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COVID 19 Solidarity guarantee act comes into force

April 1, 2021

The urgent Covid 19 Solidarity Guarantee Act of 18 December 2020, which has already entered into force, replaces the Emergency Ordinance of 25 March 2020. It regulates the phases following the granting of the state-guaranteed Covid 19 loans, which injected liquidity into Swiss companies for bridge financing.

In spring 2020, the Covid 19 epidemic and the associated national and international measures to protect public health led to a partial or even complete loss of revenue for many Swiss companies. In order for SMEs in particular to still be able to pay their fixed costs, quick and unbureaucratic access to bridging finance was needed to ensure the necessary liquidity.

The Federal Council made this possible with the Covid 19 Solidarity Guarantee Ordinance of 25 March 2020, an emergency ordinance based directly on the Federal Constitution, which was drafted and negotiated with the banks within a few days (NZZ of 18. November 2020: "Stressed programmers, empty pizza boxes and almost no time: how probably the biggest rescue operation in the history of the Swiss economy went down") that the four state-approved guarantee organisations guaranteed Covid 19 loans of up to CHF 500,000 at 100 percent.

With the signing of the credit agreement, the content of which was conclusively specified in the annex to the emergency ordinance, the loan was considered 100 percent guaranteed and the emergency financial aid could be released immediately by the lender. This was done with the help of an independent loan or an increase in the limit of an existing current account.

For loans between 500,000 and 20 million Swiss francs, on the other hand, "only" an 85 percent guarantee was provided. Here the banks - PostFinance AG was not allowed to grant such Covid 19 Loans Plus - had to carry out a credit check customary in the industry. A similarly standardised procedure as for emergency aid would not have been justified due to the higher amounts involved.

Slightly more than 135,000 Covid 19 credits with an average amount of 102,000 francs and 1,130 Covid 19 Credits Plus with an average amount of 2.7 million francs were granted. Thus, 16.4 billion francs were guaranteed directly by the four guarantee organisations or indirectly by the Confederation, which has to pay for their losses and administrative costs. Most of the guaranteed Covid 19 loans were granted between the end of March and the beginning of May 2020, i.e. during the hard lockdown to combat the first wave of the epidemic. Further figures and evaluations, for example regarding cantons and sectors, can be found at https://covid19.easygov.swiss (Covid 19 loans).

The credit applications could be submitted until 31 July 2020; this phase 1 was regulated by the Emergency Ordinance. Consequently, it remains relevant for the legal assessment of phase 1. The Emergency Ordinance expired on 19 December 2020. It was replaced by the Covid-19 Solidarity Guarantee Act - not to be confused with the Covid-19 Act.

**From emergency ordinance to ordinary federal law **

The Covid 19 Solidarity Guarantee Act regulates the most important aspects of phases 2 and 3, i.e. the situations after the loan has been granted or after the guarantee has been drawn by the lender (subjects of regulation are in particular: prevention, prosecution and combating of abuse; subordination and early payment of the guarantee; management accounting of the claims transferred to the guarantee organisations). In addition, those aspects from the Emergency Ordinance that remain topical (duration of amortisation and guarantee; possible adjustment of interest rates; rights and obligations of the guarantee organisation; exchange of data and information; simplified transfer of credit claims from the lenders to the Swiss National Bank for refinancing; civil liability of members of the supreme management and administrative body; penalty provision and notification; limited deviation from the ban on granting loans to PostFinance AG) will be transferred to ordinary law. Since the phase of granting loans has been completed and the provisions that continue to apply have been transferred to the Covid 19 Solidarity Guarantee Act, there is basically no need for an implementing ordinance. The relationship between the Confederation and the guarantee organisations will be laid down in a contract under public law between the Federal Department of Economic Affairs, Education and Research and the four guarantee organisations. This contract will be open to public inspection. If the standardisation of the practices of the four guarantee organisations or the protection of the interests of the Confederation should If the standardisation of the practices of the four guarantee organisations or the protection of the interests of the Confederation so require, the Federal Council may issue an ordinance laying down provisions, in particular on the subordination of claims, the early payment of guarantees and the management of claims transferred to the guarantee organisations.

