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Audit in case of capital loss

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Smaller companies which are not subject to ordinary audits and do not employ more than 10 employees in full-time positions on average over the business year can forego the limited audit (opting-out). This option was created by legislators with the introduction of the currently applicable auditing law from 1 January 2008.

However, with the corporate law revision, which came into force on 1 January 2023, the legislator has introduced a new audit requirement in the event of a capital loss. If the last annual financial statements of a company show a loss of capital and the company does not have a statutory auditor (e.g. in the case of an opting-out), these must be subjected to a limited statutory examination by an licensed auditor before they are approved by the General Meeting (Art. 725a para. 2 CO). The board of directors appoints the licensed auditor and in this case the limited statutory examination is carried out on a contractual basis and not as a governing body. The limited statutory examination has to be performed until any capital losses have been cleared.

Good to know

Subordination agreements covering the amount capital loss do not eliminate a capital loss in accordance with Art. 725a para. 1 CO. Accordingly, there is no exemption from the audit obligation. The audit obligation no longer applies only if the board of directors have submitted an application for a moratorium (Art. 725a para. 3 CO).

Contractual audits in case of capital losses are considered to be particularly risky from an auditor's perspective. Before mandate acceptance, the terms of the engagement must be critically assessed.

Project Lead
Project Lead
  • Daniel Carotta

    Daniel Carotta

    +41 44 533 76 00


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