{"id":137884,"date":"2026-04-08T11:32:40","date_gmt":"2026-04-08T11:32:40","guid":{"rendered":"https:\/\/legal500.designextreme.com\/guides\/?post_type=hot_topics&p=137884"},"modified":"2026-04-08T11:32:40","modified_gmt":"2026-04-08T11:32:40","slug":"carve-out-transactions-particularities-under-swiss-law","status":"publish","type":"hot_topics","link":"https:\/\/legal500.designextreme.com\/guides\/hot-topic\/carve-out-transactions-particularities-under-swiss-law\/","title":{"rendered":"Carve-Out Transactions: Particularities under Swiss Law"},"content":{"rendered":"

The Swiss M&A market showed meaningful momentum in 2025, with deal activity\u00a0and volume\u00a0advancing beyond 2024\u00a0\u2013\u00a0yet\u00a0tariff shocks and geopolitical uncertainties\u00a0led\u00a0to\u00a0the year still\u00a0landing\u00a0slightly below expectations, underscoring a landscape defined by selectivity and disciplined\u00a0underwriting.\u00a0Looking ahead to 2026,\u00a0the\u00a0upward\u00a0momentum\u00a0is expected to\u00a0continue,\u00a0remaining\u00a0subject to geopolitical and macroeconomic\u00a0risks.\u00a0<\/span>\u00a0<\/span><\/p>\n

Amidst\u00a0such\u00a0uncertain environment,\u00a0coupled\u00a0with\u00a0the\u00a0ever-growing\u00a0business importance of\u00a0technological advancements, 2026 is expected to be\u00a0a\u00a0year of\u00a0carve-outs\u00a0<\/span>(put simply, transactions where a company sells or spins off a portion of its business, typically a subsidiary or division, while retaining ownership of the rest)<\/span>. Companies\u00a0will\u00a0look to divest non-core businesses, sharpen portfolio focus, and redirect capital towards rising investment demands\u00a0in other\u00a0areas\u00a0such as\u00a0AI and digitalisation.\u00a0<\/span>\u00a0<\/span><\/p>\n

In general, the Swiss legal environment provides the involved parties with\u00a0vast flexibility to structure a carve-out. However, certain particularities\u00a0(non-comprehensive)\u00a0which\u00a0we\u00a0would like to\u00a0briefly\u00a0touch on\u00a0need to be considered.<\/span>\u00a0<\/span><\/p>\n

Contract Transfer\u00a0\u2013\u00a0Consent\u00a0Required<\/span><\/b>\u00a0<\/span><\/p>\n

In case a business unit is transferred\u00a0by way of a singular succession\u00a0(<\/span>e.g.<\/span><\/i>\u00a0by way of an asset purchase agreement),\u00a0the\u00a0legal requirements\u00a0for the\u00a0valid\u00a0transfer of each\u00a0specific\u00a0asset or liability must be\u00a0observed\u00a0(<\/span>e.g.<\/span><\/i>\u00a0written assignment of claims, transfer of possession, etc.).\u00a0With\u00a0regard\u00a0to\u00a0the transfer of entire contractual relationships\u00a0relating to the business unit,\u00a0the\u00a0consent of each contractual counterparty is\u00a0generally\u00a0required.\u00a0<\/span>\u00a0<\/span><\/p>\n

According to some scholars, this is not the case if the assets relating to the business unit are being transferred\u00a0under\u00a0the Swiss Merger Act. According to the Swiss Merger Act, the\u00a0assets\u00a0and liabilities\u00a0are transferred to the\u00a0buyer\u00a0upon entry\u00a0of the\u00a0transfer\u00a0into\u00a0the\u00a0commercial register by way of partial universal succession,\u00a0which\u00a0does not require the\u00a0consideration\u00a0of\u00a0the formal requirements that would otherwise have to be\u00a0observed\u00a0for the transfer of individual assets by way of singular succession.\u00a0According to some scholars, also the contracts relating to such assets automatically transfer to the acquirer,\u00a0<\/span>i.e.<\/span><\/i>\u00a0without the consent of the contractual counterparties.<\/span>\u00a0<\/span><\/p>\n

