How To Close A Company in Switzerland

• • through the articles of association(e.g. limiting the duration of the company, making its existence dependent upon a condition that no longer applies).
  • In this case, liquidation proceedings are not triggered automatically, but must be initiated by a competent corporate body.
  • If there is no specification of grounds in the articles of association then a resolution of a meeting must be drawn up. The resolution must be publicly notarised.
  • Legal action for dissolution for good cause
  • By court judgement if the shareholders together represent at least 10% of the shareholding request its dissolution for good cause.
  • The court may order a different solution if appropriate
  • Other grounds for dissolution: mainly caused by incorporation errors and case where companies pursue immoral and unlawful objectives.

In order to ensure that the Swiss company is closed properly and in the quickest possible timeframe you will need to follow the steps below:

• • The board of directors informs the commercial register of the existence of grounds for dissolution
  • From now on until the closure is completed, the company's name requires the suffix "in liquidation
  • The liquidation can be carried out by the board of directors or if the company is dissolved by judicial decision, the judge will appoint liquidators
  • Creditors are then invited to file their claims. For this purpose, all known creditors are notified directly, while all the others are reached by means of a public announcement published three times in the Swiss Official Gazette of Commerce (CO 742 III)
  • The liquidators draw up a balance sheet (CO742 I). If they ascertain that the company has too many debts, they must immediately notify the court; the latter then declares the start of insolvency proceedings. (see insolvency)
  • The liquidators wind up the current business, call in any outstanding share capital, realise the company's assets and perform its obligations
  • In the discharge of debts, the liquidators are required to observe the principle of equal treatment as well as preferential rights under property and contract law.
  • Once the debts of the dissolved company have been discharged, its assets are distributed among the shareholders in proportion to the amounts they contributed and with due regard to the preferential rights attaching to specific share classes
  • The distribution may take place no sooner than 1 year after the day on which the call to creditors was made from the third time.
  • Such distribution may take place after only 3 months where a licensed auditor confirms that the debts have been redeemed and that in the circumstances it may safely be assumed that no third party interests will be harmed.
  • Once the liquidation is complete, the liquidators apply to the commercial register for the deletion of the business name(CO 746)

NB: This should not be done independently it is important to take advice and assistance from a professional. Please call us immediately if you are thinking of closing your company. We will put you in touch with a member of our specialist team.

ADVANTAGES OF VOLUNTARY DISSOLUTION

The most efficient and cost effective way of closing a company in Switzerland if there are no creditors.

DISADVANTAGES OF VOLUNTARY DISSOLUTION

• • Expensive but the only way that a company can be dissolved in the most efficient manner if the company is still solvent
  • If the company is not dissolved in the proper manner then this could take time and money, please contact us for assistance and fees for winding up your company in Spain

NB: In Switzerland it is extremely important to use a lawyer and/or accountant in order to ensure that you are not in breach of any legislation whether civil or criminal. Please call us for assistance and we can put together a specific package for you based upon your requirement.

In Switzerland, Liquidation is enforced when the company must be wound up and liquidated for legal reasons ie. bankruptcy, losses, merger with another company etc

When filing for bankruptcy is the only option left for a business owner, it pays to commence the process as early as possible.

What happens in a compulsory liquidation?

Bankruptcy proceedings:

