Buying and Selling a Company
Share deal or asset deal, due diligence, contractual warranties and tax implications: the key aspects of buying or selling an SA or Sagl under Swiss law.
Buying or selling a company in Switzerland is a transaction that simultaneously touches upon corporate law, contract law and tax law. Whether the target is an SA or a Sagl, the variables are numerous: the structure of the deal, the price, the warranties, the risks hidden in the balance sheet. Underestimating even one of these aspects can prove extremely costly. The following outlines how the process works and which critical points require close attention.
Share deal and asset deal: two different paths
The first fork in any corporate acquisition concerns the structure of the transaction. In a share deal, the buyer acquires the shares (SA) or the ownership interests (Sagl) of the target company. The company remains the same entity, with all of its contracts, employees, assets and liabilities. In an asset deal, by contrast, the buyer purchases individual assets: machinery, real property, client portfolios, trademarks. The selling company continues to exist but is stripped of certain assets.
The practical consequences are significant. In a share deal, the buyer assumes the company's entire history, including hidden debts, pending litigation and past tax exposures. In an asset deal, the scope of the acquisition is precisely defined, which reduces exposure to unknown risks but complicates the transfer of contractual relationships and regulatory authorisations. The choice between the two approaches depends on the specific case and must be carefully assessed before any negotiation begins.
Transfer of shares and ownership interests
Limited company (SA)
In an SA, shares are transferred in accordance with art. 684 et seq. CO. For registered shares, the transfer is effected by endorsement and delivery of the certificate; for restricted registered shares, the articles of association may include approval clauses that make the transfer subject to the board of directors' consent. Bearer shares were abolished following the 2019 legislative revision, subject to limited exceptions. Registration in the Commercial Register is not required for the transfer.
Limited liability company (Sagl)
In a Sagl, the transfer of ownership interests requires qualified written form (public deed) and is subject to approval by the members' meeting, unless the articles of association provide otherwise (art. 786 CO). The transfer must be recorded in the Commercial Register to be effective against third parties. This procedure reflects the more personal character of the Sagl compared with the SA.
Due diligence: what is examined and why
Before signing, the buyer must truly understand what is being purchased. Due diligence is the thorough examination of the target company and typically covers three principal areas:
- Legal due diligence: existing contracts, litigation, intellectual property, regulatory compliance, employee matters.
- Financial due diligence: financial statements, cash flows, debts (including off-balance-sheet liabilities), irrecoverable receivables, provisions.
- Tax due diligence: outstanding tax liabilities, reassessment risks, VAT treatment, any pending rulings with cantonal authorities.
In a transaction valued at CHF 500,000 or more, dispensing with due diligence is not a saving; it is a gamble. Problems that surface after closing are invariably more expensive than those identified beforehand.
Representations and warranties in the contract
The share purchase agreement (SPA) typically contains a series of representations and warranties whereby the seller confirms certain facts about the company: the accuracy of the financial statements, the absence of material litigation, the regularity of employment relationships, compliance with environmental regulations. If any of these warranties proves untrue, the buyer is entitled to damages.
Negotiating these clauses is often the most sensitive part of the entire transaction. The seller tends to limit the warranties in duration and amount; the buyer seeks to extend them. Mechanisms such as the escrow account (a portion of the purchase price held in trust) or earn-out clauses (deferred payments linked to future performance) help to balance the risks between the parties.
Tax aspects of the corporate acquisition
The tax implications vary considerably depending on the chosen structure. When shares are sold by a natural person, the capital gain is generally exempt from direct federal tax (a Swiss tax privilege). If the seller is a legal entity, the capital gain forms part of taxable profit. Where the company owns real property, the real estate capital gains tax must also be taken into account; this tax is governed by cantonal law. In Ticino, the rate depends on the duration of ownership and can significantly affect the net result of the transaction.
In an asset deal, each individual transfer may trigger its own tax consequences: real estate capital gains tax for immovable property, VAT on the transfer of movable goods, stamp duty on certain securities.
Legal assistance in corporate acquisitions
From structuring the transaction to drafting the contract, from due diligence to managing the closing, every phase of a corporate acquisition requires specialised expertise. Studio Legale e Notarile Haab in Lugano assists buyers and sellers throughout all phases of the transaction. Avv. Hugo Haab and Avv. Roberto Haab coordinate the legal, tax and notarial aspects to ensure that the transaction proceeds securely and transparently. Contact us for a consultation on your corporate acquisition.
For a personal consultation: info@haablegal.ch | +41 91 913 30 70
