers the following elements.

Signing authority. The resident director holds signing authority for the company, recorded in the commercial register. In a mandate arrangement, authority is typically structured as collective (requiring more than one signatory for significant acts) rather than sole, so that no party can act unilaterally while the director retains the authority to fulfil their governance duties.

Board participation. The mandate holder sits on the board, participates in meetings and contributes to decision-making. Decisions taken in Switzerland and documented in minutes constitute one of the strongest indicators of genuine Swiss substance, relevant both to corporate governance and to the company's position on tax residence. A passive name on the register contributes nothing to this; an engaged mandate holder contributes substantially.

Register and corporate housekeeping. The mandate covers the filings that keep the company compliant with its Swiss corporate obligations: changes of director, changes of registered office, changes to share capital or articles of association, and annual formalities. It also covers the maintenance of the share register and the beneficial-owner register, both of which are statutory obligations.

Independent judgement and the right of refusal. The mandate holder exercises independent judgement on governance matters and retains the authority to decline instructions that would place them in breach of their duties under Art. 717 CO (duty of care and loyalty) or Art. 754 CO. This is the mechanism that makes the arrangement safe for the owner as well as the director: a mandate holder who will not execute improper instructions is the protection the engagement is designed to deliver.

Visibility over the company's affairs. For the oversight to be real, the mandate holder needs access to the company's accounts and bookkeeping, timely notification of significant decisions, and confirmation that social charges are being paid. These are preconditions, not preferences. Proper bookkeeping is the foundation on which all other oversight depends.

The owner's commercial control is preserved throughout. As shareholder, the owner appoints and can remove the board, sets the company's commercial direction and retains ownership of its shares. The resident director's role is governance and representation, calibrated to what the law requires, not a vehicle for taking over the business.

Risk allocation: who bears what

Article 754 CO and the social-security liability regime define the principal risk areas in a Swiss resident-director mandate; the table below maps where responsibility sits and what limits it (as of July 2026). It is not a complete legal map but a working overview of the exposures that arise most often.

The table makes visible what the offshore nominee model obscures: the resident director carries substantial personal exposure in the first two rows, and that exposure is real whether or not the director is paying attention. The professional mandate limits those exposures through structured oversight. A passive arrangement eliminates the oversight while leaving the liability intact, which is the combination that produces claims.

Governance duties: the beneficial-owner register and AML housekeeping

The beneficial-owner register is a statutory obligation for Swiss AGs and GmbHs. Swiss company law requires the company to maintain a record of the persons who ultimately own or control it above the applicable threshold, and to keep that record current. The board is responsible for this obligation, and in a resident-director mandate the mandate holder performs it as part of the governance scope.

The practical work involves establishing the register at or before formation, verifying the identity of the beneficial owners and updating the record when ownership or control changes. It is one of the clearest distinctions between a professional mandate and a passive nominee: a nominee who has never been told who owns the company cannot maintain a register of beneficial ownership, and the company's register becomes a compliance gap.

Beyond the register, the mandate holder's duty of oversight requires them to understand the company's activity, the nature of its business relationships and the basis on which its funds move. This is not the statutory AML programme of a licensed financial intermediary, but it is a real governance function. A director who endorses transactions without understanding their substance is operating in exactly the territory Art. 754 CO addresses: negligent supervision of a function over which they have formal authority.

In our advisory practice, we structure the mandate so that the mandate holder has the information rights needed to perform these duties: access to accounts, timely disclosure of significant transactions and changes of beneficial ownership, and confirmation that the company's KYC records are being maintained. The engagement is therefore not merely a name on the register but a working governance relationship grounded in the company's actual affairs.

When a resident director is not required

The Art. 718 para. 4 CO requirement is absolute for every AG and GmbH, but several structures exist where an external resident-director mandate is not needed because the requirement is satisfied another way.

A board member who is genuinely resident in Switzerland. Where one or more members of the actual working board are domiciled in Switzerland and hold signing authority, the requirement is already met. An external mandate is the solution for companies whose entire governance sits abroad; it is not needed where a real board member already satisfies the rule.

A resident manager for a GmbH. Article 814 paragraph 3 CO is satisfied by a manager (Geschäftsführer) who is resident in Switzerland and has signing authority. That person need not hold a board-level title; a senior employee with the right corporate registration can fulfil the obligation. Where this role exists internally, an external mandate adds no statutory compliance value.

A Swiss branch of a foreign company. A branch is not a separate legal entity. It does not have its own board and is not subject to Art. 718 CO as an AG would be. It must register a resident representative with signing authority, but that representative's role is different in character from a corporate director: they carry the branch's compliance obligations in Switzerland without sitting on a board with the attendant duty-of-care framework. The nominee-director question in the corporate-law sense does not arise for a branch.

A sole proprietorship. This form has no directors and no board. The owner must themselves be resident in Switzerland to operate a sole proprietorship, so the form is unavailable to non-residents and the resident-director question does not arise separately.

These carve-outs are structural, not optional workarounds. A company that genuinely falls within one of them does not need an external mandate. A company that does not meet any of them faces the requirement in full. Attempting to satisfy the rule nominally (for example by listing a resident person who never in fact exercises any authority) does not satisfy the substance of the obligation and creates the exact liability profile the rule was intended to address.

For context on how the residency requirement fits into the broader incorporation process for foreign founders, see the guide to Swiss company formation for non-residents, which sets out how the resident director, the registered office and the bank account interact at each stage.

The mandate as a maintained fiduciary engagement

Art. 718b CO gives the commercial-register authority the power to act against a company whose resident representation lapses, which is why the mandate is structured as a continuing fiduciary engagement rather than a one-off appointment. Several features of how it is maintained in practice matter to the overall risk picture.

Onboarding assessment. Before taking on the mandate, the mandate holder needs to understand the company: its activity, its ownership structure, the state of its bookkeeping and its risk profile. The director's exposure begins on the day of appointment, which means the assessment is not a commercial formality but a risk-management step for the mandate holder.

Ongoing board business. Board meetings are held in Switzerland and documented with minutes. This has two functions: it is how the director exercises and records the governance oversight the role requires, and it is also how the company builds the record of Swiss decision-making that supports its substance position. The meetings need not be frequent; they must be real.

Continuity through changes. The representation must be unbroken. When a resident director leaves, the company must have a replacement in place before the departing director is removed from the register. A gap in representation triggers Art. 718b CO and puts the company at risk. A professionally maintained mandate includes continuity planning so that this gap does not arise.

Pricing reflects the risk carried. The mandate is an ongoing annual engagement, quoted against the company's activity and risk. A more active or higher-risk company demands more oversight and carries more exposure for the director; the fee reflects that. It is not a name on a register at a flat rate, because the liability attached to the name is not flat.

The full service scope, including how the mandate is provided and what an ongoing engagement covers, is set out on the resident director and registered office service page. The registration process and what the commercial register holds are covered in the Handelsregister guide.