A general partnership is a legal form in Switzerland that is mainly used by small and medium-sized companies in which at least two natural persons are jointly liable and assume the management. This form of company does not require a minimum capital requirement and must be entered in the commercial register.
A "Kollektivgesellschaft," also known as a general partnership, is a legal form for partnerships in Switzerland, mainly utilised by small and medium-sized enterprises (SMEs). This type of business structure is governed by the Swiss Code of Obligations (Art. 552-593 OR) and requires at least two natural persons for its formation. Notably, there is no minimum capital requirement for establishing a general partnership. In the case of a general partnership, in addition to the legally prescribed content, the company name can also include details of the persons or activities of a company. It is also permitted to use a fictitious company name, provided that it is not misleading and corresponds to the truth. (Art. 944 Abs. 1 OR).
The partners in a general partnership are personally, unlimitedly, and jointly liable with their entire private assets for the company's liabilities. This means that creditors can access the private assets of the individual partners in the event of financial difficulties faced by the company up to 5 years after the dissolution of the company.
Tax-wise, the general partnership is not independently liable for taxes. Instead, the company's income and profits are allocated to the partners and taxed as part of their personal income.
A general partnership must be registered in the commercial register to achieve legal existence. The dissolution of a general partnership can occur through a resolution by the partners, the death of a partner (unless otherwise agreed), or the opening of bankruptcy proceedings over the company's assets. This legal form is particularly suited for smaller businesses where personal trust among partners and personal liability are of central importance. It is recommended to conclude an agreement for general partnerships, as this can minimise the risk of disputes. This agreement should include the following points:
Contracting parties
Subject matter of the contract
Company name, purpose and registered office of the company
Capital contributions of the shareholders
Company meeting and passing of resolutions
Management
Representation
Voting rights
General rights
Obligations
Compensation
Distribution of profits and losses
Working hours
Holiday arrangements
Resignation
Cancellation
Termination