However, the Federal Supreme Court never\u00a0decided on this matter\u00a0and\u00a0thus\u00a0a residual uncertainty\u00a0remains.\u00a0Therefore,\u00a0it is\u00a0prudent\u00a0– at least for the\u00a0material\u00a0contracts – to obtain\u00a0an explicit\u00a0consent\u00a0from\u00a0the\u00a0contractual counterparties in any case.\u00a0<\/span>\u00a0<\/span><\/p>\n

Thus, given that even in case of a transfer of assets\u00a0in accordance with\u00a0the Swiss Merger Act the consent of contractual counterparties\u00a0is\u00a0required for\u00a0the transfer of the respective contracts,\u00a0it may be advisable to structure the entire asset transfer by way of a singular succession as the Swiss Merger Act may have certain disadvantages (such as joint liability\u00a0of transferor and transferee or publication obligations\u00a0related to the mandatory filing with the commercial register).<\/span>\u00a0<\/span><\/p>\n

Transfer of Employees\u00a0\u2013\u00a0Swiss TUPE\u00a0Rules<\/span><\/b>\u00a0<\/span><\/p>\n

As\u00a0various other\u00a0jurisdictions, Switzerland knows TUPE rules.\u00a0<\/span>If a business unit or part of a business unit is transferred by way of an asset deal, the pertaining employment agreements transfer by operation of law to the acquirer, including\u00a0insurance and pension commitments, employee participation schemes such as option plans and all other rights and obligations relating to the employment relationship.\u00a0The following applies to a transfer by operation of law:\u00a0<\/span>\u00a0<\/span><\/p>\n

Each employee may\u00a0object\u00a0to the transfer\u00a0\u2013 the respective objection period is not\u00a0fixed\u00a0but a few weeks\u00a0are\u00a0generally considered\u00a0to be\u00a0appropriate. In this case, his\/her employment relationship nevertheless transfers to the acquirer as a first\u00a0step, but\u00a0terminates with the applicable\u00a0<\/span>statutory<\/span><\/i>\u00a0(not contractual) notice period from the objection (<\/span>i.e.<\/span><\/i>\u00a01-3 months depending on years of service), but earliest at closing.\u00a0<\/span>\u00a0<\/span><\/p>\n

Transferor and acquirer are jointly and severally liable towards the employees for claims becoming due (i) before closing or (ii) after closing until the employment relationship could have been\u00a0terminated\u00a0(with regular contractual notice period) or is\u00a0actually\u00a0terminated\u00a0by\u00a0the relevant employee\u00a0(via their objection to the transfer). Usually, Swiss asset purchase agreements provide for a vice versa indemnity \/ wrong pocket clause to\u00a0allocate\u00a0employment costs for pre-closing claims to transferor and post-closing claims to acquirer.<\/span>\u00a0<\/span><\/p>\n

If a collective labor agreement (CLA) applies to a transferred employment agreement, the acquirer must\u00a0comply with\u00a0the CLA terms for\u00a0one year\u00a0post-closing\u00a0unless the CLA\u00a0expires or is\u00a0terminated\u00a0earlier. If the CLA applies by law (<\/span>allgemeinverbindlicher\u00a0GAV<\/span><\/i>) or is incorporated by an employment contract as part thereof, the CLA in principle\u00a0remains\u00a0applicable also thereafter\u00a0(i.e.\u00a0following the lapse of the\u00a0one year\u00a0period).<\/span>\u00a0<\/span><\/p>\n

If,\u00a0as a result of\u00a0the transfer, measures with negative consequences for the employees are intended (<\/span>e.g.<\/span><\/i>\u00a0layoffs, reduction of benefits going forward etc.), the employee representation or absent the same all employees must be consulted:\u00a0<\/span>i.e.\u00a0<\/span><\/i>they must have the opportunity to submit suggestions. These are not binding, but the transferor and\/or\u00a0the acquirer\u00a0(as applicable)\u00a0must duly assess them and may not take a final decision prior to the end of the consultation (be careful\u00a0regarding\u00a0communication!). If no negative measures\u00a0regarding\u00a0employees are intended, they need only be informed\u00a0regarding\u00a0the transfer. Consultation or information must\u00a0take place before closing; usually this is done between signing and closing of the\u00a0asset purchase agreement (APA).<\/span>\u00a0<\/span><\/p>\n

