Company succession in inheritance law

Company succession under inheritance law often poses major challenges, as the current Swiss inheritance law does not recognise any special provisions for companies. This is why the Federal Council is proposing specific measures to facilitate company succession in its dispatch of 10 June 2022. The first amendments to the law on compulsory portions already came into force on 1 January 2023. The aim of the reform is to ensure greater stability for companies.

For the purposes of the draft law, «companies» are defined as economically active simple partnerships, sole proprietorships and unlisted trading companies. The company may carry out its activities directly or through a company controlled by it (Art. 616 para. 1 E-ZGB). Companies that exclusively manage their own assets are not included (Art. 616 para. 2 E-ZGB). The most important aspects of the draft are outlined below.

1. Integral allocation

An important component of the revision project is the so-called integral allocation of the company. This can be applied if the owner of a company dies, no allocation has been specified in the will and an heir demands one for himself or herself. The new option of integral allocation is intended to prevent the business from being dismembered or – even more seriously – from being closed. Art. 617 E-ZGB thus enables the integral takeover of the company by one heir in cases where the testator has not made a testamentary disposition. If several heirs apply for an integral assignment, the court must decide in favour of the heir who is better suited to managing the company.

2. Deferral of payment

A further element of the revision relates to the possibility of requesting a deferral of payment from the court for the equalisation of the remaining heirs. Under current law, this is owed immediately, which can sometimes lead to problems when the company is taken over. The possibility of deferring payment is specifically intended to prevent the takeover of the company from leading to liquidity problems.

3. Determination of the imputed value

The bill also contains new provisions for determining the imputed value and for determining the equalisation obligation (Art. 626 ff. ZGB). Under certain conditions – in particular if the transfer of ownership takes place during life – the time of transfer and no longer the time of inheritance is to be decisive. This is intended to take account of the entrepreneurial risk that the business successor takes on, as there can be a considerable period of time between the transfer of the business and the death of the testator. In addition, a disadvantage to the other heirs with regard to those assets that can be separated from the company is avoided by differentiating in the company valuation between assets that are essential to the business and those that are not.

4. Protection of heirs entitled to a compulsory portion

Finally, greater protection is also provided for heirs entitled to a compulsory portion. This is intended to prevent them from being allocated their compulsory portions against their will in the form of minority shares in the company. This is at least the case if another heir has control of the company. In concrete terms, this means that heirs entitled to a compulsory portion do not have to take over minority shares in the company against their will but can request to receive their inheritance share in the form of other assets.