Liability of the Board of Directors and the Auditing Body in Stock Corporation Law

Facts

The company [H. AG] was founded in 1971 with a share capital of Fr. 200'000.--, half of which was paid in. The main shareholder was W. H. The company acquired ownership interests in a shopping center and opened a retail store. The company also granted loans to W. H. The company went bankrupt in 1976.

The plaintiffs, G. AG, [K. GmbH] and O. AG, brought a liability action against the defendants, G. [K.], E. [K.] and [K. AG], alleging that the defendants had breached their duties as organs of [H. AG] and that this had caused damage to the company and its creditors.

The Baden district court dismissed the claim, and the Argovia cantonal court of appeal upheld this judgment. The plaintiffs appealed to the Federal Court.

Considerations

The Federal Court examined the plaintiffs' allegations and found that the defendants had breached their duties as organs of H. AG. The Federal Court considered that the defendants had failed to make provisions for expected losses on the loans granted to W. [H.] and had not informed the judge of the company's insolvency.

The Federal Court also examined the question of whether the defendants had breached their duties as organs of [H. AG] by failing to make provisions for expected losses on the loans granted to W. H. The Federal Court considered that the defendants had failed to make provisions for expected losses on the loans granted to W. [H.] and that this had caused damage to the company and its creditors.

Th…