Company Liquidation in Switzerland

Company liquidation in Switzerland is a seemingly simple process. Although many businessmen are somewhat experienced in company liquidation, they should know how to handle this matter in Switzerland as well. For those already investing in Switzerland, understanding liquidation procedures is just as important as knowing incorporation rules or tax incentives.

We are not going to consider and describe different Swiss associations (Vereins), funds (Stiftungen) in the classical sense, and other regulated companies.
These things should be discussed separately as all the procedures might significantly differ from the common liquidation process.

Next, you will learn several ways to liquidate LLCs and PLCs (the liquidations of GmbH and AG are quite similar procedures).

The information provided in this article does not and is not intended to constitute legal advice and should not be relied upon as such. We do not bear any responsibility for your independent actions taken after reading this article and kindly ask you to contact the lawyers for all the legally significant advice and/or work.

JSC shareholders or LLC partners may decide to terminate the business activity.
Regardless of the reasons behind such a decision, our lawyers can help you clarify the following issues:
— Whether you're planning company closure or just exploring your options for company formation in Zug, our legal experts can assist with structuring your transition the right way.
— To find out whether all the shareholders or partners decided upon company liquidation.
— To check whether there are some special comments or terms regarding this matter in the statutory documents.
— To find out whether the company has been operating for less than a year or longer.
— To check whether the company in question has the tax debts.
— To find out whether the company has any debt to contracting parties.
— To check whether the company has hired any employees and what obligations must be fulfilled within the scope of implementing agreements.
— To check all the possible details of the office lease agreement including the notice period in case the company has rented the office premises.

The things are the easiest when the company exists only on paper.
In this case, company owners must sign the decision on liquidation, certify it by a notary public and inform the commercial register of the canton
They should also notify the tax office of the canton and social services.

Commercial register will request information regarding the potential debts from the tax office and the register of debtors and get the required answers.

The duration of the company liquidation process largely varies depending on whether the company has certain assets or debts.
Should the company have neither assets nor debts, the minimum period before publishing the notice of company liquidation comprises 6 to 9 months.
During this time, the commercial register of the canton receives all the claims of potential creditors and answers requested from the tax office.

Possible Causes of Extension of Time for Company Liquidation
You should pay attention to the date of company registration. If the company has been registered more than 12 months ago or during the previous calendar (reporting) year, the tax department might insist on the conduct of a tax audit of the company.

The final stage of the company liquidation procedure implies the provision of the closing balance sheet, which is compiled by an accountant upon payment of all the taxes, debts and obligations, and the publication of corresponding changes in the commercial register. Once this information has been published, the company will be considered liquidated.

Important!
— The liquidation of a company in Switzerland can be challenged in a court of law.
— Both an accountant and a local president of the company must be financially supported throughout all the liquidation process.
—The company stands surety to the creditors with its authorized capital. If the capital is not paid in full, its unpaid part does not limit the liability.

Before the publication of the liquidation order in the register, you will have to pay at least the following services:
— The services of the company president
— The services of an accountant
— Legal address or office of the company
— Legal services rendered to address the potential requests
— The cost of three (3) notices of the search for the creditors in the press
— The trade register services regarding the publication of liquidation order
— Current debts to creditors.
This is not an exhaustive list, which does not take certain circumstances into account.

Important!
Everyone wants to know what will happen to the funds kept in the company accounts or the company’s assets upon company’s liquidation?
The answer is simple. Once you have paid all the taxes and the notice of company liquidation has been published in the register, you will be able to sell the company assets and distribute the available funds among the shareholders.

It is not always possible to conduct a simplified liquidation procedure due to problems with personnel, debts to contracting parties or unpaid taxes.

Should an amount of debts exceed the balance sheet value of the company's assets or authorized capital, company management must declare bankruptcy and turn around. In Switzerland, cantonal services called Konkursamt consider all the applications for insolvency of companies.

