Liquidating a Swiss company limited by shares (AG): routes, procedure and restrictions

A Swiss company limited by shares (Aktiengesellschaft, AG) does not end by simply ceasing to trade. As long as it is entered in the commercial register it remains a legal person with duties towards its creditors, the tax authorities and the register, and its directors remain responsible for it. Shareholders who no longer need a Swiss company therefore have to choose a route out, and that choice determines how long the process takes, what it costs and how the remaining assets are taxed. This article explains the ordinary voluntary liquidation step by step, the alternatives that avoid a liquidation altogether, the special cases of insolvency and dormant companies, and the restrictions that the law places on each route.

Dissolution and liquidation: two different things

Swiss law distinguishes between the dissolution of a company and its liquidation. Dissolution is the event that changes the company's purpose: from that moment its aim is no longer to conduct business but to wind up its affairs. Liquidation is the process that follows, in which the company's business is completed, its assets are realised, its debts are paid and any remaining surplus is distributed to the shareholders. Only at the end of that process is the company deleted from the commercial register, and only then does it cease to exist.

During liquidation the company keeps its legal personality and its name, to which the words "in Liquidation" or "in Liq." are added (Art. 739 para. 1 CO). Its corporate bodies continue to exist, but their powers are limited to the acts that the liquidation requires.

The grounds for dissolution

Art. 736 CO lists five grounds on which a company is dissolved:

• in accordance with its articles of association, for example when a fixed term expires (no. 1);
• by a resolution of the general meeting recorded in a public deed (no. 2);
• by the opening of bankruptcy proceedings (no. 3);
• by a court judgment at the request of shareholders who together hold at least ten per cent of the share capital, where there is good cause (no. 4);
• in the other cases provided for by law (no. 5).

In the minority case under no. 4, the court is not bound to order dissolution. It may instead order another solution that is appropriate and reasonable for the parties, such as the purchase of the applicants' shares (Art. 736 no. 4 CO). The "other cases provided for by law" under no. 5 include, in particular, dissolution by the court because of deficiencies in the company's organisation under Art. 731b CO, for example where the company no longer has a board of directors, an auditor or a legal domicile and fails to remedy the defect.

In practice, almost every voluntary liquidation starts with a resolution of the general meeting.

The ordinary voluntary liquidation, step by step

1. Resolution of the general meeting

The resolution to dissolve the company requires at least two thirds of the votes represented and an absolute majority of the nominal value of shares represented (Art. 704 para. 1 no. 16 CO). The articles of association may set stricter requirements. The resolution must be recorded in a public deed by a notary (Art. 736 no. 2 CO). In the same meeting, the shareholders usually appoint the liquidators and determine their signing authority.

A company that is over-indebted cannot simply resolve to be liquidated voluntarily in order to avoid bankruptcy. If its liabilities are no longer covered by its assets, the board must notify the court under Art. 725b CO unless creditors subordinate their claims to the necessary extent or a genuine restructuring is in prospect.

2. Appointment of the liquidators

Unless the articles of association or a resolution of the general meeting appoint other persons, the board of directors carries out the liquidation (Art. 740 para. 1 CO). The liquidators must be entered in the commercial register, even if they were already members of the board (Art. 740 para. 2 CO). At least one liquidator authorised to represent the company must be resident in Switzerland (Art. 740 para. 3 CO). This requirement is often the first practical hurdle for foreign-owned companies: where none of the directors lives in Switzerland, a Swiss-resident liquidator, often a lawyer or a fiduciary, has to be appointed.

The general meeting may remove liquidators it has appointed at any time. Liquidators appointed by the court can be removed only by the court (Art. 741 CO).

3. Entry in the commercial register

The board must file the dissolution with the commercial register (Art. 737 CO). The application is accompanied by the public deed of the resolution, the liquidators' declarations of acceptance and, where required, their certified signatures. From the entry onwards, the company trades under its name with the addition "in Liquidation" (Art. 739 para. 1 CO).

4. Liquidation balance sheet and call to creditors

When they take office, the liquidators must draw up a balance sheet (Art. 742 para. 1 CO). Because the company is no longer a going concern, its assets are no longer valued at going-concern values but at the values they are expected to fetch on realisation (Art. 958 para. 2 CO). If the liquidation lasts longer, the liquidators must prepare interim balance sheets each year (Art. 743 para. 5 CO).

The liquidators must then call on the creditors to file their claims. Creditors known from the books or otherwise are informed individually. Unknown creditors, and creditors whose address is unknown, are informed by public notice in the Swiss Official Gazette of Commerce (SHAB) and in the form prescribed by the articles of association (Art. 742 para. 2 CO). Since the company law reform that entered into force on 1 January 2023, a single publication in the SHAB is sufficient; under the previous law, the call had to be published three times.

5. Completing the business and realising the assets

The liquidators complete the company's current business, collect outstanding receivables, realise the remaining assets and pay the company's debts (Art. 743 para. 1 CO). They may enter into new transactions only to the extent that the liquidation requires. Unless the general meeting has ordered otherwise, they may sell assets by private sale (Art. 743 para. 4 CO), which in practice gives them the flexibility to sell a business, real estate or a participation as a whole.

