Interim dividend: is it possible?

Distributing a dividend before the close of the financial year is a recurring request: the cash is there, the results are good and shareholders don’t want to wait for the next year’s ordinary general meeting. The question is whether Swiss law allows it. The answer is yes, but only within precise conditions introduced explicitly with the reform of company law in force since 1 January 2023.

What changes with the 2023 reform

Before the reform, practice allowed the distribution of interim dividends with some uncertainty. Today the Code of Obligations expressly governs the interim dividend (Interimsdividende): the general meeting may resolve to distribute a dividend on the basis of interim accounts, that is, before the approval of the annual financial statements. It is a useful option for AGs with long financial years or with shareholders who want a more frequent return.

The conditions to be met

The interim dividend is not a free distribution. It requires several cumulative prerequisites:

Provision in the articles of association: the articles must allow the distribution of interim dividends. If they do not, they must first be amended by public deed.
Interim accounts: interim accounts (balance sheet and income statement) must be drawn up demonstrating the existence of distributable profits at the reference date.
Available profits: only the profit of the current financial year and freely available reserves may be distributed, in compliance with the mandatory legal reserves.
General meeting resolution: the distribution must be decided by the general meeting; a decision of the board of directors is not enough.

The role of the auditor

The interim accounts must as a rule be audited by the auditor, who expresses an opinion on the availability of profits. There are, however, exceptions:

If the company has opted to waive the audit (opting-out), because this is permissible under the legal criteria, the audit may not be necessary.
Even in the case of opting-out, the shareholders can still decide to have the interim accounts audited as a precaution, especially when the group of shareholders is not unanimous.

The audit is not a formality: it protects the directors from liability and creditors from distributions not covered by real profits.

The risks not to underestimate

Distributing an advance on profits that then fail to materialise exposes you to concrete consequences:

Repayment: if at year-end the profit turns out to be lower than the interim amount distributed, shareholders may be required to repay the excess received in bad faith.
Board liability: directors who resolve or execute a distribution without cover are liable towards the company and creditors.
Withholding tax: like any dividend, the interim dividend too is subject to the 35% withholding tax, which must be withheld and paid. It has to be managed from the moment of distribution.
Real liquidity: having accounting profits does not mean having cash. Before distributing, check that the outflow does not compromise the ability to pay suppliers, wages and taxes.

A practical example

An AG with a financial year ending on 31 December closes the first nine months with a solid profit. The shareholders want a dividend within the year. The correct path: verify that the articles allow it, draw up interim accounts as at 30 September, have them audited by the auditor (barring a valid opting-out), convene the meeting for the resolution, withhold the withholding tax and pay it within the deadlines. Skipping any of these steps turns a lawful operation into a liability risk.

In summary

The interim dividend is expressly allowed by company law since 2023.
It requires a provision in the articles, interim accounts and a general meeting resolution.
The interim accounts must as a rule be audited, barring a valid opting-out.
The interim dividend is subject to the 35% withholding tax like any dividend.
Distributing without real profits exposes shareholders and directors to repayment and liability.

How we help you

We structure distributions of ordinary and interim dividends in a compliant way: verification of the articles, interim accounts, coordination with the auditor and management of the withholding tax. Let’s talk about your distribution.