Insights
Legal Advice for Startups: What Matters When Incorporating a Company
Establishing a company requires legal planning in order to minimize risks and avoid conflicts. In addition to choosing the right legal form and drawing up a shareholder agreement and carefully drafted general terms and conditions, there are other aspects that should be taken into account.
Adjudication of Bankruptcy Without Prior Debt Enforcement
As a general rule, creditors with outstanding claims must first initiate debt enforcement before they can file a petition in bankruptcy. However, if a creditor's interests are at particular risk or if a company has completely ceased making payments, bankruptcy can be opened without prior debt enforcement.
Reorganization of a Sole Proprietorship into a Limited Liability Company or a Stock Corporation
Many companies that have limited capital requirements in the start-up phase commence their business activities as sole proprietorships. As soon as they have reached a certain size and investors come into play, a reorganization into a legal entity (GmbH or AG) becomes an obvious choice.
Non-competition Clauses: Key Aspects in Company Law and Employment Law
In Switzerland, non-competition clauses play an important role in both company law and employment law. When drafting non-competition clauses the need to protect the business must be balanced with the economic freedoms of the individual. In particular, the legal restrictions imposed by employment law must also be considered.
Are Board Members and Company Executives Liable for Negligent Breaches of Duty?
If board members or executives breach their duties and this causes a loss, they can be held liable for the loss. Not every mistaken business decision will lead to liability. However, if there has been a breach of duty then an act of simple negligence will generally be sufficient.
How Does Crowdfunding Work in Switzerland?
There are no specific regulations for crowdfunding or crowdinvesting under Swiss law. However, operators of crowdinvesting platforms and companies wishing to use crowdfunding should know which activities require a license, who is subject to the Swiss Anti-Money Laundering Act and when the duty to publish a prospectus arises with a public offering.
Do Companies Based in Switzerland have a Right to a Bank Account?
Anyone who wishes to establish a company normally needs a bank account in order to pay in the capital. Company foundations where the capital contribution is made using cryptocurrencies or other contributions in kind are excluded from this. However, these startups will also normally require a bank account in the local currency at the latest when they start business operations.
Bankruptcy from a Creditor’s Perspective
Bankruptcy has serious consequences not only for the owners and employees of the affected business, but also for its business partners. It is therefore important for creditors to understand how bankruptcy proceedings work and what rights they have.
New Company Law: Important Changes to Capital Requirements
From 1 January 2023, amendments to Swiss company law mean that some changes will take effect. These are also of interest to startups and SMEs, as they enable a more flexible form of capital structure and simplify certain aspects of company foundation.
What Rights Do Substantial Minority Shareholders Have in a Swiss Company Limited by Shares?
Swiss company law is based on the majority principle. A simple majority is sufficient for most decisions. However, minority shareholders also have rights which cannot be taken away from them. Clarity about the type and scope of these rights should be sought prior to founding a company.
DAOs - a Legal Perspective
In contrast to traditional companies, Decentralized Autonomous Organizations (DAOs) have neither a management board nor a registered office. Therefore, under Swiss law they have no separate legal personality. This gives rise to a number of legal uncertainties.
An Essential Guide to the Legal Framework for Digital Shares
The latest changes to securities and corporate law enable Swiss companies to digitize many company law procedures. Digital shares and smart contracts allow share transfers and shareholder agreements to be largely programmed and executed automatically.
Sole Proprietorship, Limited Liability Company or Company Limited by Shares? What Startups Ought to Know
For anyone looking to found a company, there are a range of potential legal forms available under Swiss law. On closer examination, however, only a few of these forms will typically be viable. The appropriate form is determined by the number of stakeholders, the size of the company and the seed capital available.
Bankruptcy Due to Lack of Organization: Companies Without a Valid Domicile Are at Risk of Court-ordered Dissolution
Every Swiss company must have a legal domicile that is entered in the commercial register. If no mail can be delivered to the registered address or if no new domicile is registered after deletion, this constitutes an “organizational defect” which can lead to the liquidation of the company under bankruptcy law.
Authorized Capital Increase: What Rights Do Minority Shareholders Have?
With an authorized capital increase – and in the future a “capital band” – the board of directors is authorized to change the share capital within a certain period of time. If existing shareholders are unable or unwilling to participate in a capital increase, their shares will be diluted. The specific circumstances will determine whether and how minority shareholders can protect themselves.
What Founders Need to Know about Shareholders’ Agreements
The parties involved in drawing up a shareholders’ agreement have a great deal of leeway when it comes to its contents. They must also consider the risk and consequences of a breach of contract. As technology advances, we are increasingly seeing “smart” solutions for shareholders’ agreements that ensure contracts can be performed, alongside the use of traditional legal remedies.
Founding a Company Using Crypto and Foreign Currencies
Founding a Swiss company using crypto capital is already possible today. The legal requirements are though stricter compared with making a cash contribution in Swiss francs, and potential exchange rate fluctuations must be taken into account. The revised corporate law will make capital contributions more flexible and also open the door to foreign currencies.
The Virtual Shareholder Meeting Becomes a Legal Reality
The revised Swiss company law allows virtual shareholder meetings and enables company formation, capital increases or other shareholders’ resolutions via video conferencing. While the law is not expected to enter into force before 2022, parts of it have already been implemented under temporary Covid-19 provisions.
Switzerland Says Goodbye to Bearer Shares
As of 1 May 2021, all bearer shares of companies incorporated in Switzerland will be converted into registered shares by law. Exceptions are only allowed for equity securities listed on a stock exchange or structured as intermediated securities. Companies and shareholders violating transparency and documentation duties may face penalties.