If the last annual balance sheet shows that one-half of the share capital and legal reserves is no longer covered, the board of directors must convene a general meeting without delay and propose financial restructuring measures.

Where there is a valid reason for over-indebtedness, an interim balance sheet must be drawn up and submitted to a licensed auditor for examination.  If the interim balance sheet shows that the claims of creditors are not covered, whether the assets are appraised at going-concern or liquidation value, the board of directors must notify the court, unless certain creditors subordinate their claims to those of all other creditors, to the extent of the capital deficit,

Personal liability may arise if one or more board members do not comply with, among other things, their duty of care as set out. In most cases, personal liability will arise only in the case of bankruptcy proceedings. The other three tests are: (i) the occurrence of damage; (ii) adequate causality; and (iii) a quite complex test concerning the unlawfulness of the directors’ acts or omissions.

The factual quantification of the damage is in most cases a crucial point, as it is calculated and/or estimated from the point at which one or more board members began to violate their duties of care. As in most cases in which omissions are discussed, the calculation and quantification of the damage is generally a crucial point in any corporate liability litigation.

Directors can be also be charged with criminal behaviour under the Swiss Penal Code.

Personal liability exists not only for board members, but also for members of senior management. The debtor’s auditors may also be charged with corporate liability claims to the extent they have been negligent in the exercise of their duties. Auditors have similar bankruptcy notification duties if they realise that the board has not taken action to this end.