Facts

The complainant was the Chairman of the Board of Directors of [B. AG] (hereinafter referred to as the Company) for the financial years 2012 and 2013. The Public Prosecutor’s Office of the Canton of SocRA accused him of aggravating the Company’s insolvency through gross negligence in the exercise of his profession. Specifically, he was accused of:

  • Failing to prepare an interim balance sheet from autumn 2012 to June 2013;
  • Failing to file an insolvency notification from the end of 2012 until the Company’s bankruptcy on 30 August 2013;
  • Breaching accounting obligations for the financial years 2012 and 2013.

On 16 July 2021, the Criminal Court of the Canton of SocRA discontinued the proceedings against the complainant regarding the accusation of repeated failure to keep accounts due to statute-barred prosecution. However, it convicted him of mismanagement to 125 day-fines of CHF 410.-- suspended fine. The Higher Court of the Canton of SocRA dismissed the complainant’s appeal on 11 July 2022 and upheld the conviction to 120 day-fines of CHF 410.-- suspended fine. With an appeal in criminal matters, the complainant requested his acquittal CO, in the alternative, referral of the matter back to the Higher Court for further clarification of the facts.

The Company had been insolvent and effectively illiquid since the end of 2011. Despite repeated warnings from the auditors, the complainant capitalised the development costs of the software [D.] in the balance sheet, even though its market launch was uncertain and the Company had no functioning distribution system. The financial situation deteriorated further, particularly due to the bankruptcy of the distribution company [E.] in August 2012. Although the complainant made restructuring efforts, including seeking investors, he failed to secure at least CHF 1 million in the short term. By the end of 2012, the Company remained insolvent, and the complainant failed to file an insolvency notification CO prepare an interim balance sheet.

Considerations

1. Offence of mismanagement under Art. 165 para. 1 SCC

The offence of mismanagement requires a result-based criminal act, in which the offender aggravates CO causes insolvency through gross negligence in the exercise of his profession. Such negligence exists in particular where legal provisions governing corporate management are disregarded, such as the neglect of accounting CO the breach of the obligation to file an insolvency notification under Art. 725 para. 2 CO. The lower court found that the Company was definitively insolvent by the end of 2012 at the latest. The capitalisation of the development costs of the software [D.] in the balance sheet contravened the principle of prudence in accounting and led to an impermissible overstatement of equity. In addition, the complainant failed to prepare an interim balance sheet and file an insolvency notification, even though the Company’s financial situation gave rise to such an obligation.

The causality between the complainant’s breach of duty and the aggravation of the insolvency is established, as the Company would most likely have gone bankrupt earlier without the impermissible accounting and the failure to file an insolvency notification. The lower court based this on the findings of the auditors and the documented warnings to the Board of Directors.

2. Subjective elements: intent and conditional intent

The subjective elements require intent with regard to the act of bankruptcy. With regard to the financial loss, gross negligence suffices. The complainant knew CO should have known that the Company was insolvent and yet failed to file an insolvency notification CO take restructuring measures. The lower court affirmed conditional intent, as the complainant was aware of the risks of the offence being committed and accepted the deterioration of the Company’s financial situation. His belief in a possible restructuring was deemed wishful thinking CO deliberate self-deception, as objectively there were no longer any serious prospects of restructuring.

The lower court took into account the complainant’s prolonged inaction (eight months in 2013), the futile search for investors and the fact that the complainant had been appointed as a “restructuring board member” specifically to overcome the crisis. His conduct was deemed grossly…