If a legal entity subject to mandatory reporting controls one or more companies subject to mandatory reporting, it must prepare consolidated financial statements for all the companies controlled in the annual report, Art. 963 Para. 1 CO.

A legal person controls another undertaking:

• if it directly or indirectly holds a majority of the votes in the supreme body 
• has the right, directly or indirectly, to appoint or remove a majority of the members of the supreme management or administrative body,
• or can exercise a controlling influence on the basis of the articles of association, the foundation deed, a contract or comparable instruments, Art. 963 Para. 2 CO.

Exemption from the consolidation requirement

According to Art. 963a CO, a legal entity is exempt from the obligation to prepare consolidated financial statements if

1. it - together with the controlled undertakings - does not exceed two of the following thresholds for two consecutive financial years: balance sheet total of CHF 20 million, sales revenue of CHF 40 million, 250 full-time positions on average over the year.
2. it is controlled by a company whose consolidated financial statements have been prepared and duly audited in accordance with Swiss or equivalent foreign regulations; or
3. It has transferred the obligation to prepare consolidated accounts to a controlled company pursuant to Art. 963 Para. 4.

Nevertheless, consolidated financial statements must be prepared if this is necessary for the reliable assessment of the economic situation; if shareholders representing at least 20 percent of the share capital or 10 percent of the members of the cooperative or 10 of the association request this; if a shareholder or association member who is subject to personal liability or an obligation to make additional contributions requests this; or if the foundation supervisory authority requests.

If a legal entity pursuant to Para. 1 Clause 2 waives the preparation of the consolidated financial statements for the subgroup, it must publish the consolidated financial statements of the parent company in accordance with the provisions for its own annual financial statements.