In a recent judgment rendered on 3 March 2025[1], the Swiss Federal Supreme Court (“FSC”) issued a major reversal of its case law concerning criminal mismanagement under Article 158 of the Swiss Criminal Code (“SCC”), as it applies to companies limited by shares (sociétés anonymes).
The FSC has now extended the scope of the offence to include the entire gross assets of a company limited by shares — i.e., the total of all assets — and no longer restricts it to the net assets (assets minus liabilities).
This development represents a significant evolution in the criminal protection of corporate assets, including in situations where the company is overindebted.
1. Factual background: overindebted company and private expenditures
The case involves the sole shareholder and chairman of the board of a company limited by shares that faced serious financial difficulties as early as summer 2010. The company’s debts exceeded CHF 609,000, and by the end of September 2010, it was formally overindebted.
At that time, funds were secured from a group interested in acquiring a stake in the company, but most of the loans – totaling EUR 420,000 – were never repaid.
Despite this critical financial situation, the sole shareholder continued to:
- draw a salary;
- fund his housing and luxury vehicles;
- use the company’s credit card for private purposes.
Between 1 October 2010 and 28 May 2011, the withdrawals exceeded CHF 252,000.82, and were booked as business expenses.
By judgment dated 27 May 2011, the Cantonal Court dissolved the company for lack of an audit body and ordered its liquidation. Claims against the company totaling CHF 2,486,380.65 were filed in the bankruptcy proceedings. The company was officially struck off the register on 5 November 2013.
2. The cantonal criminal proceedings against the sole shareholder
According to Article 158 para. 1 subpara. 1 SCC, any person who by law, an official order, a legal transaction or authorisation granted to him, has been entrusted with the management of the property of another or the supervision of such management, and in the course of and in breach of his duties causes or permits that other person to sustain financial loss shall be liable to a custodial sentence not exceeding three years or to a monetary penalty.
If the offender acts with a view to securing an unlawful financial gain for himself or another, a custodial sentence not exceeding five years or to monetary penalty shall be imposed (Article 158 para. 1 subpara. 3 SCC).
In light of the conduct described above (see section 1), the first-instance Cantonal Court, by judgment dated 15 July 2022, found the sole shareholder guilty of aggravated criminal mismanagement, and sentenced him to a suspended monetary penalty of 180 daily units at CHF 160, taking into account 171 days of pretrial detention. He was also ordered to pay a compensatory claim of CHF 252,000 to the canton.
On 13 July 2023, the second-instance Cantonal Court reclassified the offence as an impossible offence of aggravated mismanagement and reduced the sentence to 90 daily units at CHF 180, deemed fully served due to time spent in detention.
3. The Federal Supreme Court’s reversal
The shareholder appealed to the Federal Supreme Court, seeking an acquittal.
He argued that the characterisation of the offence as an impossible offence presupposes a factual error to the detriment of the offender, which was not the case here, since he had full knowledge of the company’s financial situation at the time the alleged acts were committed.
The FSC first recalled that even a single-shareholder company limited by shares holds its own distinct assets, which must be protected not only externally but also vis-à-vis its own governing bodies. As a result, acts committed by the board of directors to the detriment of a single-shareholder company may constitute criminal mismanagement, even if the sole shareholder has given consent.
According to the Court’s previous case law, hidden dividend distributions or other acts of disposal by the director and sole shareholder could only fall under Article 158 SCC if they affected the company’s net assets, understood as the share capital and statutory reserves. Dispositions leaving this net asset base intact were not covered by the offence[2].
- However, the FSC expressly reversed its previous position.
In the decision under review, the FSC held that the classical notion of damage must prevail: under Article 158 SCC, it is sufficient for mismanagement to result in a reduction of the company’s assets, without the need for its net assets to be affected.
Thus, the voluntary reduction of the company’s gross assets must be regarded as causing damage to the company’s creditors.
In other words, a company that, at the time of the acts, does not have any net assets — because its liabilities (foreign capital) exceed its assets — can still suffer damage.
The FSC further held that the duties of care and loyalty incumbent on the members of the board of directors (Article 717 of the Code of Obligations (“CO”)) serve to protect the company’s assets, not only in the interest of shareholders, but also in the interest of third parties, such as employees and other creditors.
The creditors’ interest in the preservation of corporate assets is protected not only by the criminal provisions on bankruptcy offences (Articles 163 ff. SCC) — which require the opening of bankruptcy proceedings as a condition of criminal liability — but also by Article 158 SCC on criminal mismanagement[3].
4. Insight and Conclusion
Overindebted companies may therefore also qualify as victims of property offences. This applies not only to offences such as theft or fraud, but also to criminal mismanagement under Article 158 SCC.
It is therefore essential to bear in mind the following key considerations:
- Single-shareholder ≠ carte blanche: Even in a one-person company limited by shares, the company remains a distinct legal entity.
- Document everything: Payments and benefits drawn from company funds must be justified, especially in crisis.
- Risk of personal liability: Misuse of company funds — even in a failing business — may lead to prosecution and financial penalties.
At lecocqassociate, our team regularly advises directors, shareholders, and corporate entities on matters relating to criminal liability, corporate governance and asset protection.
If you would like more information on how this case law shift may impact your business or legal strategy, please contact our team. We would be happy to assist you.
[1] Swiss Federal Supreme Court, judgment 6B_1211/2023 of 3 March 2025.
[2] Swiss Federal Supreme Court, ATF 141 IV 104, para. 3.2.; Swiss Federal Supreme Court, judgment 6B_262/2024 of 27 November 2024, para. 2.1.2.
[3] Swiss Federal Supreme Court, ATF 141 IV 104, para. 3.2, with references to ATF 117 IV 259.
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