In the following, important aspects of the new Covid 19 Solidarity Guarantee Act are presented, which are of particular importance for the owners of SMEs, their governing bodies and the fiduciary and auditing companies supporting them.

**Important aspects of the Covid 19 Solidarity Guarantee Act **

The Covid 19 loans were granted between 26 March and 31 July 2020 under conditions that were clear to all parties involved and to which they agreed in writing. It was therefore important to the Federal Council that the aforementioned phases 2 and 3 would be regulated in continuity with phase 1 and remain suitable for the masses. The credit guarantee system developed with the lenders, the Swiss National Bank and the four guarantee organisations and anchored in the Covid 19 Solidarity Guarantee Ordinance was not to be changed to such an extent that the framework conditions would tilt to the disadvantage of one party or overburden the Covid 19 credit guarantee system. Significant changes to the system could have led to legal uncertainty and more than 135,000 credit and guarantee relationships would have had to be adjusted if necessary. Parliament followed the Federal Council's lead, so that the goal of continuity and mass suitability as far as possible was basically achieved.

A Covid 19 credit serves to cover the liquidity needs of companies. Therefore, there are prohibitions on the use of credit in order to prevent the state-guaranteed credit funds from flowing out of the companies. In particular, dividend resolutions or distributions, the reimbursement of capital contributions (including the repurchase of own equity securities) and the granting of loans to related persons and companies are prohibited and punishable. The credit use prohibitions apply until the Covid 19 loan is fully amortised; this is irrespective of whether the guarantee was honoured or drawn early. These prohibitions on the use of credit were undisputed in the parliamentary consultation. In contrast to the Emergency Ordinance and the Federal Council's draft law, not only the distribution of a dividend, but already its resolution is inadmissible. It is clear from the legislative materials that this tightening is not intended to have any retroactive effect on the phase before the law came into force. In contrast to the Emergency Ordinance, it is now also permissible to use the credit funds for new investments.

The amortisation of the Covid 19 loans may take up to eight years; the Emergency Ordinance and the Federal Council's draft bill provided for five years. In the event of considerable hardship, the guarantee organisation may extend this period by two years on the basis of an amortisation plan, provided that this is likely to reduce the financial risks for the Confederation. The loan agreement between the lender and the borrowing company contains the five-year amortisation period provided for in the Emergency Ordinance. It is now up to the contracting parties to agree on a longer amortisation period; they do not need the consent of the guarantee organisation to do so.

At the request of the Federal Department of Finance (FDF), the Federal Council will adjust the interest rates of the Covid 19 loans to market developments annually on 31 March, for the first time on 31 March 2021. In contrast to the Emergency Ordinance, it is no longer the FDF that decides on any adjustment of interest rates, but the Federal Council at its request. This increases political legitimacy by allowing all departments to participate in the opinion-forming process. In doing so, the Federal Council will take into account the interests of all parties involved in the Covid 19 loan guarantee system. As long as the Swiss economy is in a rather recessionary phase due to the Covid 19 epidemic, it cannot be assumed that the interest rate environment will change significantly. From today's perspective, it is therefore likely that the interest rate for Covid 19 loans of up to CHF 500,000 will remain unchanged at zero percent for a longer period of time.   The law contains a hardship concept. This must not be confused with the hardship assistance under the Covid 19 Hardship Ordinance. If the guarantee organisation's careful forecast shows that the financial risks for the Confederation are not likely to increase, it can agree to a partial or full subordination, an early honouring of the guarantee or a partial waiver of claims for the sustainable restructuring of the borrowing company. If the Confederation's financial risks are not expected to increase significantly, the guarantee organisation may also contribute to the costs of a trustee's fee up to a maximum of CHF 100,000 as part of a composition procedure. The hardship concept, including the aforementioned possibility to extend the amortisation period by two years, is intended to help avoid bankruptcies of borrowing companies by having the guarantee organisations participate in the restructuring or at least in an orderly liquidation. This always takes into account the financial interests of the Confederation and the fact that no À-fonds-perdu contributions were deliberately provided for, but repayable loans.