Perpetual Licenses\u00a0\u2013 Maximum Term Required<\/span><\/b>\u00a0<\/span><\/p>\n

Often in carve-out transactions license agreements between the involved parties are\u00a0required. A Swiss particularity is that other than under\u00a0various other\u00a0jurisdictions, no perpetual licenses are\u00a0permitted.\u00a0The maximum\u00a0permitted term\u00a0of licenses\u00a0depends\u00a0on the specific circumstances:<\/span>\u00a0<\/span><\/p>\n

The Swiss law provision that may limit the admissible term of a contract and allowing a party to\u00a0terminate\u00a0early (other than for reasons like cause) is article 27 para. 2 of the Swiss Civil Code (“CC”), which reads as follows: “No person may surrender his or her freedom or restrict the use of it to a degree which violates the law or public morals.”\u00a0<\/span>\u00a0<\/span><\/p>\n

In 2017 the Swiss Federal Supreme Court\u00a0dealt with the question whether and after which period termination\u00a0of\u00a0a “perpetual” (or\u00a0very long\u00a0term) agreement must\u00a0be\u00a0possible.\u00a0While\u00a0in this specific case the Swiss Federal Supreme Court decided that an individual who was a party to a shareholders’\u00a0agreement could\u00a0terminate\u00a0such shareholders\u2019\u00a0agreement after some 30 years based on\u00a0article 27 para. 2 CC,\u00a0it made clear that article 27 para. 2 CC does not protect a party against a long-term\u00a0contract, but only against excessive commitments. In this respect it\u00a0stated\u00a0that as far as the freedom of commercial activities is concerned, the Federal Supreme Court is restrictive in assuming that article 27 para. 2 CC is violated.\u00a0Further,\u00a0in this context\u00a0it needs to be noted that it appears\u00a0generally acknowledged\u00a0by the courts and scholars that legal entities (as opposed to individuals) may invoke article 27 para. 2 CC only under more restrictive conditions.<\/span>\u00a0<\/span><\/p>\n

However, there is a decision of the Commercial Court of the Canton Zurich\u00a0rendered\u00a0in 1998 dealing\u00a0with an agreement that has at least some similarities to a license and supporting a significantly longer term. In this case the claimant tried in 1995 to\u00a0terminate\u00a0on the basis of\u00a0article 27 para. 2 CC an agreement that had been concluded in 1961 and renewed in 1966 for a term until 2050. The Commercial Court had to assess whether the claimant (a commercial entity) was excessively bound by an agreement continuing still for a period of 54 years (contract term remaining after claimant’s notice until 2050), and came in its assessment to the conclusion that this is not the case, i.e. protected a (remaining) contract term of\u00a0over\u00a050 years.\u00a0<\/span>\u00a0<\/span><\/p>\n

Thus, the relevant question is less the term as such,\u00a0but whether the commitments a party has assumed under the contract unduly restrict its commercial freedom if it\u00a0remains\u00a0bound until the expiry or next\u00a0possible termination\u00a0date.\u00a0In this regard it is important to note that the relevant\u00a0circumstances\u00a0for the assessment of excessiveness\u00a0are\u00a0not\u00a0those at\u00a0the time at which the contract is concluded, but\u00a0those at\u00a0the time at which\u00a0a\u00a0termination\u00a0on the basis of\u00a0article 27 para. 2 CC\u00a0is being\u00a0sought.<\/span>\u00a0<\/span><\/p>\n

TSA Services\u00a0\u2013 Termination Without Notice Period<\/span><\/b>\u00a0<\/span><\/p>\n

The CO does not set forth termination rights specific to\u00a0(transition) services agreements. Therefore, the general termination right\u00a0applicable to general mandate agreements\u00a0pursuant to\u00a0article 404\u00a0para. 1\u00a0CO is\u00a0generally\u00a0applicable\u00a0also to\u00a0transition services agreements\u00a0(TSAs).\u00a0Article 404\u00a0para. 1\u00a0CO reads as follows (free translation):\u00a0<\/span>“The mandate can be revoked or terminated at any time by either party.”<\/span><\/i>\u00a0<\/span><\/p>\n

