SWITZERLAND Law and Practice Contributed by: Alexander Vogel, Marc Baumberger and Selina Bruderer, MLL Legal
1. Market Conditions 1.1 Geopolitical and Economic Factors The most significant current geopolitical and econom - ic factor affecting Switzerland is the US administra - tion and its foreign policy, which has a direct impact on the Swiss economy. The Swiss economy is also heavily dependent on developments in Europe. The current economic slowdown in the EU will also have longer-term consequences for the Swiss economy. Additional key market drivers include inflation, inter - est rates and the ongoing war in Ukraine. As a result of these economic uncertainties, fewer joint ventures (JVs) involving foreign companies have been estab - lished, particularly involving large Swiss companies. However, despite these global challenges, the Swiss JV market demonstrated resilience in 2024. In any case, and for the whole Swiss economy, interest rates remain a key factor, especially in relation to JV financ - ing. Should rates not decrease further, JV parties may increasingly rely on internal funding or adopt struc - The construction industry (eg, in relation to building a second road tunnel through the Swiss Alps), industrial projects, research and financing are key for JVs in Switzerland. Industries such as retail and, in recent years, fintech also frequently engage in JVs. Generally, JV structures in Switzerland are chosen in situations where the parties rely on each other’s specific (market) knowledge, skills and/or assets to pursue a mid- to long-term business collaboration. tures that are less dependent on liquidity. 1.2 Industry Trends and Emerging Technologies
JVs are generally established in two main forms: cor - porate JVs or contractual JVs. Corporate JV In a corporate JV, the parties operate through a sepa - rate legal entity, which is typically structured as a Swiss corporation ( Aktiengesellschafte n (AG) or sociétés anonymes (SA)) or, less commonly, as a Swiss limited liability company ( Gesellschaft mit beschränkter Haf- tung (GmbH)/ Société à responsabilité limitée (Sàrl)). A corporate JV has the following advantages. • Separate legal entity: A corporate JV becomes a separate legal entity under Swiss law. This status enhances the JV’s stability and facilitates smoother interactions with third parties. External parties often prefer dealing with a familiar legal structure, which is particularly advantageous for cross-border JVs or when seeking direct financing from banks and lenders. • Limited liability: Each JV party’s liability is limited to the amount of capital it has subscribed to the JV company. Swiss courts rarely pierce the corporate veil; liability protection is robust. However, third parties may require JV parties to guarantee the JV company’s obligations, particularly in early-stage undertakings. Furthermore, the insolvency of a JV company may still affect the reputation of the JV parties. • Enhanced flexibility for change of JV parties/exit: In a JV company, the transfer of shares to a new owner is a relatively simple process, despite there being specific Swiss formalities to adhere to. The JV company’s corporate governance may be set up to allow for a smooth and rapid change of JV parties (including adding additional partners), and also with a view to a full or partial exit. The disadvantages are as follows. • Higher administrative costs: Establishment costs (drafting of agreements, notarisation and regis - tration) are usually comparable with those of a contractual JV, but operating a corporate JV often involves higher (recurring) administrative costs. This is mainly because of ongoing corporate- related costs, such as those associated with
2. JV Structure and Strategy 2.1 Typical JV Structures
Swiss law does not provide for a specific legal defini - tion or set of laws governing JVs, but the concept is legally well recognised, and the general rules for con - tracts and companies set forth in the Swiss Code of Obligations (CO) apply. This liberal framework allows partners to structure their undertaking according to their needs.
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