Annual Report 2016

8
Regulatory developments | FAOA 2016
(Art. 1a bis para. 3 letter c D-BankA
in conjunction with Art. 9a para. 4
D-AOA).
The FFSA creates uniform competition
rules to improve customer protection.
The Act includes rules for all financial
services providers with respect to the
provision of financial services and the
offer of financial instruments. The
FFSA is not expected to have direct
consequences for the audit industry.
Amendment of company law
On 23 November 2016, the Federal
Council adopted the dispatch to
parliament on the amendment of the
Code of Obligations (company law,
CO). The following points are of particular
note from an audit perspective:
− The draft introduces a so-called
«capital band». Such a band is
also compatible with the waiver
of the limited audit if the capital
band only foresees the possibility
of increasing share capital (Art.
727a para. 2 D-CO). If the lower
threshold of the capital band is set
lower than the share capital entered
in the commercial register,
a licensed audit expert must issue
an audit confirmation analogous
to that issued with respect to a
capital reduction (Art. 653w para.
1 section 2 D-CO).
− The general meeting can resolve
to pay an interim dividend when,
amongst other things, an interim
balance sheet (see also Art. 960f
D-CO) has been audited by the auditor
before the resolution of the
general meeting (Art. 675a para.
2 D-CO). Interim dividends cannot
therefore be paid by companies
that have waived the audit (Art.
727a para. 2 D-CO).
− If the last financial statements show
that net assets no longer cover two
thirds of aggregated share capital,
capital reserves and retained
earnings, the board of directors
performs a review of the financial
situation of the company and takes
measures to rectify the capital loss
(Art. 725a para. 1 D-CO). If the
company does not have a statutory
auditor the last financial statements
must, in addition, be subjected to
a limited audit by a licensed auditor
before their approval (Art. 725a
para. 2 D-CO); this audit requirement
lapses if the board of directors
applies to the court for a moratorium
(Art. 725a para. 3 D-CO).
The statutory auditor, respectively
licensed auditor, acts «with due
haste» (Art. 725a para. 4 D-CO).
− If there are reasonable concerns
that the liabilities of the company
are no longer covered by its assets
the board of directors must immediately
prepare interim financial
statements to going concern and
liquidation values. Interim financial
statements to liquidation values are
not required where the assumption
of going concern is given and no
over-indebtedness is shown in the
interim financial statements. If going
concern cannot be assumed
financial statements to liquidation
values suffice (Art. 725b para. 1
D-CO). The board of directors must
engage the statutory auditor, or if
there is none a licensed auditor, to
audit the interim financial statements
(Art. 725b para. 2 D-CO). If
both interim financial statements
show company over-indebtedness
the board of directors notifies the
court. The court opens insolvency
proceedings or proceeds according
to Article 173 of the Federal Law
on Debt Collection and Bankruptcy
(Art. 725b para. 3 D-CO; moratorium
or composition agreement).
Court notification is not required
where creditors to the amount of
the over-indebtedness consent to
be subordinated to all other creditors
and defer their claims, provided
that the subordination covers
the amount of the debt and interest
payments for the period of the
over-indebtedness; or so long as
there is a reasonable expectation
that the over-indebtedness will be
rectified within a reasonable time,
not longer than 90 days after the
audited interim financial statements
become available, and the
over-indebtedness will not increase
materially (Art. 725b para. 4 D-CO).
If the company does not have a
statutory auditor the licensed auditor
has the notification duties of a
statutory auditor performing limited
audits (Art. 725b para. 5 D-CO).
The statutory auditor, respectively
licensed auditor, acts «with due
haste» (Art. 725b para. 6 D-CO).
− Properties and participating interests
whose actual value has risen
above purchase price or production
cost can be revalued up to this
value to eliminate a capital loss or
over-indebtedness (Art. 725c para.
1 D-CO). However, this is only permissible
if the statutory auditor, or
if there is none a licensed auditor,
confirms in writing that the legal
provisions have been complied with
(Art.725c para. 2 D-CO, equating
to the current Art. 670 CO).
− Where the share capital of a company
is not denominated in Swiss
francs (see also Art. 621 D-CO), for
the purpose of determining audit
law thresholds (Art. 727 para. 1
section 2 CO) the reporting date exchange
rate applies to the balance
sheet total and the average rate for
the year applies to sales (Art. 727
para. 1 bis D-CO).
− It is clarified that the independence
provisions of the law also apply to
companies that are controlled by, or
control, the audited company or the
auditor. The management principle
is thereby replaced by the control
principle (Art. 728 para. 6 D-CO).
− The auditors of quoted companies
now audit the remuneration
report as to compliance with the
law and statutes (Art. 728a para.
1 section 4 D-CO).
− The general meeting can no longer
dismiss the auditor unconditionally
but only on important grounds (Art.
730a para. 4 D-CO). The grounds
must be disclosed in the notes to
the financial statements (Art. 959c
para. 2 section 14 D-CO).