Due diligence and disclosure

Scope of due diligence

What is the typical scope of due diligence in your jurisdiction? Do sellers usually provide due diligence reports to prospective buyers? Can buyers usually rely on due diligence reports produced for the seller?

Usually, there is an (electronic) data room that the buyer may use for its due diligence. Due diligence normally includes all aspects and covers business, financial, tax, environmental, employment, pension, insurance, compliance and legal matters. Sellers may also provide a vendor due diligence report to prospective buyers. Vendor due diligence reports are normally produced by external specialists. Scope and form of reliance vary on a case-by-case basis.

Liability for statements

Can a seller be liable for pre-contractual or misleading statements? Can any such liability be excluded by agreement between the parties?

A seller can be liable for pre-contractual or misleading statements (see question 10). In practice, such pre-contractual liability is rare, unless there is a manifest violation of the principle of good faith. It cannot be excluded contractually.

Publicly available information

What information is publicly available on private companies and their assets? What searches of such information might a buyer customarily carry out before entering into an agreement?

Private companies must be registered in the commercial register (www.zefix.ch). Among other things, its share capital, the purpose of the company, and its directors and officers and their respective signatory power are registered. In addition, certain documents such as the articles of incorporation can be obtained from the commercial register. Other publicly available information can be found in the land register and the debt enforcement register. While access to the commercial register is unrestricted, the land and the debt enforcement registers can be inspected only after having shown evidence for a prima facie legitimate interest.

Impact of deemed or actual knowledge

What impact might a buyer’s actual or deemed knowledge have on claims it may seek to bring against a seller relating to a transaction?

Unless otherwise agreed, the buyer is deemed to have knowledge of any facts including the disclosed information.

In the event of a breach of contractual representations and warranties, the liability of the seller is usually contractually excluded if the buyer had or should have had knowledge of the matter. The transaction agreement usually provides that the buyer has knowledge only of facts and circumstances that have either been fairly disclosed in the data room or that are explicitly referred to in the disclosure schedules to the transaction agreement.