19 mars 2026 | Legal Insight
Joint and Several Liability in
Shareholders' Agreements
19 mars 2026 | Legal Insight
Joint and Several Liability in
Shareholders' Agreements
A recent decision of the Swiss Federal Supreme Court highlights the risk of joint and several liability among parties to a shareholders' agreement.
Background
The Parties to a Swiss law governed shareholders' agreement agreed therein that the minority shareholders may exercise a put option towards the “Majority Shareholder”. The term “Majority Shareholder” was defined as “the person holding at least 50% of the shares plus one share, or a group of shareholders jointly holding at least 50% of the shares plus one share, even if such group was formed only temporarily to exercise one of the rights set out below.”
Two minority shareholders exercised the put option and requested, based on the definition of the term “Majority Shareholder”, payment of the purchase price from 4 other shareholders as joint and several debtors.
Decision
The Federal Supreme Court held in its judgment 4A_607/2024 that the 4 other shareholders (who were related among each other) formed a simple partnership – with the consequence that they were indeed jointly and severally liable to the minority shareholder. The court arrived at such conclusion based on (i) the (ambiguous) definition of “Majority Shareholder in the shareholders' agreement, (ii) the fact that the family members jointly communicated towards the minority shareholder, and (iii) certain court precedent and legal doctrine that qualified shareholders' agreements as simple partnerships.
Remarks
Under Swiss law, a simple partnership (einfache Gesellschaft) exists where parties agree to combine their efforts or resources to achieve a common goal (CO 530). Absent other agreement the members of a simple partnership are jointly and severally liable towards third parties for engagements of the partnership (CO 544 III). A number of legal scholars are of the view that the parties to a shareholders' agreement may, depending on the circumstances, form a simple partnership – with the consequence that they are jointly and severally liable.
To avoid such undesired ramification to the extent possible it is advisable to explicitly state in the shareholders' agreement that
Background
The Parties to a Swiss law governed shareholders' agreement agreed therein that the minority shareholders may exercise a put option towards the “Majority Shareholder”. The term “Majority Shareholder” was defined as “the person holding at least 50% of the shares plus one share, or a group of shareholders jointly holding at least 50% of the shares plus one share, even if such group was formed only temporarily to exercise one of the rights set out below.”
Two minority shareholders exercised the put option and requested, based on the definition of the term “Majority Shareholder”, payment of the purchase price from 4 other shareholders as joint and several debtors.
Decision
The Federal Supreme Court held in its judgment 4A_607/2024 that the 4 other shareholders (who were related among each other) formed a simple partnership – with the consequence that they were indeed jointly and severally liable to the minority shareholder. The court arrived at such conclusion based on (i) the (ambiguous) definition of “Majority Shareholder in the shareholders' agreement, (ii) the fact that the family members jointly communicated towards the minority shareholder, and (iii) certain court precedent and legal doctrine that qualified shareholders' agreements as simple partnerships.
Remarks
Under Swiss law, a simple partnership (einfache Gesellschaft) exists where parties agree to combine their efforts or resources to achieve a common goal (CO 530). Absent other agreement the members of a simple partnership are jointly and severally liable towards third parties for engagements of the partnership (CO 544 III). A number of legal scholars are of the view that the parties to a shareholders' agreement may, depending on the circumstances, form a simple partnership – with the consequence that they are jointly and severally liable.
To avoid such undesired ramification to the extent possible it is advisable to explicitly state in the shareholders' agreement that
- the parties do not form a simple partnership and waive the respective provisions to the extent possible, and
- there shall be no joint and several liability among any of the parties thereto.
