Mantelhandel in Switzerland: when the sale of a corporate shell is void

Art. 684a CO sets a three-part objective test

Art. 684a para. 1 of the Code of Obligations reads that where a company no longer operates as a business, no longer has any disposable assets and is over-indebted, the transfer of shares is null and void. The three conditions are cumulative. A dormant company that still has cash in its account has disposable assets and falls outside the provision. An over-indebted company that is still trading falls outside it as well. The provision bites only on the combination.

Two features of the drafting decide most real cases. First, the test is objective: it describes the state of the company and says nothing about what the transferee knew or ought to have known. Good faith is no defence, and equally, bad faith adds nothing where the company still has assets. Second, the sanction is nullity, not voidability. The transfer produces no effect from the outset; no one has to sue, and there is no limitation period to run.

Art. 787a extends the same regime to the GmbH, providing that the provisions of the law on companies limited by shares apply accordingly to the assignment of capital contributions in over-indebted companies that do not operate as a business and have no disposable assets. Both articles were inserted by the Federal Act of 18 March 2022 on Combating Abuse of Bankruptcy Procedures and entered into force on 1 January 2025.

The commercial register office is the enforcement point

Art. 684a para. 2 CO gives the commercial register office an active role rather than leaving nullity to be litigated later. Where the office has reasonable grounds to suspect such a share transfer in connection with a notification — typically the simultaneous replacement of the board, the registered office and the company purpose — it requests the company's current signed annual accounts, audited if the company has an auditor. If the company does not comply, or if the accounts confirm the suspicion, the office refuses the requested entry.

This is why the practical failure mode of an unlawful Mantelhandel is not a court judgment years later. It is a refused registration within weeks, with the buyer holding a share certificate that transfers nothing and a company whose board cannot be updated. Art. 684a para. 3 reserves Art. 934 CO, under which the register office deletes a legal entity that no longer operates as a business and no longer has disposable assets, after inviting the entity and then any other interested parties to state an interest in keeping the entry.

Issue stamp duty is the cost most buyers miss

The Federal Stamp Duty Act treats an economically liquidated company that changes hands as if it had been founded anew. Art. 5 para. 2 letter b places on the same footing as the creation of participation rights the change of hands of the majority of the shares, capital contributions or cooperative shares in a domestic company or cooperative that has been economically liquidated or brought into liquid form. The rate under Art. 8 para. 1 is 1%.

The base is set by Art. 8 para. 1 letter c: on a change of hands of the majority of participation rights, the duty is calculated on the net assets held by the company at the time of the change of hands, but at least on the nominal value of all existing participation rights. For a stripped AG whose only remaining item is its CHF 100,000 nominal capital, that is CHF 1,000. For a shell that was brought into liquid form — the business sold, the proceeds sitting in the bank — the base is the cash, and the figure scales with it.

The allowance does not travel. Art. 6 para. 1 letter h exempts participation rights issued against payment on the formation or capital increase of an AG, a partnership limited by shares or a GmbH to the extent that the shareholders' contributions do not exceed one million francs in total. A change of hands under Art. 5 para. 2 letter b is neither a formation nor a capital increase, so the CHF 1 million threshold that makes ordinary Swiss incorporations duty-free has no application. As of 25 August 2026 this remains the position under the consolidated text in force since 1 January 2024.

Transfer stamp duty depends on who is in the room

Transfer stamp duty, the Umsatzabgabe, is a separate charge with a separate trigger. Art. 13 para. 1 of the Stamp Duty Act makes the transfer of ownership of taxable documents against payment subject to duty only where one of the contracting parties or one of the intermediaries is a securities dealer as defined in para. 3. Swiss shares and GmbH capital contributions are taxable documents under Art. 13 para. 2 letter a.

Where a securities dealer is involved, Art. 16 para. 1 letter a sets the rate at 1.5 per mille for documents issued by a Swiss resident, and Art. 17 para. 1 makes the securities dealer the person liable, owing half the duty for each party that cannot show itself to be a registered dealer or an exempt investor. A share purchase agreement signed between two private parties with a lawyer and a notary in attendance involves no securities dealer and no transfer stamp duty. The 1% issue duty above is unaffected either way.