The rights and obligations arising from the credit relationship can only be transferred within the framework of a restructuring under the Merger Act. The lender agrees to such a transfer if it includes all assets and liabilities or at least the essential part of the company. Other types of transfers, e.g. within the framework of Art. 181 of the Code of Obligations (CO), do not result in a transfer of the rights and obligations arising from the credit relationship. Only the application of the Merger Act ensures sufficient transparency and clear procedures. There is a good compromise between the restructuring wishes of borrowing companies and the mass suitability of the loan guarantee system. No expedient restructurings are prevented, but "beer-cup transfers" are. The loan agreement for the more than 135,000 Covid 19 loans up to 500,000 Swiss francs already explicitly excluded such assignments and transfers.

The guarantee organisations, the lenders, all competent federal and cantonal offices, the Swiss Federal Audit Office and the Swiss National Bank may process, link and disclose to each other personal data and information required for the administration, monitoring and processing of Covid 19 loans and for preventing, combating and prosecuting abuse. For example, the VAT data of the Federal Tax Administration is compared with the information of the borrowing companies on the annual turnover. This makes it possible to check whether the Covid 19 credit applied for is too high in relation to the turnover. The law expressly states that bank client, tax, audit, statistical and official secrecy cannot be invoked. This data and information system is a central and effective element in combating abuse.

The guarantee organisations can independently initiate and conduct civil and criminal proceedings before the competent prosecution authorities and courts. In criminal proceedings, they can constitute themselves as private plaintiffs; they thus have all the associated rights and obligations. These possibilities are important for combating abuse and for recovering claims against borrowing companies where the guarantee has been honoured prematurely or drawn by the lenders.

The Covid 19 loan must be recognised by the borrowing company as a long-term liability under borrowed capital (Art. 959a para. 2 subpara. a in conjunction with Art. 959 para. 6 sentence 2 CO). However, a Covid 19 loan of up to CHF 500,000 does not have to be taken into account for the entire term of the loan when calculating whether there is a loss of capital or even over-indebtedness. For Covid 19 loans above 500,000 Swiss francs, however, this exception does not apply.

In application of Art. 959c para. 1 item 2 CO, the fact that the company has taken out a Covid 19 loan must be disclosed in the notes to the annual financial statements. This information is important for the persons involved in the company and for other addressees of the annual financial statements.

If, in the course of the limited or ordinary audit of the annual or consolidated financial statements, the auditors determine that the Covid 19 credits have been used in an improper manner, they must set the highest performance or administrative body of the borrowing company (e.g. in the case of an AG, the board of directors) an appropriate deadline to restore the proper state of affairs. If this body remains partially or completely inactive, the auditor informs the highest body of the company (e.g. in the case of an AG, the general meeting). If the highest management or administrative body still does not immediately restore the proper state of affairs, the auditors inform the competent guarantee organisation. It is clear from the legislative material that this does not impose any new auditing duties on the auditors. However, if the auditor discovers, for example, during the annual audit of the appropriation of profits, that there has been a violation of the prohibition on dividends, it must, if necessary, inform the guarantee organisation using the notification cascade described above. The guarantor organisation can also commission an audit firm to carry out a credit utilisation audit at the borrower company (see the expected Covid-19 credit utilisation audit by EXPERTsuisse). This option is available to it for every borrowing company, regardless of whether it is subject to audit or has waived the limited audit of the annual financial statements (opting out). In all these cases, audit secrecy is waived.

