Cash pooling is often used within a group of companies for financial management optimisation
purposes. However, a recent Zurich Commercial Court decision risks jeopardising the use of cash
pooling by setting overly onerous standards for the characterisation of an intra-group payment in the
cash pool as a legally permitted intra-group loan.
Under these harsh conditions, many existing cash pools involving Swiss group companies would
violate Swiss law, and the legality of a large amount of dividends already paid by such group
companies to their holding companies would be questionable and could even entail the personal
liability of group company board members and management.
This decision is questionable under important legal doctrine and will be brought before the Federal
Supreme Court for a final decision where it could get overturned. Until then the decision stands, and it
must be considered for all cash-pooling systems involving group or parent companies.
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