Forming A Company In Switzerland: Articles Of Association And Shareholders' Agreements Explained

When forming a company in Switzerland, founders often focus on capital, tax and regulatory approvals. Corporate documentation receives less attention, yet it plays a decisive role in governance, investor relations and dispute prevention.

Two documents are central to Swiss corporate structuring: Articles of Association and the Shareholders' Agreement. They serve different legal and commercial functions. Understanding how they work, and when each is required, helps founders avoid structural issues that typically surface during investment rounds or shareholder disputes.

1) Articles of Association in Switzerland

Are Articles of Association mandatory in Switzerland?

Yes. Articles of Association are required to incorporate both a public limited company (SA/AG) and a limited liability company (Sàrl/GmbH) under Swiss law. They form part of the incorporation deed, must be notarised and are filed with the Commercial Register.

Without valid Articles, the company cannot be registered and therefore cannot legally exist.

What must Swiss Articles of Association contain?

Swiss company law requires minimum statutory content. In practice, this includes:

Company identity and purpose

• Company name
• Registered office in Switzerland
• Corporate purpose

Capital structure

• Share capital or quota capital
• Number, nominal value and category of shares or quotas

Governance framework

• General meeting rules and voting rights
• Management or board structure
• Form of shareholder communications

The exact requirements vary slightly between SAs and Sàrls, but the principle is the same: the Articles establish the company's legal structure and core operating rules.

How flexible are Articles of Association?

They're partly standardised by law but still allow meaningful customisation. Common tailored provisions include:

• Share transfer restrictions
• Pre-emption rights
• Capital increase mechanisms
• Enhanced voting thresholds

However, mandatory provisions of the Swiss Code of Obligations cannot be overridden. Certain board powers, for example, are non-transferable.

2) Shareholders' Agreements in Switzerland

Is a Shareholders' Agreement required?

No. Swiss law does not require shareholders to enter into a shareholders' agreement. Despite this, they are widely used in:

• Start-ups
• Joint ventures
• Investor-backed companies

In practice, most companies with more than one significant shareholder will consider one.

What does a Swiss Shareholders' Agreement typically cover?

Because it is a private contract, content is largely unrestricted (subject to general Swiss contract law). Typical provisions include:

• Right of first refusal and pre-emption rights
• Drag-along and tag-along rights
• Reserved matters requiring investor or founder consent
• Board nomination rights
• Deadlock resolution
• Founder vesting or lock-up arrangements
• Exit scenarios and valuation mechanisms

Many of these provisions are difficult or impractical to include in the Articles alone.

Who is bound by a Shareholders' Agreement?

Unlike the Articles, a shareholders' agreement binds only the parties who sign it.

It does not automatically bind:

• The company (unless it is a party)
• Future shareholders (unless they sign an accession agreement)

If breached, remedies are contractual, typically damages or agreed penalties, rather than corporate law remedies.

How founders usually allocate provisions between the two

In Swiss practice:

Use Articles of Association when you need rules that:

• Affect share rights or capital structure
• Must be enforceable at company level

Use a Shareholders' Agreement when you need provisions that:

• Are commercially sensitive
• May change frequently
• Require detailed behavioural obligations

Alignment between the two documents is essential. Conflicts can create enforcement uncertainty and complicate investment negotiations.

Why these documents matter in practice

For founders and growth companies, properly structured documentation affects:

• Investment readiness
• Governance stability
• Minority shareholder protection
• Exit planning
• Dispute risk

Most corporate disputes arise not from bad faith but from unclear or unspoken expectations. Clear documentation reduces that risk.

Final Thoughts

Articles of Association and Shareholders' Agreements serve different but complementary roles in Swiss corporate structuring. One establishes the legal framework of the company, while the other regulates how shareholders interact commercially.

For founders, the practical question is rarely whether to choose one or the other. It is how to use both in a coordinated way that supports growth and reduces friction between shareholders.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.