The members of the supreme management or administrative body as well as all persons involved in the management or liquidation of the borrowing enterprise are personally and jointly liable to the creditors of the enterprise, the lender, the guarantee organisation and the Confederation for any damage they cause intentionally or negligently by violating the prohibitions on the use of credit. The auditors do not fall within the scope of this liability for fault unless they exert an inadmissible influence on the management or liquidation and thus become a de facto management or liquidation body. Any further liability provisions, in particular those of company law (Art. 754 et seq. CO), are of course reserved.

The Covid 19 Solidarity Guarantee Act contains an independent penalty provision: anyone who intentionally, with who has intentionally obtained a Covid 19 loan with false information, in particular has made false statements and assurances in the loan agreement, or who has intentionally used the funds from a Covid 19 loan in an inadmissible manner, for example has distributed a dividend or granted a loan to a related person, can be punished with a fine of up to CHF 100,000. More serious criminal offences under the Criminal Code are reserved, e.g. fraud, unlawful receipt of social security or social assistance, forgery of documents and money laundering (in detail: Marc Jean-Richard-dit-Bressel / Andrea Jug-Höhener, Die Profiteure der Krise, Jusletter of 3 August 2020). The employees of the guarantee organisations and the State Secretariat for Economic Affairs may report criminal conduct to the prosecution authorities without violating business or official secrecy. The criminal provision or report is also an important element in preventing and combating abuses.

**Reading the law is recommended **

Not only for the borrowers, but also for the fiduciary and auditing companies supporting them, it is highly recommended to read the Covid 19 Solidarity Act, which is not particularly comprehensive, in its entirety, at least with regard to the aspects mentioned above. The legislative materials, in particular the explanations of the Federal Council in its dispatch on the individual provisions of the law, are also helpful for a better understanding of the provisions. Admittedly, nothing unreasonable is being demanded of SMEs and the Federal Council and Parliament have largely succeeded in ensuring continuity from the Covid 19 Solidarity Guarantee Ordinance to the Covid 19 Solidarity Guarantee Act. However, due to the liability and penalty provisions, which should not be underestimated, as well as the now established fight against abuse by various agencies, the legal risks should not be underestimated.

Source: veb.ch Magazine 01/2021

COVID 19 Solidarity guarantee act comes into force

April 1, 2021

The urgent Covid 19 Solidarity Guarantee Act of 18 December 2020, which has already entered into force, replaces the Emergency Ordinance of 25 March 2020. It regulates the phases following the granting of the state-guaranteed Covid 19 loans, which injected liquidity into Swiss companies for bridge financing.

In spring 2020, the Covid 19 epidemic and the associated national and international measures to protect public health led to a partial or even complete loss of revenue for many Swiss companies. In order for SMEs in particular to still be able to pay their fixed costs, quick and unbureaucratic access to bridging finance was needed to ensure the necessary liquidity.

The Federal Council made this possible with the Covid 19 Solidarity Guarantee Ordinance of 25 March 2020, an emergency ordinance based directly on the Federal Constitution, which was drafted and negotiated with the banks within a few days (NZZ of 18. November 2020: "Stressed programmers, empty pizza boxes and almost no time: how probably the biggest rescue operation in the history of the Swiss economy went down") that the four state-approved guarantee organisations guaranteed Covid 19 loans of up to CHF 500,000 at 100 percent.

With the signing of the credit agreement, the content of which was conclusively specified in the annex to the emergency ordinance, the loan was considered 100 percent guaranteed and the emergency financial aid could be released immediately by the lender. This was done with the help of an independent loan or an increase in the limit of an existing current account.

For loans between 500,000 and 20 million Swiss francs, on the other hand, "only" an 85 percent guarantee was provided. Here the banks - PostFinance AG was not allowed to grant such Covid 19 Loans Plus - had to carry out a credit check customary in the industry. A similarly standardised procedure as for emergency aid would not have been justified due to the higher amounts involved.

