Determining the purpose of a company
At the time of the foundation of company, the statutes that will govern the venture must be codified and within them the purpose of a company must be set.
This purpose of a company is seen as something of central importance and must therefore be clearly determined for any limited liability company (GmbH) or public limited company (AG). Even a sole proprietor (Einzelfirma) is required to enter a business purpose into the commercial register.
It is essential that a company express an explicitly allowable purpose at the time of its foundation. A purpose that is legally or morally questionable would prevent the company from being created in the first place. For bona fide third parties this can be of dire consequence. Due to the protection of confidence the company does not fail from the outset, but instead falls into liquidation from that point on and remains formed until its obligations are met.
The purpose can be of use when it comes to the conclusion or closing of a company. For example, a cooperative is dissolved as soon as a partner dies and there are no stipulations governing continuance beyond such a death (Art. 576 OR [Swiss Code of Obligations]). A continuation clause may be implied if it is not explicitly stated (Federal Court Decision 116 II 53).
Furthermore, the company purpose determined the guidelines for company policy and boundaries for eventual changes in business activities. In order to change the company purpose in a GmbH or AG one requires a qualified majority or a quorum at a meeting of the general assembly (Art. 704 (1), Art. 808b (1) OR).
Also influenced are the role and the power of the representation of the executive bodies, such as those of the managing director. The executive bodies of AGs and GmbHs (Art. 718a Para. I, Art. 814 Para. IV OR) and their general managers (Art. 459 OR) have a legally defined power of representation: they may execute all legal actions necessitated by the purpose of the company.
Insofar that the articles of association are unclear or display gaps, the purpose of a company serves as the central point of reference in the design of the company structure.
Example of an AG in the hotel and restaurant industry:
The company intends to execute a number of operations like providing lodgings such as hotels, motels and inns, running take away restaurants, organizing events, providing catering and dealing in associated wares with support and consulting services provided. The company can purchase, maintain and sell real estate and intellectual property rights. Branch offices may be opened domestically or abroad, and the company may take stakes in other businesses and business activities insofar that they promote the purpose and goals of the company.