Withholding tax is a consequence of distributions, not of the sale

Withholding tax at 35% under Art. 13 para. 1 letter a of the Withholding Tax Act is charged on income from movable capital assets, which by Art. 4 para. 1 letter b includes dividends and other returns on shares and GmbH capital contributions issued by a Swiss resident. A share sale is not itself such a return, and no withholding tax arises because a shell changed owner.

The exposure comes afterwards, when the new owner takes the accumulated substance out. Art. 20a para. 1 letter a of the Federal Act on Direct Federal Tax is the provision to model: the sale of a participation of at least 20% out of private assets into the business assets of another person is treated as income from movable assets to the extent that non-operating substance which existed and was distributable at the date of sale is distributed within five years with the seller's involvement. Sellers who take the price as a tax-free private capital gain and then help the buyer empty the company are the intended target of the rule.

Loss carryforwards are the assumption to test before signing

Art. 67 para. 1 of the Federal Act on Direct Federal Tax permits losses from the seven financial years preceding the tax period to be deducted from the net profit of that period, to the extent they could not be taken into account earlier. The right attaches to the legal entity, and nothing in the text extinguishes it because the shareholders changed.

Practice is less generous than the text. Where the acquisition of an emptied company has no discernible purpose other than the use of its losses, the authorities apply the general anti-avoidance doctrine and refuse the set-off, and the same facts that make Art. 5 para. 2 letter b of the Stamp Duty Act apply — a company economically liquidated or brought into liquid form — are the facts that make the avoidance argument available. A buyer whose valuation rests on the losses should obtain an advance ruling from the competent cantonal administration before the purchase agreement is signed. Afterwards there is nothing left to negotiate.

When none of this applies

A clean shelf company sits outside every provision above. It has never traded, it holds its full statutory capital — CHF 100,000 for an AG under Art. 621 para. 1 CO, CHF 20,000 for a GmbH under Art. 773 para. 1 — and it has no liabilities. It therefore has disposable assets and is not over-indebted, so Art. 684a does not reach it. It was capitalised at formation and its issue stamp duty position was settled then, so it has not been economically liquidated within the meaning of Art. 5 para. 2 letter b of the Stamp Duty Act. Our Swiss shelf company transactions are structured on this footing.

A going-concern sale sits outside it as well. A company with revenue, staff and contracts is operating as a business, which defeats the first condition of Art. 684a and the economic-liquidation requirement of the stamp duty provision alike. What remains in a going-concern deal is ordinary tax and warranty work, not shell doctrine.

The formalities differ from what is often assumed. Transferring registered shares of an AG requires no notary; assignment of a GmbH capital contribution requires written form under Art. 785 para. 1 CO, and the assignment contract must repeat the information on rights and obligations under the articles of association unless the acquirer is already a member. Neither the register office nor the notary verifies compliance with Art. 684a on the parties' behalf. The check is the buyer's, and the evidence to demand is the same evidence the register office will ask for: current signed annual accounts.

What to verify before a shell purchase

Due diligence on a Swiss shell reduces to establishing which side of Art. 684a and Art. 5 para. 2 letter b the target sits on. Obtain the current signed annual accounts, audited where an auditor is in office, since these are the documents Art. 684a para. 2 empowers the register office to demand. Confirm from the bank statements that the paid-in capital is present in the company and has not been lent to related parties, because the loan converts a disposable asset into a receivable against a party who may not pay.

Search the debt-enforcement register at the company's seat, obtain a tax clearance from the cantonal administration, and quantify the 1% issue duty on net assets before agreeing a price, so that the duty is allocated in the contract rather than discovered after completion. Where the seller resists producing accounts, the resistance is itself the finding. A company whose accounts cannot be shown is a company whose registration the register office is entitled to refuse.

Buyers weighing the alternative should compare the total cost against incorporating a new Swiss company, where the first CHF 1 million of contributions is exempt from issue stamp duty, or against a ready-made entity that carries no history to diligence.