What is it all about?
This article briefly describes the liquidation procedure of a company based on a voluntary winding up upon special resolution by its shareholders.
What do I have to do?
The shareholders need to resolve the liquidation of the company. A quorum of at least two thirds of the votes represented and the absolute majority of the par value of the shares represented is required. Formally the resolution must be made by public deed. The shareholders may be represented by proxy holders.
The liquidation shall be carried out by the board of directors unless the resolution of the shareholders charges other persons with it (liquidator). The liquidator has the competence to represent the company in all legal transactions connected with the liquidation. The right of representation contains, for example, the engagement in lawsuits, the conclusion of new business transactions, agreements and settlements.
Registration with commercial register
With the registration of the resolution upon the liquidation of the company in the commercial register the company’s function is limited to the liquidation actions. The company must use the term “in Liq.” in its name.
The liquidation procedure is divided into the following phases: (i) shareholders resolution and opening balance sheet; (ii) creditors information; (iii) winding up the current business; (iv) measures in case of overindebtedness; (v) realisation of assets; (vi) fulfilment of commitments and liabilities; (vii) closing balance sheet, distribution of surplus to shareholders; and (viii) deletion from the commercial register / tax implications.
(i) Shareholders resolution and opening balance sheet
The liquidator is obliged to provide a liquidation opening balance sheet to disposal values for the day of the resolution of the company. In certain cases the liquidator submits this balance sheet to the shareholders for approval.
(ii) Creditors information
Creditors reflected in the books of the company or known in any other way shall be informed personally by letter and be requested to file their claims. Unknown creditors shall be notified and requested to file their claims by publication in the Swiss Official Gazette of Commerce.
(iii) Winding up the current business
The liquidator shall wind up the current business, liquidate assets, and fulfil the commitments of the company unless the balance sheet and the call for the filing of claims result in an overindebtedness.
(iv) Measures in case of overindebtedness
The judge shall be notified as soon as overindebtedness is established. If the overindebtedness cannot be resolved, the liquidation shall be carried out in the bankruptcy procedure as set forth in the Federal Act on Debt Enforcement and Bankuptcy (SchKG).
(v) Realisation of assets
The liquidator has to convert the assets into cash. The liquidator may act without instruction of the shareholders. In many cases the liquidator prepares a comprehensive concept about the realisation of the assets and submits it to the shareholders for approval.
(vi) Fulfilment of commitments and liabilities
The liquidator is further responsible to pay all open invoices and to settle all liabilities of the company.
(vii) Closing balance sheet, distribution of surplus to shareholders
Having the assets realised and the liabilities paid, the liquidator provides the closing balance sheet as well as his final report. The closing balance sheet and the final report must be verified by the auditor and approved by the shareholders. The approval is the prerequisite for the liquidation taxes and the distribution of the remaining net assets. The auditor must confirm the distribution resolution. Basically, the distribution may be effected at the earliest upon expiration of one year from the day upon which the call for the filing of claims was issued for the third time. However, the distribution may already be made after a period of three months if a licensed expert auditor confirms that the liabilities have been satisfied and that it may be assumed that no third party interests are jeopardized.
The net assets, unless otherwise provided for by the articles of association, shall be distributed to the shareholders in proportion to the amounts paid in and with due regard to the preferential rights of individual classes of shares. In practice the distribution takes place after the confirmation of the tax authorities that all taxes have been paid and the deletion of the company from the commercial register. The distribution of the final liquidation dividend is subject to the Swiss withholding tax unless taken out of reserves of capital contributions.
(viii) Deletion from the commercial register / tax implications
After the liquidation is ended, the liquidator shall notify the commercial register that the company name is extinguished. The commercial register de-registers the company after receipt of the confirmation that all taxes have been paid.