• • Can be imposed through a court declaration of the commencement of bankruptcy proceedings following an application by either a creditor or even by the company itself as a result of overindebtedness (CO 725 II) or declaration of insolvency according to Art. 191 I Swiss Debt Enforcement and Bankruptcy Law ("DEBL")
  • In all these cases, proceedings are carried out through a bankruptcy administrator
  • The company continues to use its previous legal name, but with the suffix "in liquidation" (CO 739 I)
  • The bankruptcy administrator will carry out the liquidation in the case of bankruptcy (CO 740 VI)
  • The debtor is obliged to divulge all assets to the bankruptcy office and to hold itself at the administrator's disposal
  • The creditors have to register all their claims even if they are pending, conditional, contested and uncontested.
  • Once the deadline for filing ahs elapsed, the bankruptcy authority examines the filed claims and makes the necessary inquiries for their verification
  • Within 60 days of the elapse of the deadline for filing claims, the bankruptcy administrator prepares the distribution plan and the final account
  • After distribution the bankruptcy administration submits its final report to the bankruptcy court
  • On completion of the liquidation process, the liquidators apply to the commercial registry for the deletion of the business name.
  • Moratorium proceedings (CO 736 Sec. 3) – Bankruptcy proceedings end in most cases with dismissal due to lack of assets and therefore without satisfaction of creditors claims. To avoid this, it is possible to restructure a company without liquidation of the company if creditors agree to such a moratorium proceeding
  • Commencement of moratorium proceedings (DEBL 293 ) – a debtor seeking to reach an agreement with his creditors must submit a reasoned application and a draft agreement to the composition court, attaching a balance sheet and the operating accounts or an equivalent document indicating assets and income.
  • Creditors may also apply to the court to open composition proceedings
  • Upon receipt of the application the court orders without delay the measures necessary for conserving the debtor's assets. It may provisionally approve a moratorium for a maximum of two months, appoint a provisional commissioner and entrust him with examining the debtor's financial position and income basis and the prospects of recovery.
  • The court immediately summons the debtor and the applicant creditors to a hearing. The court can also hear other creditors and require the debtor to submit a detailed balance sheet, operating accounts and a list of business records
  • As soon as the composition court is in the possession of the necessary documents it decides as quickly as possible whether to approve the moratorium
  • If there are prospects of recovery, the composition courts grants the debtor a moratorium for 4-6 months and appoints one or more commissioners. At the commissioners request, the moratorium can be extended to twelve, and in particularly complex cases to 24 months.
  • The commissioner supervises the debtor's activities, presents interim reports at the request of the composition court and informs the creditors of the progress of the moratorium
  • At the commissioner's request the moratorium can be prematurely revoked if this is necessary for the conservation of the debtor's assets or if it is obvious that a composition agreement will not be reached.
  • The granting of the moratorium is published and notified to enforcement.

PROCEEDINGS AND LEGAL CONSEQUENCES OF A MORATORIUM

• • The commissioner draws up an inventory of the debtors' assets and estimates their value immediately after his appointment. The commissioner make a public announcement asking creditors to file their claims, indicating that failure to do so will preclude them from voting in the negotiations concerning the composition agreement
  • The debtor may continue his business activities under the supervision of the commissioner. The composition court may however direct that certain acts shall require the commissioner's participation.
  • As soon as the draft composition agreement has been drawn up, the commissioner convokes a meeting of creditors by public announcement.
  • The commission chairs the meeting of creditors and reports on the debtor's assets and income basis. The debtor must also attend the meeting and provide information requested.
  • The composition agreement is submitted to the creditors for approval and signature
  • The composition agreement is deemed ratified if prior to its confirmation by the court the majority of the creditors, who represent two thirds of the total of claims, or one quarter of the creditors, who represent at least three quarters of the claims, have given their consent.
  • The commissioner transfers the file to the court before the end of the moratorium and the court decides
  • Once the decision is definitive, it is published and notified to the enforcement office and the land registry. With the publication of the decision the effects of the moratorium elapse.
  • If the composition agreement is rejected or the moratorium revoked, each creditor may, within 20 days of the announcement, demand that bankruptcy proceedings immediately be opened against the debtor

A company may also be wound up without liquidation. Possibilities are restructuring transaction such as merger, demergers and transformations. Those transactions are regulated by the Federal Act on Merger, Demerger, Transformation and Transfer of Assets and Liabilities

TAXES

Essential tax consequences of (in-/voluntary) liquidation or relocation abroad:

• • Difference between book value and market value subject to both corporate income tax and withholding tax (refund of WHT to non-Swiss recipient of liquidation proceeds subject to DTA, if any)
  • If voluntary liquidation, termination of Swiss tax liability only upon effective payment of all taxes due
  • VAT may need to be examined separately
  • No substantial differences between tax consequences of voluntary or involuntary liquidation, same may be true for deemed liquidation (termination of business activity without formal liquidation);
  • Liquidators may be held liable for unpaid tax (usually limited to company's assets)

For all options it is important to take care to protect the assets of the business, to conform with the liquidator's wishes and to act responsibly. Please contact us for further information and advice as to how to proceed.