Shell Company Transactions
The End of Retroactive Opting-Out and Restrictions by the new Swiss Corporate Law Amendments.

Recent reforms of Swiss corporate legislation have introduced significant changes affecting the acquisition and management of so-called Firmenmäntel (in English often referred to as shell companies or shelf entities). These changes also abolish the option of a retroactive opting-out from statutory audits. For entrepreneurs dealing with the purchase or sale of a Mantelgesellschaft—whether as an AG Mantel (comparable to a stock corporation shell) or a GmbH Mantel(comparable to a limited liability shell)—it is now more crucial than ever to be aware of the new rules.

Previously, companies could retroactively waive the requirement for a limited audit, which was often advantageous for businesses with minimal trading activity. Following the recent changes to the Swiss Code of Obligations (see Art. 727 et seq. CO, as revised on 1 January 2023), this practice is no longer permitted. Hence, an opting-out resolution can only apply to future financial years and must be adopted in a timely manner by the general meeting (for stock corporations) or the assembly of members (for limited liability companies).

The trade in shell companies—including the purchase of a Firmenmantel or an inactive AG Mantel / GmbH Mantel—is now subject to more stringent oversight. The primary intent behind these amendments is to curb abusive practices and bolster transparency. Sellers and buyers are now required to demonstrate that the transfer of the shell entity is valid and based on fair terms.

The new Federal Act on Combating Abusive Bankruptcies amends several laws, including the OR, SchKG, StGB, and DBG. The transfer of shares in over-indebted, inactive companies without realizable assets is prohibited (Art. 684a nOR). Commercial registers will have expanded powers and may request audited financial statements in case of suspicion.

Violations can lead to civil and even criminal sanctions.

Businesses that relied on the retroactive opting-out or have been involved in trading shelf entities should ensure prompt compliance with the revised legislation. While the law does provide certain transitional arrangements allowing previous practices for a limited period, it is advisable to act swiftly to avoid any complications.

Furthermore, the new rules signify a broader tightening of audit requirements. Smaller entities that previously could forego a statutory audit should carefully check whether they still qualify for an opting-out under the revised provisions or whether a limited or ordinary audit is now required. More details are available in Articles 727 and 727a CO (2023) and in the explanatory notes published by the Swiss Federal Office of Justice (www.bj.admin.ch).

Companies planning to restructure or looking to acquire or sell a shell company—whether referred to in Swiss law as a Mantelgesellschaft or in English jurisdictions as a shell or shelf company—are advised to examine these latest developments closely and seek professional guidance if needed. Given the tighter controls, thorough due diligence is paramount to avert potential legal risks and costs. In the future, further professionalization in dealing with shell entities can be expected, as authorities will likely enforce these regulations more rigorously.

Disclaimer: This text does not constitute legal advice. For specific guidance tailored to individual corporate situations, professional consultation is recommended.

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