Minority interests, doctrine of biens aisément négociable

An heir entitled to a statutory share is assigned a minority stake in a company. It is controversial under current law whether this can be refused as far as the fulfillment of the compulsory portion is concerned.

Challenge

In principle, there is an entitlement to a statutory share in easily realizable assets («bien aisement négociables»). This was decided by the Swiss Federal Tribunal (cf. decision 70 II 142).

This case law was developed further (the so called «bien aisement négociables» doctrine): minority pacts of restricted shares (with restricted transferability) and minority stakes in family businesses cannot be counted towards the statutory share. Minority holdings are qualified as items that are not easily sold. They are often not tradable. There is no liquid market. In addition, the majority shareholder decides whether dividends are distributed. Therefore, an heir entitled to a compulsory portion does not have to accept such minority stakes as part of its statutory share.

However, according to another doctrine, a fellow heir entitled to a statutory share may have to accept the allocation of a minority holding, especially if its rights are strengthened.

Planning options

Involve all concerned parties, draw up an amicable agreement, especially if the company is the main asset. A contract of succession and a shareholder pooling agreement are possible planning instruments.

Inheritance contract

Regulate bindingly the company successor by entering into a contract of succession. The shares in the company are distributed, as are the other assets of a future estate. Compensation agreements must be made. This allows to transfer the family business as smooth as possible at the time of the owner’s demise. The other heirs usually agree to a (partial) waiver of their statutory share if they receive other assets or appropriate compensation (aka forisfamiliation).

Minority shareholders must be protected. Their rights are recorded in a shareholder pooling agreement. An inheritance contract is often combined with a shareholder pooling agreement.

Shareholder pooling agreement

Involve the heirs of the statutory share during your lifetime. Transfer shares to them, whereby a shareholder pooling agreement must be concluded. After the death of the patron, a minority shareholder cannot easily invoke the «bien aisement négociables» doctrine. He would risk being accused of contradictory behavior, being already a party to a shareholder pooling agreement.

A shareholder pooling agreement sets out, among other things, the objectives of the family owners and the principles of business policy. The claims of minority shareholders are protected. Their rights are formulated, such as a right to representation on the board of directors, a right to a minimum dividend, or a right to sell the share to the company successor after a certain period of time. Shareholders often enter into a voting agreement. Since the shareholder pooling agreement only applies between the parties, measures for enforcement should be taken.