The Swiss\u00a0Federal\u00a0Supreme Court has consistently held this provision to be mandatory, i.e.\u00a0not subject to party agreement and has consistently invalidated contractual agreements\u00a0that sought to limit article 404\u00a0para. 1\u00a0CO, including penalty clauses that would\u00a0have been triggered by exercising this revocation \/ termination right. Consequently,\u00a0this right is available to\u00a0the parties of a carve-out transaction\u00a0at any time.<\/span>\u00a0<\/span><\/p>\n

There is no difference in legal effects between revocation and termination, typically,\u00a0therefore both terms are used synonymously and generally reference is made\u00a0only to termination. Termination under article 404\u202fpara. 1\u00a0CO\u00a0operates\u00a0prospectively\u00a0(<\/span>ex\u00a0nunc<\/span><\/i>). This means that the terminated contract does not have to be unwound.<\/span>\u00a0<\/span><\/p>\n

To mitigate\u00a0this\u00a0risk\u00a0of an unexpected termination or at least the resulting costs,\u00a0there are a couple of different approaches.\u00a0First,\u00a0<\/span>should such termination be declared at\u00a0a highly sensitive\u00a0and detrimental point in time to the other party, the termination\u00a0remains\u00a0valid and effective, but the terminating party is liable for damages caused by the termination of the contract (reliance \/ negative interest)<\/span>\u00a0(article\u202f404 para.\u00a02\u00a0CO).\u00a0To\u00a0determine\u00a0whether a termination has been\u00a0<\/span>declared at\u00a0a highly sensitive\u00a0and detrimental point in time, the overall context of the carve-out transaction as well as the agreed terms under the TSA may be relevant.\u00a0<\/span>Second,\u00a0the structuring of the\u00a0contract\u00a0may be relevant. If the TSA is not structured as a pure mandate or mandate-like agreement but as a mixed agreement with, for example, elements of a purchase agreement, the mandatory termination right according to article\u00a0404 CO may not be applicable.\u00a0Third,\u00a0in critical cases, the parties may agree\u00a0that the TSA is governed by non-Swiss law and\u00a0jurisdiction\u00a0(if there are valid reasons for choosing non-Swiss law).<\/span>\u00a0<\/span><\/p>\n

Tax Considerations\u00a0\u2013 Tax-neutral Demerger Possible<\/span><\/b>\u00a0<\/span><\/p>\n

Swiss tax laws offer a tax-efficient option to structure a carve-out,\u00a0i.e.\u00a0a tax-neutral demerger of a Swiss company to a Swiss sister company. Such demerger\u00a0generally\u00a0implies\u00a0a transfer of assets to a sister company of the transferring entity\u00a0at (tax) book values, without any compensation being granted in return to the transferring company. As the demerger does not trigger any blocking period, the shares in the receiving sister company may\u00a0subsequently\u00a0also be sold by the shareholder via a share deal without triggering any adverse tax consequences. This can especially be beneficial for a Swiss tax resident individual shareholder, as a share deal in\u00a0general results in a tax-free capital gain. In comparison, an asset deal is a taxable event for the\u00a0company\u00a0and a\u00a0potential subsequent dividend distribution leads\u00a0to taxable dividend income for the individual shareholder.\u00a0<\/span>\u00a0<\/span><\/p>\n

Tax-neutrality of a demerger is possible in case the following conditions are met:\u00a0<\/span>\u00a0<\/span><\/p>\n

i) The concerned assets and liabilities remain subject to Swiss tax liability;<\/span>\u00a0<\/span><\/p>\n

ii)The tax book values of the assets and liabilities are retained;<\/span>\u00a0<\/span><\/p>\n

iii) The transferred assets represent one or more going concern business operations or partial businesses; and<\/span>\u00a0<\/span><\/p>\n

iv) The legal entities resulting from the demerger (transferring and acquiring entities) each carry on a going concern business operation or partial business after the demerger.<\/span>\u00a0<\/span><\/p>\n