The liquidators must keep the company's financial position under review throughout. If they find that the company is over-indebted, they must notify the court (Art. 743 para. 2 CO), and the liquidation continues as a bankruptcy.

The practical work in this phase usually includes:

• terminating employment contracts, leases, service agreements and insurance policies with due regard to the notice periods;
• deregistering from VAT and the social security institutions and settling the final contributions;
• filing the final tax returns and settling the corporate income and capital taxes;
• collecting receivables and resolving pending disputes;
• closing bank accounts once the final payments have been made.

6. Protection of creditors

Before any distribution to shareholders, all creditors must be paid or secured. If known creditors have not filed their claims, the amount of their claims must be deposited with the court (Art. 744 para. 1 CO). The same applies to debts that are not yet due or that are disputed, unless the creditors receive equivalent security or the distribution of the company's assets is postponed until these debts are settled (Art. 744 para. 2 CO).

7. The waiting period and the distribution of the surplus

Once all debts are paid, the remaining assets are distributed among the shareholders in proportion to the amounts they paid in, taking into account any preferential rights attached to certain classes of shares, unless the articles of association provide otherwise (Art. 745 para. 1 CO).

The distribution may take place at the earliest one year after the day on which the call to creditors was published (Art. 745 para. 2 CO). This waiting period is often called the "blocking year" (Sperrjahr). It may be shortened to three months if a licensed audit expert confirms that the debts have been paid and that, in the circumstances, no third-party interests are at risk (Art. 745 para. 3 CO). The shortened procedure costs the fee for the auditor's confirmation, but it can bring the end of the liquidation forward by nine months, which is often worth it for a company with a simple balance sheet.

Distributions made before the waiting period has expired, or before all creditors have been paid or secured, expose the liquidators to personal liability.

8. Deletion from the commercial register

When the liquidation is complete, the liquidators file the deletion of the company with the commercial register (Art. 746 CO). The application must be signed by all liquidators and must refer to the publication of the call to creditors (Art. 65 para. 1 of the Commercial Register Ordinance, HRegV). The register will only delete the company once the federal and cantonal tax authorities have consented to the deletion (Art. 65 para. 2 HRegV). In practice, the tax authorities give their consent only after all final tax assessments have been issued and paid, which is often what determines how long the last phase of the liquidation takes.

After deletion, the share register, the accounting records and the register of beneficial owners must be kept in a safe place for ten years, together with the supporting documents (Art. 747 CO). The liquidators designate the place; if they cannot agree, the commercial register office decides.

Taxes on liquidation

The tax consequences are frequently the most important factor in choosing the route out, and they should be analysed before the general meeting resolves on dissolution.

Corporate income tax. The liquidation realises the hidden reserves in the company's assets. Liquidation gains form part of the taxable profit of the company (Art. 58 para. 1 let. c of the Federal Act on Direct Federal Tax, DBG), and the cantonal tax laws contain corresponding rules. A company that holds real estate, intellectual property or participations with substantial hidden reserves will therefore pay profit tax on these gains in its final tax period.

Withholding tax. The liquidation surplus, meaning the amount distributed to the shareholders that exceeds the nominal share capital and the confirmed capital contribution reserves, is subject to Swiss withholding tax of 35 per cent (Art. 4 para. 1 let. b and Art. 13 para. 1 let. a of the Withholding Tax Act, VStG; Art. 20 para. 1 of the Withholding Tax Ordinance, VStV). The repayment of nominal capital and of capital contribution reserves confirmed by the Federal Tax Administration is not subject to withholding tax (Art. 5 para. 1bis VStG). Shareholders resident in Switzerland can generally reclaim the tax in full. Foreign shareholders can reclaim it only to the extent provided for in the applicable double taxation treaty, and some treaties reduce the residual tax to zero or a few per cent for corporate shareholders with a substantial holding. Within groups, the tax can in certain cases be settled by a notification procedure instead of payment and refund.

Personal income tax. For shareholders who are individuals resident in Switzerland and hold their shares as private assets, the liquidation surplus is taxable income in the same way as a dividend (Art. 20 para. 1 let. c DBG). Where the shareholder holds at least ten per cent of the share capital, only part of it is taxed (Art. 20 para. 1bis DBG, and correspondingly under cantonal law).

De facto liquidation. The tax authorities do not wait for a formal resolution. If a company sells its business and pays the proceeds to its shareholders, or allows its assets to drift to them without a formal process, it may be treated as being in a de facto liquidation. The persons who in fact carry out such a liquidation are jointly liable with the company for its withholding tax up to the amount of the liquidation proceeds, and the start of the liquidation does not depend on an entry in the commercial register (Art. 15 para. 1 let. a VStG; Federal Supreme Court, judgment 2C_806/2013 of 24 March 2014, consid. 3.3–3.5).

Alternatives to liquidation

A formal liquidation is not the only way to bring a Swiss company to an end. Depending on the shareholders' objectives, one of the following routes may be faster or cheaper.

