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The general partnership (Kollektivgesellschaft): A legal survey

A general partnership is an association of persons, which normally has an economic purpose and operates a commercial business. Legal entities (e.g. AG or GmbH) are not allowed to join a general partnership. A general partnership is in many respects similar to a sole proprietorship (cf. post), with the difference that more people are involved, so that more questions arise.

The general partnership is person-centred (so called non-incorporated firm). This is, for instance, demonstrated in the provision which states that the partnership is basically solved if one partner dies (unless something else has been arranged). A membership change is only possible if this is provided in the partnership agreement, or if all partners agree. Furthermore, a strict non-competition duty applies to the partners.

Foundation: A partnership can not be founded alone, but at least two physical persons are required. It is possible to create a partnership informally. Because of the partner’s personal liability (see below), no minimal capital is required for the foundation of a partnership. Usually, a partnership agreement is stipulated. The partners are largely free in the agreement’s arrangement. If a problem is not regulated by the agreement, the law applies subsidiarily. Such a partnership agreement usually provides for, for example, the goals and the management modalities, as well as for the manner in which profits and losses are to be shared.

Liability: The partnership’s liability is structured into two levels: The partnership’s assets are primary liable for any debts the partnership may face. If the partnership’s assets are not sufficient, all partners are subsidiary, personally, jointly and severally liable. In order for a creditor to directly prosecute a partner, the partnership’s bankruptcy must have been declared (“subsidiary”). Thereafter, however, the creditor may demand payment of the full amount (“jointly”) from any of the partners (“severally”). This partner has then to demand from the other partners a contribution to their share of the liability.

Appearance in public: The general partnership is not an incorporated enterprise (such as, for instance, the AG and the GmbH) in Switzerland. Therefore, the general partnership is no legal entity, i.e. it has no legal personality. However, a general partnership may stipulate contracts, sue and be sued, prosecute and be prosecuted under its own firm name. This demonstrates that the partnership is yet similar to an incorporated enterprise.

Commercial Registry: A partnership operating a commercial business is basically subject to registration in the Commercial Registry. However, the partnership is already considered to be established before or even without registration.

Firm name: see the previous post.

Accountancy: By the time the partnership is registered in the Commercial Registry at the latest, it becomes subject to follow the commercial bookkeeping rules (Art. 957-964 of the Swiss Code of Obligations). Therefore, double entry accounts with balance, inventory and profit and loss statement have to be kept.

Preferably you establish or convert your company with STARTUPS.CH. STARTUPS.CH will provide you with professional guidance before and after the foundation.

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