Buying or selling a company in Switzerland

11.01.2021

Company acquisition in Switzerland is known to be very advantageous. In fact, this jurisdiction is the best choice in terms of the fastest start of business activities in Europe.

Usually, companies in Switzerland are acquired through the process of buying shares or assets. As to mergers, this procedure can sometimes be more difficult. While deciding on a merger, there are two options to choose from:

  • Takeover – one company ceases and becomes a part of another company;
  • Merging – both companies participating in the merge end their existence; a totally new legal entity is created by the merge.

In Switzerland, for a merger to take place a minimum of 2/3 of the shareholder must approve the change.

Protocol of intent

As it often happens during the acquisition procedures not only in Switzerland but in general, some guarantees need to be concluded even before the transaction itself happens. If the seller and the buyer are interested in the transaction after passing the initial communication, they enter the next stage which includes a pre-sale check, business valuation, and the conclusion of a preliminary contract.

To study the object of sale in detail, the buyer receives preliminary information. However, this can be insufficient: the buyer can demand more detailed information that is most of the time confidential. No wonder this becomes a certain nuance: detailed confidential information about the company can be considered by the sellers as too sensitive to share with strangers. That is why they prefer to have some guarantees that the buyer’s intentions are serious.

The best way of solving this nuance is to conclude a Protocol of Intent and to deposit cash security before buying a business. For the buyer, the conclusion of this protocol lets them start the full process of due diligence and receive access to important information about the object in the sale. When it comes to the seller, such protocol confirms that the buyer is seriously engaged in the process of purchase. Furthermore, a Protocol of Intent brings an opportunity to detailly describe the preparation stages of the selling process and to record the negotiations and the obligations of both parties in writing.

Right and obligations of a buyer

The Swiss company can be used by the buyer for a long period based on a deed of transfer without ownership before the actual moment of the ownership happens. The whole company can be transferred after the transaction is completed.

During this period, the buyer’s power is less strong than the owner’s rights. The buyer can only make transactions such as for making a profit, paying taxes, or other expenses (in other words – for the disposal of property). Expenses necessary for the company’s functioning can be incurred by the buyer, as well. However, they can only demand compensation for them as the title owner, if the contract gets canceled.

Once a company purchase transaction in Switzerland is successfully closed, the buyer can be considered an official complete owner of the purchased assets and shares. Typically, the contract between the party determines the number of assets, liabilities, and contracts that will be transferred in a transaction.

An important note on the company’s employees: their contracts will not be terminated in a Swiss company if an employee does not wish so. It is their decision to make.

Legal assistance

No matter how small or easy the purchase transaction seems, professional assistance during the sale and purchase procedure in Switzerland can play a crucial role.

COREDO has a team of professionals who are ready to offer expert assistance regardless of the business sector you work in. Our specialists provide their high-quality services in accordance with the leading international practices and international corporate governance standards. Do not hesitate to contact us and arrange a consultation about the purchase and sale of companies in Switzerland.

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