simple partnership

The simple partnership in Switzerland is considered to be the simplest form of partnership. It is governed by the Swiss Code of Obligations (art. 530-551 CO).

It results from a contract between two or more persons who agree to pool their resources and skills in order to achieve a certain common objective (art. 530 para. 1 CO). Thus, the simple partnership differs from other forms of company in that it is considered a contract rather than a company, even though it is the origin of all other forms of company. It should be noted that a company can only be classified as a simple partnership if it does not meet the requirements of another form of company (art. 530 para. 2 CO).

Advantages of a simple partnership

The simple partnership gives associates considerable freedom to determine how they will work together, and how they will share profits and losses. Unlike other forms of company, it is simple and inexpensive to set up. The simple partnership does not need to be published in the Commercial Register, which preserves the confidentiality of the partners.

Disadvantages of a simple partnership

The partners of a simple partnership are jointly and severally liable without limitation for the partnership’s debts. This means that each partner is liable for all the partnership’s debts, and creditors can demand payment from one or more partners. In addition, the simple partnership has no legal personality, which means that the partners are themselves considered to be the partnership. This can lead to difficulties in terms of succession or transfer of shares. Finally, the société simple may encounter difficulties in obtaining major financing, as it cannot issue equity securities.

Incorporation and management of a société simple

As a rule, simple partnerships have a limited lifespan, like construction consortia, which dissolve once the building has been completed. They are perceived from the outside as communities of economic interests, and have no legal personality or official name. As a result, they often form without the participants being aware of it. In such cases, we speak of a “de facto company”.

The formation of a simple partnership in Switzerland does not require any particular form. It is not necessary to register a simple partnership in the Commercial Register. However, it is advisable to draw up a partnership agreement signed by all partners. This contract can contain information such as the rules governing the management of the company, the division of tasks, powers, etc.

Each partner is required to make a contribution to the simple partnership, which may take the form of a sum of money, a claim or an asset (art. 531 para. 1 CO). In the absence of provisions to the contrary in the partnership agreement, each partner has an equal right to the profits and also bears an equal share of the losses, irrespective of the nature and value of his contribution (art. 533 al. 1 CO).

The management of a simple partnership is entrusted to the partners. In a simple partnership, decisions are taken with the consent of all partners (art. 534 para. 1 CO). However, the partners may appoint one or more managing partners to manage the company on their behalf. The managing partners may be associates or third parties. The appointment and dismissal of managing partners must be decided by the shareholders. The managing partners are responsible for the day-to-day management of the société simple. They must act in the interests of the company and its associates, and comply with all applicable legal provisions. They must also keep associates informed of the company’s financial situation.

All partners are prohibited from engaging in activities that are contrary or detrimental to the company’s purpose on their own behalf (art. 536 CO).

Taxation

In Switzerland, ordinary partnerships are subject to income and capital taxes in the same way as other forms of company. The ordinary partnership has no legal personality separate from that of its partners. Consequently, profits generated by the partnership are taxed directly at the level of the partners, according to their respective shares in the partnership’s profits. In addition, partners are also subject to wealth tax, which is calculated on the basis of their total assets, including their share in the société simple.

In conclusion, the simple partnership is easy to set up and tax-efficient, but also presents risks of liability and conflicts between partners. It is important that potential partners fully understand the advantages and disadvantages of the simple partnership. It is advisable to consult a lawyer to ensure that all legal requirements are met when setting up a simple partnership.