It\u00a0is\u00a0advisable to confirm the tax neutrality of such carve-out through an advance tax ruling with the Swiss tax authorities.\u00a0Obtaining such tax rulings is\u00a0common practice\u00a0in Switzerland,\u00a0ensures legal security and could\u00a0facilitate\u00a0discussions with a potential buyer\u00a0in the event of\u00a0a\u00a0subsequent\u00a0disposal of the receiving entity.\u00a0<\/span>\u00a0<\/span><\/p>\n

Pension\u00a0\u2013 Partial Liquidation<\/span><\/b>\u00a0<\/span><\/p>\n

Carve-out\u00a0transactions may also trigger a\u00a0situation where the employees\u00a0pertaining to\u00a0the transferred business unit\u00a0will have to be transferred to another pension scheme while the\u00a0remaining\u00a0employees will stay in the\u00a0transferring company\/group’s\u00a0pension scheme.\u00a0While this is typical for asset deals (carve-out), such a separation of the pension fund is necessary for certain share deals as well,\u202fe.g.\u202fwhere a seller group of companies sponsors or is affiliated with a group pension scheme and the shares in one or several \u2013 but not all \u2013 group companies are transferred.\u202f<\/span>\u00a0<\/span><\/p>\n

Within such pension fund separation context, a partial liquidation of a pension scheme is typically triggered if (i) the number of employees is reduced significantly, (ii) the company is restructured or (iii) the affiliation contract is\u00a0terminated. The pension scheme\u202fis obliged to\u202fprovide the exact prerequisites\u00a0and the procedure\u00a0for such a partial liquidation.\u202f<\/span>\u00a0<\/span><\/p>\n

Where a partial liquidation is triggered, the employees have a right to their accumulated individual shares of the plan assets as well as\u00a0certain reserve positions\u00a0in the pension fund\u2019s balance sheet (if any). The pension fund must seek a fair allocation of assets and liabilities between its pensioners and the active insured population\u00a0as well as between the\u00a0leaving and the remaining insured population, whereas all insured persons, including the pensioners,\u00a0have the right to be informed and the right to object against the allocation decision. A partial liquidation may only be executed once the objection procedure\u00a0with\u00a0the first\u00a0instance\u00a0is over (or if no objection has been raised).\u202fIf the pension fund is underfunded for Swiss law purposes at the time of the partial liquidation, this might lead to a reduction of\u00a0the pension benefits of the insured persons\u00a0(up to the amount of the retirement assets).\u202f<\/span>\u00a0<\/span><\/p>\n

Further to that, upon a separation on the level of the pension fund, the employer often needs to find a new pension solution whereby employee consent will be\u00a0required.\u202fIn some cases, the conversion of a group pension scheme into a collective pension scheme may be a suitable\u00a0option. It is recommended to carefully evaluate all alternatives, while\u00a0considering also\u00a0the actuarial aspects of the existing and potential future pension solutions.\u202fSpecific attention should also be given to the retiree’s population and their\u202ffinancing situation.\u202f<\/span>\u00a0<\/span><\/p>\n

In light of\u202fthe above, it is recommended that any pension aspects around a\u00a0carve-out\u00a0transaction\u00a0be\u00a0carefully reflected in the negotiations\u00a0of\u00a0the SPA or APA and that sufficient time\u00a0be\u00a0allocated\u00a0also for implementation steps – not only but\u00a0especially\u00a0in underfunding situations.<\/span>\u00a0<\/span><\/p>\n

Deal Certainty and Timing \u2013 New (limited)\u00a0Swiss\u00a0FDI Screening Regime\u00a0and\u00a0revision\u00a0of\u00a0the Swiss\u00a0Merger Control\u00a0framework<\/span><\/b>\u00a0<\/span><\/p>\n

Until now, Switzerland has had<\/span>\u00a0no general foreign direct investment (FDI) screening mechanism. This\u00a0<\/span>will change with<\/span>\u00a0the Investment Screening Act, ISA (<\/span>Investitionspr\u00fcfgesetz,\u00a0IPG<\/span><\/i>) that\u00a0is expected to enter into force\u00a0during\u00a02027.\u00a0<\/span>\u00a0<\/span><\/p>\n