Merger. The company can be absorbed by another company under the Merger Act (FusG). The absorbed company is dissolved and deleted from the register without liquidation, and its assets and liabilities pass to the absorbing company by universal succession (Art. 3 and Art. 21 FusG). This route is often used within groups, where a dormant subsidiary is merged into its parent or into a sister company. A company that is already in liquidation can still take part in a merger as the transferring company as long as the distribution of its assets has not yet begun (Art. 5 FusG). Mergers that fulfil the conditions for tax neutrality can be carried out without realising the hidden reserves.

Sale of the shares. Instead of ending the company, the shareholders can sell it. For a company with an operating business, a clean balance sheet or valuable licences, a sale is often more attractive than a liquidation. Shareholders who are individuals must, however, take into account the rules on indirect partial liquidation and transposition, under which the tax authorities may treat part of the sale price as taxable income.

Relocation abroad. A Swiss company can, under certain conditions, move its seat abroad without being liquidated in Switzerland, provided the foreign law permits the transfer and the company continues there (Art. 163 of the Federal Act on Private International Law, PILA). For tax purposes, however, the relocation of the seat abroad is treated like a liquidation: the hidden reserves are taxed, and withholding tax is due on the reserves as if they had been distributed (Art. 4 para. 2 VStG).

Takeover by a public-law entity. Where the assets of a company are taken over by the Confederation, a canton or a municipality, the takeover may be carried out without liquidation (Art. 751 CO). This route is of little relevance for private investors.

Insolvency: liquidation in bankruptcy

If the company's liabilities are no longer covered by its assets and no restructuring is possible, the board must notify the court (Art. 725b para. 3 CO). The opening of bankruptcy proceedings dissolves the company (Art. 736 no. 3 CO), and the liquidation is then carried out by the bankruptcy office under the Debt Enforcement and Bankruptcy Act (SchKG). The directors lose control of the process, and the shareholders as a rule receive nothing.

Where the assets do not even cover the costs of the bankruptcy proceedings, the court suspends the proceedings for lack of assets (Art. 230 SchKG), and the company is subsequently deleted from the commercial register. Directors who delayed notifying the court, or who continued to trade while the company was over-indebted, are exposed to liability claims by the creditors (Art. 754 para. 1 CO) and potentially to criminal liability.

Dormant companies without activity and without assets

Since 1 January 2021, the commercial register can delete a company on its own initiative if the company no longer conducts any business and no longer has any realisable assets (Art. 934 para. 1 CO). The register office first asks the company to state whether it has an interest in keeping its entry. If it receives no answer, it publishes a call in the SHAB asking other interested parties, such as creditors, to come forward. If this call also remains unanswered, the company is deleted. If a creditor or shareholder asserts an interest in keeping the entry, the register office refers the matter to the court (Art. 934 paras. 2 and 3 CO).

This procedure is designed for empty shells. It is not a cheap substitute for a liquidation: a company that still has assets, a bank balance or open tax matters will not qualify, and shareholders who let a company with assets drift into deletion risk losing those assets and incurring the tax consequences of a de facto liquidation.

Liability of the liquidators

Liquidators are liable to the company, the shareholders and the creditors for any loss caused by an intentional or negligent breach of their duties (Art. 754 para. 1 CO). The typical risks are premature distributions to shareholders, failing to pay or secure known creditors, failing to notify the court of over-indebtedness, and failing to settle the company's taxes. Liquidators are also jointly liable for the company's withholding tax and, under the tax laws, for certain other taxes up to the amount of the liquidation proceeds. A careful liquidator therefore distributes nothing until the tax position has been settled and the waiting period has expired.

How long a liquidation takes

A simple voluntary liquidation of a company without operating business, employees or real estate typically takes between six months and a little over a year. The decisive factors are the waiting period of one year after the call to creditors, which can be reduced to three months with an auditor's confirmation, and the time the tax authorities need to issue the final assessments and consent to the deletion. Companies with operating business, employees, real estate, pending litigation or complex group structures take correspondingly longer.

Checklist

• Analyse the tax consequences before the resolution: hidden reserves, capital contribution reserves, withholding tax and the position of foreign shareholders.
• Check whether a merger, a sale of the shares or a relocation would achieve the objective more efficiently.
• Make sure that at least one liquidator authorised to represent the company is resident in Switzerland.
• Have the dissolution resolved by the general meeting in a public deed and filed with the commercial register.
• Draw up the liquidation balance sheet and publish the call to creditors in the SHAB.
• Complete the business, terminate contracts, realise the assets and pay the debts; deposit the amounts for unknown or disputed claims.
• Observe the waiting period of one year, or three months with the confirmation of a licensed audit expert.
• File the final tax returns, declare and pay the withholding tax on the liquidation surplus and obtain the tax authorities' consent to the deletion.
• Distribute the surplus, file the deletion and arrange for the records to be kept for ten years.

How Ressos Legal helps

I advise shareholders and boards of Swiss companies on the choice between liquidation, merger and sale, and I act as Swiss-resident liquidator for companies whose directors live abroad. Through an affiliated Swiss trust company, we also take care of the accounting, the final tax returns and the correspondence with the commercial register and the tax authorities, so that the company can be closed in an orderly way. Contact me for a first conversation.

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of October 2026.