Change of Corporate Form: Executive Summary

For a company, the change of corporate form means that
- the existing company continues as a legal entity and thus maintains both its economic and legal identity;
- there is no need for a formal incorporation of a new entity;
- A transfer of assets and liabilities or, generally speaking, of any legal relationship of the hitherto existing company is not required.

Contrary to the previous regulation, and as a general rule, the Merger Act allows a change of corporate form whenever the corporate form to be adopted is fully compatible in its legal structure with the pre-existing one.


The Merger Act provides an exhaustive list (numerus clausus) of the changes of corporate form that are admissible. In addition, the Merger Act contains a particular regulation for the changes of corporate form of both a general partnership and a limited partnership.

Due to different legal structures, the following changes of corporate form are prohibited:
- No corporate enterprise (= stock corporations, corporations with unlimited partners and limited liability companies [“GmbH”]) may change its corporate form into a general partnership, a limited partnership, an association, or a foundation;
- No company (= corporate enterprises, general partnerships, limited partnerships, associations and cooperatives) may change its corporate form into a foundation and vice-versa;
- No company or foundation may change its corporate form into an association (exception: cooperative without a cooperative capital);
- No association may change its corporate form into a general partnership, a limited partnership or a foundation.

A change of corporate form must maintain both the equity interests and the membership rights of the involved parties. Modifications of those interests and rights, however, must be accepted if they derive inherently from the change of the corporate form itself.

Finalizing a change of corporate form requires a number of documents and resolutions. In any event, the formal requirements of incorporation must be followed that otherwise would apply if the new corporate form were established by incorporation instead of a change of corporate form:
- Based on the most recent, no more than six months old, financial report, the management of the entity to be changed must establish a written plan, a formal statement regarding the change of corporate form, and an up to date balance sheet.
- These three documents must be audited by a specially qualified auditor.
- For a period of 30 days prior to their adoption, the plan, the formal statement, the audit report, and the financial report must all be made available for the equity holders or partners' inspection.
- The general meeting must approve the change of corporate form by the same qualified majority as required for a merger or splitting. The change of corporate form of a corporate enterprise into a cooperative requires the assent of all partners or shareholders. The change of share corporate form of a corporation or a limited partnership into a limited liability company requires the assent of all shareholders, should a liability to make further contributions or another personal obligation be introduced. The resolution of change of corporate form must be made in a notarized deed and must be registered with the Commercial Register. The change of corporate form becomes effective upon the entry in the Commercial Register.

On behalf of small and medium enterprises the Merger Act alleviates certain constraints.

Since a change of corporate form does not affect the assets of the company nor change any liability position, the transaction causes less of a risk to any actual or potential creditor of the company than other forms of reorganization. Therefore, unlike for other transactions under der the Merger Act, the change of corporate form does not require that the creditors are additionally secured. Yet, a change of corporate form may affect a creditor’s position if it eliminates a personal liability of a previous partner (e.g. in a change of corporate form of a general partnership into a corporation). In such cases, the Merger Act perpetuates the liability of those partners who were personally liable to creditors before the change of corporate form took place). On behalf of employees, the Merger Act expands this continued liability even to future salary payments. This occurs if and as far as such payments were due under the earliest possible ordinary termination of the employment contract and without a change of corporate form.

The provisions on change of corporate form can be found in Arts. 53 - 77 Merger Act.

Suggested citation:
Hans Caspar von der Crone / Andreas Gersbach / Franz J. Kessler / Martin Dietrich / Claudia Fritsche / Katja Berlinger, www.fusg.ch - die Internetplattform zu Fragen des Transaktionsrechts, <http://www.fusg.ch/en/trans/change/index.php?datum=2003-08-22>, status: Aug. 22, 2003, visited Feb. 04, 2012.