|Jacques Kistler||Ferdinando Mercuri|
The new law is intended to make the provisions of the Swiss Code of Obligations and of existing company law more flexible. Companies will have two accounting years from January 1 2013 to adapt their bookkeeping and financial reporting and three years to adapt consolidated financial statements.
Under the new law it is possible to present financial statements in one of the national languages, German, French or Italian, as well as in English. It is now also possible to present the accounts in a currency other than Swiss francs. Beforehand, it was always necessary to convert accounts that were kept in a functional currency into Swiss francs for year-end statutory accounting purposes. Consolidated statements have to be filed if a company exceeds two of the following criteria: CHF 40 million revenue, 250 full-time employees or CHF20 million net balance sheet, on an average annualised basis.
In terms of specific disclosures and recognition requirements for the accounts key changes include:
- Recognition of assets if a cash inflow is probable and value can be reliably estimated;
- Modifications to the presentation of equity;
- New methods for valuations and the introduction of the principle of impairment; and
- New categories for expenses and revenues.
The new criterion for including entities in consolidated statements required for large companies is "legal control" versus common management, which was the criterion for a consolidation in the past. Other additional requirements for large companies include having to prepare financial statements in accordance with recognised standards for publicly listed companies, preparing a cash flow statement and directors report with additional disclosure requirements.
It was the intention of the legislator to ensure a tax neutrality of the new rules. However, some new rules may impact companies and there are also interpretation questions that will need to be taken into consideration to assess the tax impact of the new rules. We recommend performing a readiness review to identify and incorporate the changes necessary to comply with these new legal requirements on a timely basis.
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