Slightly more than 135,000 Covid 19 credits with an average amount of 102,000 francs and 1,130 Covid 19 Credits Plus with an average amount of 2.7 million francs were granted. Thus, 16.4 billion francs were guaranteed directly by the four guarantee organisations or indirectly by the Confederation, which has to pay for their losses and administrative costs. Most of the guaranteed Covid 19 loans were granted between the end of March and the beginning of May 2020, i.e. during the hard lockdown to combat the first wave of the epidemic. Further figures and evaluations, for example regarding cantons and sectors, can be found at https://covid19.easygov.swiss (Covid 19 loans).

The credit applications could be submitted until 31 July 2020; this phase 1 was regulated by the Emergency Ordinance. Consequently, it remains relevant for the legal assessment of phase 1. The Emergency Ordinance expired on 19 December 2020. It was replaced by the Covid-19 Solidarity Guarantee Act - not to be confused with the Covid-19 Act.

**From emergency ordinance to ordinary federal law **

The Covid 19 Solidarity Guarantee Act regulates the most important aspects of phases 2 and 3, i.e. the situations after the loan has been granted or after the guarantee has been drawn by the lender (subjects of regulation are in particular: prevention, prosecution and combating of abuse; subordination and early payment of the guarantee; management accounting of the claims transferred to the guarantee organisations). In addition, those aspects from the Emergency Ordinance that remain topical (duration of amortisation and guarantee; possible adjustment of interest rates; rights and obligations of the guarantee organisation; exchange of data and information; simplified transfer of credit claims from the lenders to the Swiss National Bank for refinancing; civil liability of members of the supreme management and administrative body; penalty provision and notification; limited deviation from the ban on granting loans to PostFinance AG) will be transferred to ordinary law. Since the phase of granting loans has been completed and the provisions that continue to apply have been transferred to the Covid 19 Solidarity Guarantee Act, there is basically no need for an implementing ordinance. The relationship between the Confederation and the guarantee organisations will be laid down in a contract under public law between the Federal Department of Economic Affairs, Education and Research and the four guarantee organisations. This contract will be open to public inspection. If the standardisation of the practices of the four guarantee organisations or the protection of the interests of the Confederation should If the standardisation of the practices of the four guarantee organisations or the protection of the interests of the Confederation so require, the Federal Council may issue an ordinance laying down provisions, in particular on the subordination of claims, the early payment of guarantees and the management of claims transferred to the guarantee organisations.

In the following, important aspects of the new Covid 19 Solidarity Guarantee Act are presented, which are of particular importance for the owners of SMEs, their governing bodies and the fiduciary and auditing companies supporting them.

**Important aspects of the Covid 19 Solidarity Guarantee Act **

The Covid 19 loans were granted between 26 March and 31 July 2020 under conditions that were clear to all parties involved and to which they agreed in writing. It was therefore important to the Federal Council that the aforementioned phases 2 and 3 would be regulated in continuity with phase 1 and remain suitable for the masses. The credit guarantee system developed with the lenders, the Swiss National Bank and the four guarantee organisations and anchored in the Covid 19 Solidarity Guarantee Ordinance was not to be changed to such an extent that the framework conditions would tilt to the disadvantage of one party or overburden the Covid 19 credit guarantee system. Significant changes to the system could have led to legal uncertainty and more than 135,000 credit and guarantee relationships would have had to be adjusted if necessary. Parliament followed the Federal Council's lead, so that the goal of continuity and mass suitability as far as possible was basically achieved.

A Covid 19 credit serves to cover the liquidity needs of companies. Therefore, there are prohibitions on the use of credit in order to prevent the state-guaranteed credit funds from flowing out of the companies. In particular, dividend resolutions or distributions, the reimbursement of capital contributions (including the repurchase of own equity securities) and the granting of loans to related persons and companies are prohibited and punishable. The credit use prohibitions apply until the Covid 19 loan is fully amortised; this is irrespective of whether the guarantee was honoured or drawn early. These prohibitions on the use of credit were undisputed in the parliamentary consultation. In contrast to the Emergency Ordinance and the Federal Council's draft law, not only the distribution of a dividend, but already its resolution is inadmissible. It is clear from the legislative materials that this tightening is not intended to have any retroactive effect on the phase before the law came into force. In contrast to the Emergency Ordinance, it is now also permissible to use the credit funds for new investments.