They take care of all the ongoing business processes, obtain information of company assets as well as data on the open accounts in Swiss banks and abroad.
Cantonal services can draw up a balance sheet and a plan for the sale of assets to cover the claims of creditors.

In general, company management may decide to declare a bankruptcy and accept the fact that the company cannot keep paying all the bills or fulfil existing contractual obligations.

The company president will ask an accountant to draw up the company's balance sheet as of the current date in terms of receivables, payables, and assets. Next, the company president must submit a corresponding application to the Canton’s Konkursamt (click the link to download an example of the application).

If there are sufficient grounds for company liquidation, the Konkursamt will appoint a liquidator, which can be either an employee of the Konkursamt or the current company president.

We have over 12 years of experience in handling such matters. Hence, we know that the company president may also terminate his powers BEFORE filing for bankruptcy. The latter might affect shareholders in the most unpredictable ways. We will separately discuss the possible issues and solutions.

Once the documents at the beginning of the bankruptcy proceedings have been signed, the company president must stop all the economically significant actions. He cannot advertise company services, pay bills, enter new contracts, and even conduct negotiations. Failure to comply with this requirement is subject to criminal liability.

Moreover, the company president will have to transfer all the accounting documents, information about company assets, bank accounts, land plots, etc. to the bankruptcy trustee.

Bankruptcy process can last up to five years. During this process, creditors or affected parties might file a police report or start the lawsuits. All these matters can delay the processes and increase the expenses. Companies based in larger business centers, like Zurich, often face higher procedural costs and regulatory scrutiny during bankruptcy, making early planning crucial.

It is not possible to predict the full cost of a bankruptcy procedure.

You should remember that in any case, you will need a company president (liquidator), an accountant (auditor), and a lawyer to move forward with this matter.
Ideally, the same people should take care of the entire process, which can take up to 5 years.
It would be also nice to have a lawyer address all the requests and represent the shareholders in all instances since many things can lead to completely unpredictable consequences not only for the company president but also for the shareholders.

Buying and selling a company along with a change of its president, name and location is not a mere liquidation as is. This is an opportunity to quickly get rid of something unnecessary for those who neither calculated their strength nor managed to tackle some project with partners and gave empty promises. Another good reason for doing this is the change of a market situation like, say, the tourism sector shrank significantly due to pandemics.

Things happen – the authorized capital might end, or a certain goal has not been achieved, and one neither wants nor can invest any more into a company. The company might neither have debts nor assets.

Swiss Shelf companies is a common asset on the market.

Even for those utilizing Swiss shelf companies or looking to transfer dormant firms, it is essential to meet the local corporate governance standards and understand related obligations, including residency and licensing. See also: How to Get a Swiss Residence Permit for company owners or directors.

To avoid a lengthy and costly bankruptcy process, the ideal solution would be to re-register such a company on someone else’s name and forget about going through all of this in Switzerland for good.

Important!
Regardless of your wishes, all Swiss companies must have a local president or a board member.
Should any issues arise, this person will deal with all the state authorities and claims of creditors.

Therefore, before re-registering a company, one must request the provision of all the related documents indicated at the beginning of this article

The costs of liquidating of a company through purchase and sale usually include the cost of notarial certification of the contract of sale, changes in the constitutive corporate documents and the trade register fees taken to cover the publication of these changes.

These expenditures may vary depending on the Swiss region and Canton.

Notary fees will range from 500 to 2000 francs. The most expensive notarial services are in the city of Geneva. Registry fees change from time to time. You can check the registry fees for the Canton of Zug on their official website.

In cases involving financial technology startups or innovative business models, liquidation might also affect previously granted sandbox privileges. Learn more about the Swiss Financial Sandbox Initiative and how it can impact your obligations during company wind-down.

In any case, please do not hesitate to get in touch with our lawyers from Goldblum and Partners.
We have over 12 years experience in the field. During this time, we assisted dozens of cases including the liquidation procedures as well as represented debtors and creditors in the collection of debts in Switzerland.