Dissolving and liquidating a company in Switzerland

Closing a company in Switzerland is not simply a matter of “switching off the lights”: it is a formal procedure that passes through dissolution, liquidation and removal from the commercial register, with precise rules to protect creditors. Doing it well avoids personal liability for those managing the operation. Let us look at the complete path for a GmbH or an AG.

Dissolution and liquidation: two distinct phases

Two moments must be distinguished:

• dissolution is the decision that triggers the end of the company: from that moment the company enters liquidation but continues to exist;
• liquidation is the phase in which the assets are realised, the debts are paid and any surplus is distributed.

The company exists until the liquidation is concluded and it is removed from the register. During this phase the company name is completed with the addition “in liquidation”.

The grounds for dissolution

Dissolution can arise from:

• a resolution of the members (general meeting in the AG, members’ meeting in the GmbH), which is the most common case for a voluntary closure;
• the occurrence of a ground provided for in the articles of association;
• the opening of bankruptcy;
• a court judgment in particular cases.

We focus here on voluntary liquidation, the one decided by the members.

The resolution and the appointment of the liquidators

Voluntary dissolution requires a resolution in the form of a public deed (before a notary). With the dissolution the liquidators are appointed: they may be the directors in office or persons designated ad hoc. At least one liquidator must be domiciled in Switzerland with signing authority, to guarantee representation.

Dissolution, entry into liquidation and appointment of the liquidators must be entered in the commercial register.

The task of the liquidators

The liquidators manage the terminal phase of the company. In particular they:

• draw up an opening balance sheet of the liquidation;
• realise the assets (collect receivables, sell property);
• pay the debts and settle the pending relationships;
• conclude the current business and do not undertake new business, except that necessary for the liquidation.

They act with the required diligence and are answerable for their conduct: a hasty liquidation that ignores creditors exposes them to liability.

The notice to creditors and the waiting year

A characteristic step of Swiss liquidation is the notice to creditors: the creditors are invited, through publication in the Swiss Official Gazette of Commerce, to notify their claims.

To protect creditors, the law provides that the residual assets may not be distributed to the members before the expiry of a waiting period (as a rule one year from the third publication of the notice). This period can be shortened in particular cases, under the liquidators’ responsibility and with the attestation of a licensed auditor, when it is certain that all the debts have been extinguished or secured.

The final distribution and the removal

Once the debts have been extinguished or secured and the period has elapsed, the liquidators:

• draw up the final account of the liquidation;
• proceed to the distribution of the residual assets among the members, according to the quotas or shares.

A tax aspect to anticipate: the part of the surplus distributed to the members that exceeds the share capital and the reserves from capital contributions is as a rule treated as a liquidation surplus subject to the withholding tax of 35% (Verrechnungssteuer). It must be planned before the distribution.

Once the distribution is concluded, the removal of the company from the commercial register is requested. With the removal the company ceases to exist. The company books and accounting records must be kept for the period provided for by law.

Errors to avoid

• Distributing the surplus before the waiting period or before having satisfied the creditors: it exposes the liquidators to liability.
• Neglecting the final tax obligations (closing VAT, tax settlement, withholding tax on the surplus).
• Forgetting the deregistration with the social insurances and the other authorities.
• Not keeping the documentation for the required period.

In brief

Liquidation is an orderly path: dissolution, appointment of the liquidators, realisation and payment of the debts, notice to creditors, waiting period, distribution and removal. Respecting its stages protects the creditors and those conducting the operation, and closes the company cleanly on the tax front too.

Do you need to close a company without leaving loose ends? SIH ONE’s corporate division accompanies you from dissolution to removal, with the tax aspects under control.