The amortisation of the Covid 19 loans may take up to eight years; the Emergency Ordinance and the Federal Council's draft bill provided for five years. In the event of considerable hardship, the guarantee organisation may extend this period by two years on the basis of an amortisation plan, provided that this is likely to reduce the financial risks for the Confederation. The loan agreement between the lender and the borrowing company contains the five-year amortisation period provided for in the Emergency Ordinance. It is now up to the contracting parties to agree on a longer amortisation period; they do not need the consent of the guarantee organisation to do so.

At the request of the Federal Department of Finance (FDF), the Federal Council will adjust the interest rates of the Covid 19 loans to market developments annually on 31 March, for the first time on 31 March 2021. In contrast to the Emergency Ordinance, it is no longer the FDF that decides on any adjustment of interest rates, but the Federal Council at its request. This increases political legitimacy by allowing all departments to participate in the opinion-forming process. In doing so, the Federal Council will take into account the interests of all parties involved in the Covid 19 loan guarantee system. As long as the Swiss economy is in a rather recessionary phase due to the Covid 19 epidemic, it cannot be assumed that the interest rate environment will change significantly. From today's perspective, it is therefore likely that the interest rate for Covid 19 loans of up to CHF 500,000 will remain unchanged at zero percent for a longer period of time.   The law contains a hardship concept. This must not be confused with the hardship assistance under the Covid 19 Hardship Ordinance. If the guarantee organisation's careful forecast shows that the financial risks for the Confederation are not likely to increase, it can agree to a partial or full subordination, an early honouring of the guarantee or a partial waiver of claims for the sustainable restructuring of the borrowing company. If the Confederation's financial risks are not expected to increase significantly, the guarantee organisation may also contribute to the costs of a trustee's fee up to a maximum of CHF 100,000 as part of a composition procedure. The hardship concept, including the aforementioned possibility to extend the amortisation period by two years, is intended to help avoid bankruptcies of borrowing companies by having the guarantee organisations participate in the restructuring or at least in an orderly liquidation. This always takes into account the financial interests of the Confederation and the fact that no À-fonds-perdu contributions were deliberately provided for, but repayable loans.

The rights and obligations arising from the credit relationship can only be transferred within the framework of a restructuring under the Merger Act. The lender agrees to such a transfer if it includes all assets and liabilities or at least the essential part of the company. Other types of transfers, e.g. within the framework of Art. 181 of the Code of Obligations (CO), do not result in a transfer of the rights and obligations arising from the credit relationship. Only the application of the Merger Act ensures sufficient transparency and clear procedures. There is a good compromise between the restructuring wishes of borrowing companies and the mass suitability of the loan guarantee system. No expedient restructurings are prevented, but "beer-cup transfers" are. The loan agreement for the more than 135,000 Covid 19 loans up to 500,000 Swiss francs already explicitly excluded such assignments and transfers.

The guarantee organisations, the lenders, all competent federal and cantonal offices, the Swiss Federal Audit Office and the Swiss National Bank may process, link and disclose to each other personal data and information required for the administration, monitoring and processing of Covid 19 loans and for preventing, combating and prosecuting abuse. For example, the VAT data of the Federal Tax Administration is compared with the information of the borrowing companies on the annual turnover. This makes it possible to check whether the Covid 19 credit applied for is too high in relation to the turnover. The law expressly states that bank client, tax, audit, statistical and official secrecy cannot be invoked. This data and information system is a central and effective element in combating abuse.

The guarantee organisations can independently initiate and conduct civil and criminal proceedings before the competent prosecution authorities and courts. In criminal proceedings, they can constitute themselves as private plaintiffs; they thus have all the associated rights and obligations. These possibilities are important for combating abuse and for recovering claims against borrowing companies where the guarantee has been honoured prematurely or drawn by the lenders.

