Structuring a Joint Venture in Switzerland
Legal form, governance, shareholders' agreement, exit — the structuring decisions of a joint venture, and the most common pitfalls.
A successful joint venture is rarely decided by the cooperation agreement itself. It is decided by the quality of the choices made upstream: the legal form, the governance, and above all the scenarios of disagreement and exit.
What is a joint venture?
A joint venture is a collaboration in which two or more companies pool resources to pursue a defined objective: a new market, a product, an infrastructure project. The partners remain legally independent; it is the form given to that pooling that determines most of their rights and risks.
Contractual joint venture or common company?
Two broad structures are available to the partners.
The contractual joint venture
The partners cooperate on the basis of a contract, without creating a separate entity. In Swiss law this often takes the form of a simple partnership: quick to set up and flexible. But it exposes the partners — in a simple partnership, partners are in principle jointly and severally liable for obligations. It suits cooperations limited in time or in scope.
The equity joint venture
The partners create a common company, which holds the assets, employs the staff and carries the contracts. Risk is then ring-fenced within that company. This is the form suited to lasting, capital-intensive cooperations, or those involving significant investment.
Choosing the form of the common company
Where a common company is created, Swiss law offers two main vehicles:
- The company limited by shares (SA / AG): minimum capital of CHF 100,000, shareholder anonymity, robust governance, flexible share transfers. The preferred form for large joint ventures and institutional partners.
- The limited liability company (Sàrl / GmbH): minimum capital of CHF 20,000, members registered in the commercial register, more tightly framed transfer of interests. Suited to smaller joint ventures or a narrow circle of partners.
The choice depends on the capital involved, the confidentiality sought, the ease of exit and the profile of the partners.
The shareholders' agreement: the real joint venture document
The articles of association organise the company; the shareholders' agreement organises the relationship between partners. It is what makes — or breaks — a joint venture. The critical clauses:
- Governance — board composition, nomination rights, qualified majorities and veto rights over reserved matters (budget, investments, borrowing, key hires).
- Financing — each partner's commitments, treatment of future funding needs, consequences of a failure to contribute — notably dilution.
- Deadlock — mechanisms to resolve situations where the partners no longer agree: escalation, mediation, and, as a last resort, buy-sell clauses.
- Exit — share transfers, pre-emption rights, tag-along and drag-along clauses, conditions for a sale to a third party.
- Non-compete and exclusivity — the scope of activity reserved to the joint venture, and the partners' commitments outside it.
- Intellectual property — who owns what is contributed, what is created by the joint venture, and what happens to that intellectual property on dissolution.
The most neglected question is also the most important: how does the joint venture end? A joint venture is structured by thinking first about its exit. Partners, enthusiastic at the outset, negotiate break-up scenarios poorly — which is precisely why they must be negotiated early, while heads are cool.
Competition law and merger control
A joint venture between players in the same market can raise competition law questions. Depending on the size of the partners and their turnover, the creation of a full-function joint venture may have to be notified to the Competition Commission (COMCO), or even to foreign authorities. Information exchanges between competing partners must also be strictly framed.
The most common mistakes
- Starting the joint activity before the shareholders' agreement is signed.
- Neglecting deadlock and exit scenarios because "everything is going well" at launch.
- Underestimating the treatment of intellectual property contributed and created.
- Confusing the articles of association with the shareholders' agreement, or letting the two documents contradict each other.
- Overlooking the competition dimension and any notification obligations.
In short
- The choice between a contractual joint venture and a common company determines risk exposure.
- The shareholders' agreement — governance, deadlock, exit — is the decisive document.
- A joint venture is structured by anticipating its end, not only its launch.
- Competition law aspects should not be addressed last.
This guide is provided for general information only and does not constitute legal advice. Structuring a joint venture calls for analysis tailored to each situation. See also the Services page.
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