Corporate restructuring

When economic conditions change, companies must regularly rethink their legal structures. The most important forms of corporate restructuring are mergers, demergers, transformations, and asset transfers.

The economy is a constantly changing cosmos that repeatedly presents new challenges to companies and demands a high degree of adaptability from them. Often, a change in the corporate structure is also necessary. The Federal Act on Mergers, Demergers, Transformations, and Asset Transfers (Merger Act, FusG) of October 3, 2003, as the name already suggests, establishes rules for the restructuring of companies.

The Merger

A merger (Art. 3 ff. FusG) is defined as the combination of legally independent companies into a single economic and legal entity. Swiss law distinguishes two types of mergers: absorption mergers and consolidation mergers. In an absorption merger, one company takes over another, while in a consolidation merger, the companies involved unite to form a new company. The motives for a merger are diverse and may be strategic, financial, or personal in nature.

The Demerger

With a demerger (Art. 29 ff. FusG), entrepreneurs aim to split their company and continue it in a different form. There are also two different types of demergers. In contrast to a split-up, where the assets and participations are divided into two new companies and the transferring company is liquidated, a spin-off only carves out parts of a company while the transferring company remains in existence. A demerger is often the consequence of an expansion of business areas.

The Transformation

In a transformation (Art. 53 ff. FusG), a company changes its legal form. It allows a company to adapt its legal structure to changed economic needs. Since the existing company remains in existence during the transformation, there is no dissolution and no need to establish a new company. Frequently, a company changes to the corporate form of a capital company to limit the personal liability of entrepreneurs or to involve investors in the company.

The Asset Transfer

Finally, an asset transfer (Art. 69 ff. FusG) allows a company to transfer all or part of its assets and liabilities to another company. Any consideration received benefits the transferring company. Unlike the previously mentioned forms of restructuring, the ownership or participation conditions of the stakeholders do not change with an asset transfer. This allows entrepreneurs to adapt to economic movements without having to change the legal structures of their company.

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