The Covid 19 loan must be recognised by the borrowing company as a long-term liability under borrowed capital (Art. 959a para. 2 subpara. a in conjunction with Art. 959 para. 6 sentence 2 CO). However, a Covid 19 loan of up to CHF 500,000 does not have to be taken into account for the entire term of the loan when calculating whether there is a loss of capital or even over-indebtedness. For Covid 19 loans above 500,000 Swiss francs, however, this exception does not apply.

In application of Art. 959c para. 1 item 2 CO, the fact that the company has taken out a Covid 19 loan must be disclosed in the notes to the annual financial statements. This information is important for the persons involved in the company and for other addressees of the annual financial statements.

If, in the course of the limited or ordinary audit of the annual or consolidated financial statements, the auditors determine that the Covid 19 credits have been used in an improper manner, they must set the highest performance or administrative body of the borrowing company (e.g. in the case of an AG, the board of directors) an appropriate deadline to restore the proper state of affairs. If this body remains partially or completely inactive, the auditor informs the highest body of the company (e.g. in the case of an AG, the general meeting). If the highest management or administrative body still does not immediately restore the proper state of affairs, the auditors inform the competent guarantee organisation. It is clear from the legislative material that this does not impose any new auditing duties on the auditors. However, if the auditor discovers, for example, during the annual audit of the appropriation of profits, that there has been a violation of the prohibition on dividends, it must, if necessary, inform the guarantee organisation using the notification cascade described above. The guarantor organisation can also commission an audit firm to carry out a credit utilisation audit at the borrower company (see the expected Covid-19 credit utilisation audit by EXPERTsuisse). This option is available to it for every borrowing company, regardless of whether it is subject to audit or has waived the limited audit of the annual financial statements (opting out). In all these cases, audit secrecy is waived.

The members of the supreme management or administrative body as well as all persons involved in the management or liquidation of the borrowing enterprise are personally and jointly liable to the creditors of the enterprise, the lender, the guarantee organisation and the Confederation for any damage they cause intentionally or negligently by violating the prohibitions on the use of credit. The auditors do not fall within the scope of this liability for fault unless they exert an inadmissible influence on the management or liquidation and thus become a de facto management or liquidation body. Any further liability provisions, in particular those of company law (Art. 754 et seq. CO), are of course reserved.

The Covid 19 Solidarity Guarantee Act contains an independent penalty provision: anyone who intentionally, with who has intentionally obtained a Covid 19 loan with false information, in particular has made false statements and assurances in the loan agreement, or who has intentionally used the funds from a Covid 19 loan in an inadmissible manner, for example has distributed a dividend or granted a loan to a related person, can be punished with a fine of up to CHF 100,000. More serious criminal offences under the Criminal Code are reserved, e.g. fraud, unlawful receipt of social security or social assistance, forgery of documents and money laundering (in detail: Marc Jean-Richard-dit-Bressel / Andrea Jug-Höhener, Die Profiteure der Krise, Jusletter of 3 August 2020). The employees of the guarantee organisations and the State Secretariat for Economic Affairs may report criminal conduct to the prosecution authorities without violating business or official secrecy. The criminal provision or report is also an important element in preventing and combating abuses.

**Reading the law is recommended **

Not only for the borrowers, but also for the fiduciary and auditing companies supporting them, it is highly recommended to read the Covid 19 Solidarity Act, which is not particularly comprehensive, in its entirety, at least with regard to the aspects mentioned above. The legislative materials, in particular the explanations of the Federal Council in its dispatch on the individual provisions of the law, are also helpful for a better understanding of the provisions. Admittedly, nothing unreasonable is being demanded of SMEs and the Federal Council and Parliament have largely succeeded in ensuring continuity from the Covid 19 Solidarity Guarantee Ordinance to the Covid 19 Solidarity Guarantee Act. However, due to the liability and penalty provisions, which should not be underestimated, as well as the now established fight against abuse by various agencies, the legal risks should not be underestimated.

Source: veb.ch Magazine 01/2021

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