Joint Ventures in Switzerland

Swiss doctrine distinguishes between two key types of joint ventures, namely, between contractual joint ventures and the corporate/equity joint ventures. In the former case, cooperation between the joint venturer is based purely on a contractual level, whereas in the latter case the cooperation is taking place by founding jointly a new legal entity, which can operate independently on the market or jointly acquiring an existing company.

Therefore, joint ventures are basically recognized as a distinct legal concept in Switzerland, even if there is no statutory definition of it or no specific set of law is applicable to it.

In principle, foreign venture partners are treated in the same way as domestic ones, which is why there are no specific legal or regulatory provisions applicable to them.

Nevertheless, specific provisions apply when operating a regulated business, for example in the banking sector.

If the control of a Swiss bank is acquired, foreigners are subject to a special permit (cf. art. 3^bis sec.1 BA).

The direct and indirect acquisition of real estate by non-residents of Switzerland is also subject to a permit requirement (cf. art. 2 sec. 1 ANFRA).

Nationals from outside the EU or EFTA are subject to immigration regulations, according to which only a limited number of work permits are issued (cf. art. 20 sec. 2 FNIA). Consequently, it could be difficult for joint venturers from countries outside the EU and EFTA to hire workers from their countries of origin for the joint venture in Switzerland.

There are Swiss jurisdiction-specific considerations that influence the structuring of a joint venture due to the primarily fact of lack of a specific joint venture statute. When structuring a joint venture, legal provisions which originate from general contract and company law therefore serve as basis.

Therefore, choice of structure — contractual or a separate corporate entity – is key in defining the venture's operational framework and Governance.

Joint ventures are subject to mandatory approval of the Swiss Competition Commission if the turnover thresholds of all the participating venturer exceed together worldwide 2 billion Swiss francs respectively 500 million Swiss francs in Switzerland or at least two of the venture partners do each generate sales of 100 million within Switzerland (art. 9 CartA).

There are no restrictions concerning the contribution of assets to a joint venture entity, except the requirements that the assets are tradeable, available to the company immediately after the contribution, can be capitalized in the balance sheet and can be liquidated by the company if there’s a necessity (cf. art. 634 CO).

A primary legal consideration relates to the legal structure of the joint venture. A decision must be made as to whether a purely contractual joint venture is preferable or whether a corporate form serves better the purposes to be achieved (see sections 1 and 3 above).

Whereas purely contractual joint ventures give the venturer greater freedom of action, such joint venture does not have its own legal personality. In contrast, the establishment of a corporate joint venture is subject to Swiss company law provisions including considerations on rules for corporate governance, board composition and decision-making to prevent deadlock.

Independently of the structure, it is advisable to clarify the intellectual property rights related to the joint venture and to sign comprehensible confidentiality obligations to protect sensitive information. Further legal aspects to be considered are tax implications (particularly when it comes to cross-border joint ventures), clauses dealing the initial and future contributions including the type of contribution, mechanisms for resolving disagreements upon the venturer and conditions under which the joint venture may be dissolved.

From a commercial point of view, cooperation regarding market entry and risk distribution (loss and profits) among the venturer needs to be considered and agreed upon.

At least one of the appointed officers or board members is required to be domiciled in Switzerland (art. 718 sec. 4 CO resp. art. 814 sec. 3 CO).

It is permissible to choose a foreign governing law for the joint venture due to the Swiss principle of freedom of contract (cf. art. 19 sec. 1 CO).

However, the mandatory provisions and the fundamental Swiss legal principles of Swiss law must always be complied with, regardless of the foreign law chosen (cf. art. 6 PILA; art. 19 sec. 1 PILA).