The duties behind the liability

Every board member owes the company care and loyalty: decisions taken on an informed basis, in the company's interest, with conflicts of interest disclosed and managed. These duties are personal. They apply to the passive member as much as to the president, they cannot be delegated away, and "I trusted the CEO" is no defence where oversight was owed. Delegating management is legitimate — abandoning supervision of it is not.

Liability follows when a breach of these duties causes damage. As long as the company is healthy, claims are rare; they surface when the company fails and creditors, or the insolvency estate, look back at what the board did and did not do.

Where it actually goes wrong

Two scenarios dominate Swiss practice.

  • Unpaid social security contributions. When a struggling company stops paying employee contributions, the authorities routinely claim the shortfall from board members personally. This exposure is real, common and largely independent of how involved the member was in daily operations.
  • Reacting too late to a crisis. Art. 725 ff. CO imposes escalating duties when capital is lost or overindebtedness threatens — monitor solvency, take restructuring measures, and involve the court where required. Boards that wait for the next big contract instead of acting are the classic defendants after a failure.

Beyond these, the recurring patterns are unmanaged conflicts of interest, transactions with related parties on generous terms, and signing off on accounts nobody on the board seriously questioned.

Diligent process is the real protection

Courts do not sanction bad outcomes; they sanction bad process. A business decision taken on adequate information, free of conflicts and in the company's interest is generally respected even when, in hindsight, it proved wrong. That protection is built before the decision, not argued afterwards: reliable and timely financial reporting, minutes that record what the board knew and why it decided as it did, dissent recorded when it exists, and external advice on major questions — on the record.

The moment warning signs appear — losses, stretched liquidity, unpaid contributions — the calculus changes: the duties of Art. 725 ff. CO come to the foreground, and continuing business as usual becomes itself the breach.

What to do

  • Insist on financial reporting you can actually rely on, at a fixed cadence.
  • Document decisions and their basis; a thin minute is worth little in litigation.
  • Treat unpaid social contributions as a personal red flag, not a cash-flow tactic.
  • When distress signals appear, take the statutory duties seriously and get advice early.

Whether a specific mandate exposes you, and how to structure it defensibly, depends on the facts — we are happy to review your situation with you.