Under\u00a0the\u00a0new FDI screening regime, acquisitions of Swiss companies\u00a0registered with the commercial register\u00a0(or their assets constituting a business unit) by investors directly or indirectly controlled by a foreign state will\u00a0require\u00a0prior approval by the federal government (State Secretariat for Economic Affairs,\u00a0SECO) if the target\u00a0(i)\u00a0operates in a\u00a0specific\u00a0critical sector\u00a0(e.g.\u00a0defence, energy supply, critical infrastructure or certain high-technology sectors)\u00a0and\u00a0(ii)\u00a0achieves\u00a0certain\u00a0turnover\u00a0or FTE\u00a0thresholds.\u00a0<\/span>The\u00a0<\/span>Swiss FDI regime solely focuses on\u00a0foreign\u00a0state-controlled investments and\u00a0thus has a significantly narrower\u00a0scope than\u00a0<\/span>comparable<\/span>\u00a0FDI screening mechanisms in the EU<\/span>. In\u00a0practice\u00a0only a handful of transactions are expected to\u00a0be affected<\/span>.<\/span>\u00a0<\/span><\/p>\n

For carve-out transactions, the new regime\u00a0becomes\u00a0relevant where the business unit being carved out\u00a0operates\u00a0in one of the\u00a0critical\u00a0sectors and the prospective acquirer is a foreign state-controlled entity. In such cases, the parties will need to\u00a0consider\u00a0an\u00a0additional\u00a0regulatory approval step, which may affect the transaction timeline and deal certainty. It is advisable to assess early in the process whether the\u00a0Swiss FDI\u00a0screening\u00a0could\u00a0be triggered and, if so, to account for the necessary lead time in the\u00a0overall\u00a0transaction\u00a0timeline.<\/span>\u00a0<\/span><\/p>\n

Furthermore,\u00a0Switzerland is also revising its merger control\u00a0intervention\u00a0standard by introducing the Significant Impediment to Effective Competition (SIEC) test, which lowers the\u00a0intervention\u00a0threshold\u00a0for\u00a0the\u00a0Swiss Competition Commission (COMCO). Until the enactment of this revision, which is expected in 2027, the dominance-plus test, which requires a dominant market position that could\u00a0eliminate\u00a0effective competition, will continue to apply.\u00a0The SIEC test\u00a0will create\u00a0legal\u00a0uncertainty during\u00a0at least\u00a0an\u00a0initial\u00a0period\u00a0and\u00a0it\u00a0is likely\u00a0that COMCO will\u00a0initiate\u00a0more phase 2 proceedings.<\/span>\u00a0<\/span><\/p>\n

In connection with the partial revision of the Cartel Act, COMCO\u00a0will\u00a0also\u00a0have the ability\u00a0to\u00a0extend\u00a0the one-month deadline for phase 1 by an\u00a0additional\u00a0month and the four-month deadline of phase 2 by\u00a0additional\u00a0two months.\u00a0Although these extensions will require\u00a0the notifying parties\u2019 consent, it is unlikely that they will refuse such consent.\u00a0<\/span>\u00a0<\/span><\/p>\n

For carve<\/span>\u2011<\/span>outs,\u00a0parties\u00a0may\u00a0therefore be confronted with possible longer\u00a0(and more complicated)\u00a0merger control proceedings\u00a0as well\u00a0as\u00a0with higher risks of deal\u00a0restrictions. Thus,\u00a0it is recommended that\u00a0merger control scoping should be considered\u00a0early in the\u00a0deal\u00a0process\u00a0including longer timeline buffers between signing and closing.\u00a0<\/span>\u00a0<\/span><\/p>\n","protected":false},"featured_media":0,"template":"","class_list":["post-137884","hot_topics","type-hot_topics","status-publish","hentry"],"acf":[],"_links":{"self":[{"href":"https:\/\/legal500.designextreme.com\/guides\/wp-json\/wp\/v2\/hot_topics\/137884","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/legal500.designextreme.com\/guides\/wp-json\/wp\/v2\/hot_topics"}],"about":[{"href":"https:\/\/legal500.designextreme.com\/guides\/wp-json\/wp\/v2\/types\/hot_topics"}],"wp:attachment":[{"href":"https:\/\/legal500.designextreme.com\/guides\/wp-json\/wp\/v2\/media?parent=137884"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}