Caution: end of retroactive opting out!

From 1 January 2025, retroactive opting out will no longer be permitted under Swiss law. Companies wishing to opt out under current law are advised to obtain their entry in the Commercial Register before 31 December 2024. 

With effect from 1 January 2025, Swiss law no longer permits retroactive opt-outs.

Companies wishing to proceed with an opt-out under the current legislation are advised to obtain their entry in the Commercial Register before 31 December 2024.

Given the high popularity of the opt-out among SMEs, it is expected that undecided companies will do so before the new legislation comes into force, even if this means giving up opting out during the financial year.

If a company is not required to have its annual financial statements audited by a statutory auditor, it must in principle submit them to a limited audit.

A company with no more than ten full-time employees on an annual average may, with the consent of all shareholders or members, dispense with a limited audit. This is commonly referred to as "opt-out".

Unless the shareholders or members decide otherwise, the waiver of the limited audit takes effect immediately and applies to subsequent years (as long as the conditions for opting out continue to be met).

For instance, companies can now opt out of the limited audit of their annual accounts for the current or previous financial year ("retroactive opt-out").

If the financial year has already ended, current law allows an opt-out decision to be taken as long as the six-month period following the end of the financial year has not expired and the relevant annual accounts have not yet been approved.

With effect from 1 January 2025, Swiss law no longer permits retroactive opt-outs.

In particular, a company will no longer be able to waive the limited audit for the current financial year (which has not yet ended), or for a financial year which has already ended but for which the annual financial statements have not yet been approved by the general meeting or members' meeting. An opt-out may only be resolved for the following financial year. In addition, the entry in the Commercial Register must specify the beginning of the financial year from which the waiver takes effect.

This ban on retroactive opting out is part of the measures adopted by Parliament and the Federal Council to combat the abuse of bankruptcy, which should already have come into force on 1 January 2024.

The new provisions will apply from 1 January 2025. Companies wishing to opt out under the current law are advised to register this in the Commercial Register before 31 December 2024; otherwise, they will have to wait until the following financial year to opt out.

Companies with a 31 December year-end that wish to opt out will be required to do the following:

• For the 2023 financial year: decide on the opting out before 30 June 2024 and simultaneously register the opt-out in the Commercial Register, but no later than 31 December 2024.
• For the 2024 and 2025 financial years: decide to opt out and register this in the Commercial Register by 31 December 2024.

For the reasons outlined above, this is a real innovation in Swiss law that could affect many Swiss companies. Given the popularity of opting out among SMEs, it can be expected that undecided companies will opt out before the new legislation comes into force, even if this means giving up opting out during the current financial year.