The General Partnership (Kollektivgesellschaft): A Legal Survey
A general partnership is an association of persons with an economic purpose, operating a commercial business. Unlike corporations, legal entities such as AG or GmbH are not permitted to join a general partnership. While similar to a sole proprietorship, a general partnership involves multiple people, raising additional questions and complexities.
Person-Centered Structure
A general partnership is person-centered (non-incorporated firm), meaning it heavily depends on its partners. This is illustrated by the provision that the partnership generally dissolves if one partner dies unless otherwise arranged. Changes in membership are only possible if provided in the partnership agreement or if all partners agree. Additionally, partners are subject to a strict non-competition duty.
Foundation of a General Partnership
A general partnership cannot be founded by a single individual; it requires at least two physical persons. The formation can be informal, and no minimum capital is required due to the partners’ personal liability. Typically, a partnership agreement is created, allowing partners significant freedom in its arrangement. This agreement usually covers the partnership’s goals, management modalities, and profit/loss sharing methods. If not specified in the agreement, Swiss law applies subsidiarily.
Liability in a General Partnership
Liability in a general partnership is structured into two levels:
- Partnership’s Assets: Primarily liable for any debts.
- Partners’ Personal Liability: If the partnership’s assets are insufficient, all partners are subsidiarily, personally, jointly, and severally liable.
This means creditors must first seek payment from the partnership’s assets. If those are insufficient, they can pursue any partner for the full amount, who can then seek contribution from the other partners.
Public Appearance and Legal Status
While a general partnership is not an incorporated entity (such as an AG or GmbH) and does not have legal personality, it can still enter into contracts, sue and be sued, and conduct business under its own firm name. This gives it functionality similar to incorporated enterprises.
Commercial Registry Requirements
A general partnership operating a commercial business must register in the Commercial Registry. However, the partnership is considered established before or even without registration.
Firm Name and Accountancy
Refer to the previous post for details on naming a general partnership. Once registered, the partnership must follow commercial bookkeeping rules (Art. 957-964 of the Swiss Code of Obligations), requiring double-entry accounts with balance, inventory, and profit and loss statements.
Professional Guidance from STARTUPS.CH
Navigating the formation and legal requirements of a general partnership can be challenging. STARTUPS.CH provides professional guidance to ensure compliance and successful establishment. They offer support before and after foundation, including counselling interviews and free documentation.
STARTUPS.CH can help with:
- Forming your general partnership
- Ensuring legal compliance
- Managing registration in the Commercial Registry
- Providing expert advice on partnership agreements and liability issues
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