The dissolution and liquidation of a company are formal legal operations that put an end to the existence of a legal entity. They may result from a voluntary decision of the shareholders, a court decision or the opening of bankruptcy. PBM Avocats assists directors, shareholders and liquidators in all phases of this process in Geneva and Lausanne, ensuring compliance with legal formalities and the protection of the interests of all stakeholders.
Grounds for Dissolution: Voluntary and Forced
The dissolution of a company may occur in several circumstances:
| Ground for dissolution | Type | Legal basis (SA) |
|---|---|---|
| Decision of the general meeting (qualified majority) | Voluntary | Art. 736 no. 2 CO |
| Expiry of the statutory duration | Automatic | Art. 736 no. 1 CO |
| Opening of bankruptcy | Forced | Art. 736 no. 3 CO |
| Court judgment for good cause | Forced / judicial | Art. 736 no. 4 CO |
| Organisational deficiency (art. 731b CO) | Judicial | Art. 731b para. 1 no. 3 CO |
The Liquidation Phase: Step-by-Step Process
Once dissolution has been pronounced, the company enters the liquidation phase. The company name must be supplemented with the words "in liquidation" (art. 739 para. 1 CO). The liquidators take charge of the company and proceed in the following order:
- Registration of the liquidators in the commercial register
- Drawing up an inventory of the company's assets and liabilities
- Publication of the call to creditors in the SOGC (minimum period of one year)
- Realisation of assets: collection of receivables, sale of stock and fixed assets
- Payment of debts: satisfaction of all known creditors
- Drawing up the final liquidation balance sheet
- Distribution of the balance among shareholders/partners in proportion to their rights
- Deregistration from the commercial register and publication in the SOGC
The Call to Creditors in the SOGC
The call to creditors is an essential formality that cannot be omitted. It protects unknown creditors and allows liquidators to ensure that no debt is overlooked. The minimum period for submitting claims is one year from the third publication in the SOGC (art. 742 para. 1 CO). Before the expiry of this period, no distribution to shareholders may take place. Creditors who submit their claims after the deadline may still assert them if assets remain, but have no right to be paid in priority over any earlier lawful distributions.
Distribution Among Shareholders
After payment of all debts and consignment of amounts owed to unknown creditors, the liquidation surplus is distributed among the shareholders/partners. The distribution follows the order provided for in the articles of association: first, the nominal value of the shares is reimbursed; then, statutory reserves if the articles of association so provide; finally, the balance is shared in proportion to the capital held.
From a tax perspective, the distribution of the liquidation surplus is subject to anticipatory tax of 35% to the extent that it exceeds the paid-up capital contributions (nominal value + capital contribution reserves within the meaning of the FTA). The portion corresponding to the reimbursement of capital contributions proper is exempt. Tax planning for the liquidation is therefore crucial.
Judicial Dissolution for Good Cause
Art. 736 no. 4 CO allows shareholders representing at least 10% of the share capital to request the court to dissolve the corporation for good cause. Good cause consists of circumstances that make it intolerable for the applicants to maintain the company: persistent deadlock of the company's bodies, majority abuse, serious violations of minority shareholders' rights. The court may, instead of dissolution, order other less radical measures (art. 736 no. 4 in fine CO). This route is often used in parallel with an action for minority shareholder protection.
Deregistration from the Commercial Register
Deregistration of the company from the commercial register marks the end of its legal existence. It occurs after the liquidators have certified that all known debts have been paid and assets distributed. The deregistration is published in the SOGC. After deregistration, the former shareholders and liquidators remain liable to creditors whose claims could not be satisfied, for a period of 3 years.
Frequently Asked Questions on Company Dissolution and Liquidation
What is the difference between dissolution and liquidation of a company?
Dissolution is the legal decision that ends the normal existence of the company and opens the liquidation phase. Liquidation is the operational process that follows dissolution: realisation of assets, payment of debts, call to creditors and distribution of the balance among the shareholders. The company retains its legal personality throughout the liquidation phase, but only for the purposes thereof. It is only after deregistration from the commercial register that the company ceases to exist.
What are the grounds for dissolution of a corporation (SA) under Swiss law?
Art. 736 CO enumerates the grounds for dissolution of a corporation: (1) a statutory ground (e.g. limited duration, occurrence of a specified event), (2) a decision of the general meeting by qualified majority, (3) the opening of bankruptcy, (4) a court order pronounced at the request of shareholders representing at least 10% of the share capital for good cause (art. 736 no. 4 CO), (5) the decision of another competent body according to the articles of association, and (6) cases provided for by law (e.g. over-indebtedness). The dissolution decision of the general meeting must be recorded in authentic form.
How does the call to creditors procedure work?
After the dissolution decision, the liquidators must publish a call to creditors in the Swiss Official Gazette of Commerce (SOGC) inviting them to submit their claims within a period of one year (art. 742 CO). This one-year period cannot be shortened: distribution may not occur before its expiry. Creditors who do not come forward within the statutory period do not lose their rights, but their claim is dealt with by consignment if it is known. If unknown creditors exist after distribution, the balance may be consigned with a cantonal fund.
Who can be a liquidator of a corporation (SA) or limited liability company (Sàrl)?
In a corporation, if the articles of association do not designate a liquidator and if the general meeting does not appoint one, the members of the board of directors assume the functions of liquidators by operation of law (art. 740 para. 1 CO). The general meeting may at any time appoint or remove liquidators. The liquidators must be registered in the commercial register. They have the powers of all the company's bodies for the purposes of the liquidation, but may not carry out new commercial acts that are not necessary for the liquidation.
Can an inactive company be quickly dissolved and deregistered?
The so-called 'dissolution by declaration' procedure is possible for corporations and limited liability companies whose assets no longer cover anything other than the costs of liquidation and where there are no pending proceedings (art. 745 para. 2 CO). In this case, the liquidators may declare to the commercial register that the company has no debts towards third parties, which allows accelerated deregistration. However, the shareholders remain jointly and severally liable for claims of third parties appearing after deregistration, for a period of 3 years.